How Businesses Can Pass Credit Card Fees to Customers

Incurring credit card processing fees is an inevitable reality if your business accepts payment cards. But businesses don’t always have to absorb 100% of these costs. Increasingly, there are compliant and transparent ways to pass these fees on to customers who opt to pay with credit cards.

This week, we’ll dive into specific strategies businesses use to shift these costs and how they can be implemented effectively.

Why Pass on Credit Card Fees?

Last week, we explored strategies for managing credit card processing fees, such as absorbing costs, increasing product prices, or negotiating with processors. While those methods can help reduce the impact of fees, passing them directly to customers is another powerful option. This approach can help businesses maintain a healthy profit margin without significantly altering their pricing structure for all customers.

Let’s explore the most common methods businesses use to pass credit card fees to their customers:

1.  Credit Card Surcharging

What it is: Adding a percentage-based fee to a customer’s bill when they choose to pay with a credit card. This fee directly offsets the cost of processing the transaction

Key Considerations:

• Surcharging is legal in most states but prohibited in a few (e.g., Connecticut, Maine, Massachusetts, Oklahoma)
• Businesses must disclose surcharges at the point of sale and on receipts
• Card networks (like Visa and Mastercard) require merchants to notify them 30 days before implementing surcharges

Pros:

• Directly covers processing costs
• Encourages customers to use lower-cost payment methods like ACH or debit cards

Cons:

• May deter credit card users
• Requires strict compliance with legal and network rules

2. Convenience Fees

What it is: Charging a flat fee for using an alternative channel of payment outside the business’s standard option (e.g., paying online instead of in person)

Key Considerations:

(Note: do not apply to card present payments)

• Convenience fees are often flat amounts rather than percentages
• They apply only in specific scenarios (e.g., online or phone payments)

Pros:

• Offsets costs for non-standard payment methods
• Under Visa’s and Mastercard’s rules, convenience fee may be charged on all forms of payment presented in the convenient channel

Cons:

• Limited applicability depending on transaction type

3. Cash Discount Programs

What it is: Offering a discount to customers who pay with cash or other low-cost methods like ACH. In this model, prices are marked up by default to include credit card fees, but cash-paying customers receive a discount equivalent to the fee amount

Pros:

• Legal in all states
• Encourages cash payments, which have no processing fees

Cons:

• May confuse customers if not explained clearly
• Could make prices appear higher compared to competitors who don’t use this model

4.  Minimum Purchase Requirements

What it is: Setting a minimum purchase amount for credit card transactions such as, $10.

Key Considerations:

• Customers who don’t meet the minimum threshold are encouraged to use cash instead
• This approach is particularly useful for small-ticket businesses like coffee shops or convenience stores

Pros:

• Reduces relative processing costs on low-value transactions
• Simple and easy to implement without additional fees

Cons:

• May inconvenience customers making small purchases. Some customers may feel frustrated to be forced to spend more money than they intended.
• Requires clear signage and communication at checkout

Choosing the Right Approach

When deciding how to pass credit card fees on to your customers, consider the following:

1. Compliance: Ensure your chosen method aligns with state laws and card network rules. For example, Oklahoma will have a change in law to permit surcharging as of November 1, 2025.
2. Transparency: Clearly communicate any added fees or discounts at checkout
3. Customer Impact/Conversion: Evaluate how these changes may affect customer satisfaction and loyalty

Yeeld’s Commitment to Helping Your Business

At Yeeld, we understand that managing credit card processing fees can be challenging. Whether you choose to absorb costs, optimize your payment methods, or pass fees on to your customers, our goal is to provide you with actionable insights and tools that align with your business needs.

If you’re ready to explore strategies that work best for your business model, contact us to book a call today for personalized support. Together, we can help you navigate the evolving landscape of payment processing and maximize your profitability.