The Ultimate Guide To Understanding What Is Surcharging In Credit Card Payments

Most B2B (business to business) prefer to pay using credit cards because of its convenience, the cash flow benefits of delaying payments, and the opportunity to take advantage of rewards.

However, merchants don’t share the same sentiments. Receiving credit card payments for their business costs them a lot of money, especially with credit cards processing platforms like MasterCard and Visa constantly increasing their fees.

However, with online commerce gaining popularity, merchants have no choice but to accept credit cards. There are a few ways merchants can cushion their business to cover credit card processing fees, either by increasing their prices, offering cash discounts, or adding a convenience or surcharge fee.

Today’s guide delves into what surcharging is, is it legal, and whether it is right for your business.

What is credit card surcharging?

Credit card surcharging charges customers a fee to try and offset credit card processing fees. For example, if an item is $100 and the fee to process this payment is, let’s say, $2.60, then you charge the customer $102.60.

Credit card schemes charge merchants about 1.3% – 3.5% of every transaction to process credit card payments. However, this doesn’t include the additional fees merchants have to pay to their payment processor, which may depend on which they’ve decided upon, whether tiered, interchange plus, or a flat rate.