Frequently Asked Questions

United States consumers who have questions regarding credit card transaction fees can find answers to common questions here. As surcharging becomes more prevelant, this Frequently Asked Questions database will expand with more information.


What is a merchant credit card processing fee?

Whenever a customer uses a credit card to purchase a product or service from a merchant, the merchant must pay a processing fee to the credit card companies. These fees are usually between 2 to 4% of the sale and can be higher for “high-risk” merchants like airlines, ticket vendors and travel arrangement services, or merchants where the card is not present, like online stores. Credit card processing fees can be extremely challenging for many merchants because they tighten margins, decrease profits and depending on the size or age of the business, can make it exceedingly difficult to grow and succeed.

What is a credit card transaction fee?

A credit card transaction fee, often called a “surcharge”, is when a merchant recovers the processing fee incurred by passing it on to customers who choose to use a credit card. The fee amount shows up on the customer’s receipt most often labeled as a transaction fee.

Why does the customer have to pay the fee?

Though the norm has been to consider credit card processing fees “part of doing business” mostly due to U.S. regulations, surcharging is actually the fairest way to deal with the merchant credit card processing fee.  Without surcharging the fees, many merchants bake the credit card processing fee into the price of their products and services, no matter the payment method. That means that customers that pay with alternative free payment methods such as cash, debit cards or even ACH, are subsidizing credit card payers by also paying the fees when in reality they shouldn’t necessarily be. By surcharging the fees, customers know up front that if they choose to pay by credit card, let’s say because they want the points with a particular card which ultimately costs the merchant higher rates, that they will have to pay the transaction fees associated with the card they choose.

How can customers avoid paying the fee?

United States consumers making purchases can avoid paying a transaction fee by using any other payment method, including debit cards, some government issued credit cards, cash, checks, or electronic payments such as Automated Clearing House (ACH) if offered as an option.

Are transaction fees legal in the United States?

Credit card surcharges are legal in 44 states. Currently as of March 2019, Connecticut, Colorado, Kansas, Maine, Massachusetts, and Oklahoma are the only states that still have surcharging bans. Multiple judicial decisions, including one made by the Supreme Court in the case of Expressions Hair Design v. Schneiderman established that most laws banning surcharging are a violation of the Free Speech Clause of the First Amendment.

Are there any rules or regulations surrounding the fee?

Yes. Credit card surcharging is a simple idea that is complex in its implementation due to a myriad of federal, state, local, and card issuer regulations.

Merchants must comply with specific requirements when applying a credit card surcharge. Some of these requirements include;

  1. Credit card companies require merchants to display a notice of the surcharge at the in-store and online points of sale.
  2. The maximum credit surcharge is 4% of the transaction total, or the actual cost to process cards, whichever is lower.
  3. Credit card companies require written notification of “intent to surcharge” 30 days prior to imposing any surcharges.
  4. Credit card surcharge fees must appear on every receipt in an individual line item.
  5. If a merchant provides a refund for an item and a transaction fee was applied to the purchase, the full transaction fee must also be refunded.


Those are just a few of the regulations surrounding surcharging. Each state and locality have their own specific regulations, so consult your state or local law book to learn more.