What is Surcharging?
Surcharging is the practice of adding a small fee to credit card transactions to offset processing costs. Instead of absorbing these fees, businesses pass them to customers who choose to pay with a credit card.
Why Use Surcharging?
Credit card processing fees can add up quickly, cutting into your bottom line. By applying a surcharge, businesses can recover these costs while still offering the convenience of credit card payments.
How Does It Work?
A customer pays with a credit card – Instead of charging the full sale amount, the system automatically adds a surcharge (typically a percentage of the total).
The customer is informed – Regulations require businesses to disclose surcharges before payment is processed.
The fee is passed on – The surcharge covers the credit card processing cost, reducing expenses for the business.
Is It Legal?
Yes, but compliance is key. Surcharging is allowed in most U.S. states, but businesses must follow specific rules, such as:
Transparent disclosure: Customers must be notified before completing a purchase.
Debit card restrictions: Surcharges can only apply to credit card payments, not debit cards.
Fee limits: The surcharge cannot exceed the actual processing cost (typically up to 3%).
How Do I Enable Surcharging in My Account?
Surcharging requires the Time and Billing license, as well as enrolling in payment processing through the Billing Settings tab. To enable surcharging, check out our step-by-step guide Enable Surcharge for Client Portal Payments here!