Published On: October 24, 2023
  • Credit card surcharging is a legal payment practice that can reduce processing fees for merchants.
  • Merchants must follow the rules and regulations when adding credit card processing fees.
  • MONEXgroup offers surcharging add-ons for Flex, Mini, and Duo devices.

What are the surcharge rules and requirements that merchants must follow?

There are several rules a merchant must follow when adding a credit card surcharge.

Brand vs. Product Level

Merchants are allowed to charge cardholders a fee for using Mastercard/Visa credit, but this fee is limited to the cost that the merchant incurs for accepting Mastercard/Visa credit. If a merchant decides to add a surcharge at the brand or product level, there are caps on the amount that can be charged. For brand-level surcharges, the cap is the lower of the merchant’s average effective discount rate for Mastercard/Visa credit acceptance or the Maximum Surcharge Cap. For product-level surcharges, the cap is the lower of the merchant’s cost for accepting the specific Mastercard credit product or the Maximum Surcharge Cap. In Canada, the maximum surcharge for any transaction is 2.4%.

Registration required

To impose a credit card payment fee on customers, you will need to register with the major card brands like Mastercard and Visa by sending them a written notice. However, American Express does not require this.

Clear disclosure

Merchants accepting credit cards are required to provide clear disclosure of their surcharging practices to their customers at the point of interaction. This includes the amount and dollar value of the surcharge on the transaction receipt provided to the customers. Merchants must also comply with any applicable provincial or federal laws and should refer to specific standards for additional consumer disclosure obligations.

Types of cards permitted to surcharge

Merchants are only able to add a surcharge on credit cards and not on any Mastercard/Visa debit or prepaid cards. The good news is that the fees for debit and prepaid cards are usually much lower than credit cards.

What are the different merchant fees?

It’s important to note that each type of merchant requires specific requirements for accepting payments. For example, when applying a surcharge on Visa transactions, it cannot exceed any surcharge applied to Mastercard or PayPal transactions. You should refer to the specific type of fee definition below. Additionally, it’s crucial to understand that in Canada and the U.S., surcharging is only allowed on credit card transactions.


This is a fee added to a credit card transaction by a merchant for accepting the credit card. The fee must not be greater than any surcharge on Amex or PayPal transactions. The maximum surcharge cap is 2.4%.

Service Fee

Some payment card networks allow merchants to charge a service fee for specific types of transactions. The terminology used may differ depending on the PCNO. Eligibility can be confirmed by the merchant with their acquirer. However, if a merchant charges this fee for credit or debit payments, they are not allowed to impose a surcharge.

Convenience Fee

A convenience fee is set by a merchant in addition to the price charged for accepting the card to provide the cardholder with genuine convenience (such as an alternate payment method outside the merchant’s usual payment channel). It’s crucial to remember that Canada does not permit convenience fees, whereas, in the U.S., this is allowed.

How Technology Advancements Enhance Payment Security

Since the late 1990s, chip cards have become the preferred way to make payments, with the introduction of the EMV standard. According to EMVCo, in 2022, 93% of card transactions worldwide used EMV chips.

To ensure that the genuine card is used for every transaction, the chip generates a unique transaction code that is verified by the issuing bank. This technology increases the security of a cardholder’s data.

Using EMV cards provides enhanced security for cardholders by utilizing microprocessors to protect their information. Additionally, these cards often include small antennae that enable contactless transactions, which have become increasingly popular during the pandemic due to concerns about sharing cards with others.

EMV technology continues to evolve and become more secure. Recently, Mastercard developed new quantum-resistant specifications for contactless payments. This development will protect cardholders and merchants from fraud for decades to come. The new specifications will not require physical changes to the digital wallets, contactless cards, or point-of-sale terminals. They will maintain the same half-second, tap-and-go experience as today.

Customers can make payments without physical contact by tapping their card or phone near the POS terminal. This technology, known as radio frequency identification (RFID), enables communication between the card reader and the device used to make the payment. Although contactless payments have been available in the U.S. for several years, their use has increased significantly since the pandemic began. Additionally, mobile payments are considered more secure than chip cards due to the added biometric component.

When a customer makes a payment using their mobile phone, they need to confirm their identity by scanning their face or providing their fingerprint. Mastercard is developing a Biometric Card, which uses chip technology in conjunction with the customer’s fingerprint to verify their identity.

When making a payment, the customer can insert or tap their card on the payment terminal. As this happens, the sensor captures a digital image of the customer’s thumb. This image is then compared with the one stored on the card. If there’s a match, the transaction is authenticated and approved. These new technologies have made transactions safer, and they are now commonly used for payments.

When is Magnetic Swipe expected to be fully phased out?

Starting in 2024, most markets will no longer require newly issued Mastercard credit and debit cards to have a magnetic stripe due to the decline in payments powered by magnetic swipes after the rise of chip-based payments. By 2029, new Mastercard credit or debit cards will not be issued with magnetic stripes at all. Additionally, banks in the U.S. will no longer be required to issue chip cards with magnetic stripes beginning in 2027. It is worth noting that prepaid cards in the U.S. and Canada are currently exempt from this change.

How Will This Change the Payments Landscape for Merchants, Payment Service Providers, And Customers?

If you own a business and have at least one payment terminal, it is essential to accept EMV payments, or else your business will be held liable for fraudulent card use and chargebacks that occur at your premises. Therefore, it’s critical to be proactive and ensure your business is EMC-compliant to avoid potential financial losses.

EMV chip cards are now widely used in the United States and around the globe. In 2022, these chip-enabled credit cards constituted 93% of credit card transactions worldwide and 87% of transactions in the U.S. It is worth noting that many business owners had already integrated EMV card readers into their operations before Mastercard’s announcement. If your business has not yet done so, it’s crucial to consider upgrading your POS terminal and card readers.

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With MONEXgroup as your payment provider you benefit from our all-in-one payment ecosystem with: integrated processing solutions, 24/7/365 support, comprehensive reporting, and much more.
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Streamline Your Payments with a Surcharging Program

If you’re looking to apply credit card surcharging, MONEXgroup has got you covered! Our Flex, Duo, and Mini devices offer an add-on feature for surcharging and are perfect for accepting mobile payments on the go or in-store.

We can also help you register and set up surcharging to streamline your business and save time.

So, if you’re ready to enhance the efficiency of your business operations by adding a new POS device, you can get a free, no-obligation quote and, additionally, receive a 10% discount on your purchase. You can fill out the form here or contact us directly at 1.866.286.7787.

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Knowing what drives your revenue is a significant advantage to making informed business decisions. Access the full-suite reporting dashboard to monitor data such as financial transactions, usage statistics, location/regional performance, etc.

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