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Surcharging for 0% Processing: What to Know About Transparency and Compliance

No matter the size of your business, finding ways to save on processing fees is always top of mind. With that said, have you heard of surcharging for 0% processing?

It may seem like an unreliable tactic, but if done correctly, this program could help you save significantly. This could mean more funds in your pocket to spend on much needed resources for your business. However, before implementing a surcharging strategy, there are a few things to know.

In this blog from ModPay Solutions, we'll discuss everything you need to know about surcharging for 0% processing, including transparency and compliance.

Surcharging for 0% Processing: What to Know About Transparency and Compliance

Table of Contents:

  1. What is Surcharging?

  2. How It Works for 0% Processing

  3. Surcharging: Is It Right for Your Business?

  4. Understanding the Rules and Restrictions of Surcharging

  5. Communicating with Customers

  6. Complying with The Law

  7. Surcharging with Transparency and Compliance: Best Practice Tips

  8. Benefits for Businesses and Customers

  9. Choosing the Right Payment Processor

  10. Conclusion

What is Surcharging?

Surcharging is the practice of passing on the fees associated with credit card processing to the consumers. In other words, it means adding a small fee to credit card transactions to offset traditional processing costs generally borne by the merchant.

By doing so, businesses can offset a portion of their transaction costs. Surcharging is just one of several methods that allow businesses to ensure their processing fees remain low to non-existent. In other words, this program is one option for making 0% processing for merchants possible.

How It Works for 0% Processing

Surcharging is a practice where businesses pass on the cost of credit card processing to customers who pay with their cards. In other words, when a customer uses a credit card to pay for goods or services, the merchant adds a small surcharge fee on top of the purchase amount.

Traditionally, the amount of the surcharge can range from 1% to 4% of the transaction total, depending on the type of card used and the processing fees charged by the payment processor. With 0% processing, this method works the same way as businesses pass on the processing costs to the customers during each credit card transaction.

Surcharging is legal in most states but is subject to laws and regulations that vary by state.

Surcharging: Is It Right for Your Business?

Before deciding on a surcharge program, you need to ensure that this route to 0% processing is a good fit for your business.

Here are some key considerations to keep in mind:

- Surcharging may not be legal in all states. Check your state's laws and regulations before starting to surcharge.

- Be sure to communicate the surcharge policy clearly to your customers. While this program may seem less ideal, many studies have shown that customers prefer to pay with cards even if a small fee is involved.

- Surcharges must be listed on receipts. Don't forget, the surcharge should be mentioned on the receipt for any purchase or transaction. Make sure to include both the percentage and the dollar amount of the surcharge.

- Surcharging can increase revenue without affecting profit margin. By surcharging customers, you can offset the cost of processing credit cards without compromising your profit. This can be especially beneficial for high-risk businesses that face higher processing fees.

Understanding the Rules and Restrictions of Surcharging

While surcharge bans have been lifted in most states, some rules and restrictions must be followed. For example, businesses must give a clear and conspicuous disclosure both in-store and online that they are surcharging, the dollar amount of the fee, and the credit card brands that are subject to the fee.

The surcharge amount must also be less than or equal to the cost of the processing fee. It is important to note that not all card brands allow surcharging, and state laws may also place additional restrictions.

Communicating with Customers

One of the keys to successful surcharging is to communicate with complete transparency to your customers. With open and honest communication, let them know why you have implemented a surcharge and how it will benefit your business.

Train your staff to answer customer questions about the program professionally and politely. Some businesses even offer a discount to customers who choose to pay with cash, which can help offset the surcharge cost.

Complying with The Law

As mentioned earlier, surcharging is not legal in all states, and the rules regarding its implementation may vary depending on the state. In some states, merchants are required to notify their customers about the surcharge before completing the transaction.

Also, they must disclose the amount of the surcharge on the receipt. It's essential to ensure you comply with the state and federal law requirements to avoid legal or financial repercussions.

Surcharging with Transparency and Compliance: Best Practice Tips

If you decide to surcharge your customers, you must do it transparently and comply with the law.

Here are some best practices to follow:

- Clearly disclose the surcharge fee on receipts and signage before the sale. The fee should be stated as a percentage of the transaction total and separated from the purchase amount.

- Only surcharge for credit card payments, not for other payment methods such as cash, checks, or debit cards.

- Use a third-party surcharging service with a trusted processor that complies with the Payment Card Industry Data Security Standard (PCI DSS). The service should securely handle and transmit credit card information to avoid legal or financial risks.

- Ensure that your business's surcharging policy complies with all relevant state and federal laws and regulations.

Benefits for Businesses and Customers

Surcharging can benefit both the merchants and consumers. For merchants, it can offset the costs associated with accepting credit card payments, allowing them to allocate the savings to other areas of their business.

For customers, surcharging can provide transparency regarding the cost of payment processing and offer more ways to pay. Merchants can remain competitive by providing open and honest communication and comprehensive payment methods.

Choosing the Right Payment Processor

You'll also want to choose a processor that offers transparent pricing with no hidden fees. At ModPay, we do that and much more. We also offer a variety of payment methods, including mobile and online payments.


Surcharging for 0% processing can be an excellent way for businesses to save on credit card processing fees. Still, it's crucial to implement this strategy with transparency and compliance in mind.

By disclosing the surcharge to your customers, complying with state laws, and working with a reputable payment processing company, you can ensure your business saves money while maintaining strong customer relationships.

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