More businesses are choosing to pass some or all of their card acceptance cost on to customers. There are two common ways to do it, and they are not interchangeable.

Surcharging

A surcharge is a fee added to a credit card transaction at checkout. Card brand rules govern how it works:

  • It applies to credit cards only, never to debit or prepaid cards, even when run as credit.
  • It is capped by card brand rules and may not exceed your actual cost of acceptance.
  • Customers must be told before they pay, at the entrance, at the point of sale and on the receipt.
  • Card brands may require advance notice before you begin.
  • Some states restrict or prohibit surcharging.

Cash discount

With a cash discount program, your posted prices include the cost of card acceptance, and customers who pay with cash receive a discount. Because it is framed as a discount for cash rather than a fee for cards, different rules apply, but clear signage and receipts are still required.

Which one fits?

  • Surcharging keeps posted prices lower but adds a visible fee at checkout for credit card customers.
  • Cash discount keeps checkout simple but raises posted prices for everyone who pays by card.
  • Businesses with many debit card customers often find cash discount simpler to run, because surcharges cannot apply to debit.

Is it right for your customers?

Passing on costs can save a business real money, but it is a customer experience decision too. Many businesses find that a better processing rate removes the need for either. Start with a statement review and see what your rate could be first.

Published · BrightStar Merchant Services