Getting Started

How to Get Started with Surcharging

February 28th, 10:28 AM
By: Lorde Astor West

Surcharging why now...

For years merchants have had the ability to transfer the cost of accepting credit cards to consumers. This is thanks to a 2013 landmark class action settlement giving some merchants the ability to surcharge credit card customers in certain situations. The new rules allow merchants to recoup the cost of accepting credit cards up to a maximum of 4% where it is not prohibited by state law.

Not many merchants have taken advantage of this ability to surcharge, however.  Until recently, most merchants felt that the convenience of accepting credit cards and the increased revenue from consumer overspending made up for the fees levied by the Credit Card Networks.

However, the tide is turning because interchange rates have been rising upwards and the consumers have been increasing their use of rewards and super premium cards which cost merchants more to accept than standard credit and debit cards.  Merchants are no longer able to absorb these increased costs, and the market will not support raising prices as a method to pass the fees to consumers.

Because of the rise in fees, 24% in just four years, many merchant’s profits are being gobbled up leaving little room for fluctuations and in many cases leaving merchants’ balance sheets cash flow negative. All things being equal merchants are looking for ways to maximize profits while continuing to stay competitive like negotiating lower interchange fees and are turning to cost-shifting measures such as cash discounts and increasingly, surcharging. 

Getting started

When asked, overwhelmingly merchants explain that the number one reason why they do not surcharge is that they are confused about the rules. While the rules are straight forward implementation can be complex if not managed correctly or automated by sophisticated technology such RECOUP a Predictive Surcharging App from SCRATCH. No one wants to be slapped with fines that can be huge depending on the card brand. 

The Rules

The rules for surcharging are relatively clear. 

  1.  There is no surcharging Debit or Prepaid cards even if the customer chooses to run the transaction as credit. 
  2. Merchants in states where surcharging is prohibited, must not surcharge consumers. 
  3. You must disclose to networks and card holders 30 days prior to surcharging. 
  4. Merchants must disclose the surchare in very specific ways
  5. The maximum surcharge amount must be calculated based on an formula derived to determine the merchant’s average effective discount rate that has been applied to the applicable card during the period covering either the previous 30 days or 12-months, at the merchant's choice.
  6. You must observe level playing field rules - meaning if you surcharge one card brand you must surcharge them all excluding debit/prepaid
  7. You must observe rules for international transactions. 

What you should consider before implementing your program

Surcharging, while straightforward, is packed full of complexities from compliance to taxes. Before implementing surcharging be sure to understand the implications and clearly define the guidelines of your program. You must be sure to:

  1. Fully understand compliance rules
  2. Define and adopt clear guidelines as well as Acceptance Policies & Procedures
  3. Evaluate the cost of implementing your surcharge program, including the opportunity costs involved
  4. Understand the nature of the Interchange Fee system and ensure that you are doing everything in your control to face the lowest Interchange Fees possible
  5. Negotiate lower processing fees with your Merchant Service Provider
  6. Create "Best Practices" for the treatment of vendors and consumers
  7. Map out credit card acceptance logistics 
  8. PCI policies and considerations
  9. Review your program with your CPA and tax attorney to negate any tax violations and mitigate increased tax liability

This is where SCRATCH comes in

While it is not impossible to surcharge correctly, the complexities of implementing a proper and complaint surcharging program and the implications of getting it wrong hold many merchants back from recouping significant profits lost to credit card acceptance fees.

 SCRATCH Profit Recovery Apps such as RECOUP automate business rules, keep merchants compliant, and ensure PCI compliance is not comprised.

 Our platform provides transparent surcharging and a modern interface with simple inputs that mirror the merchant’s processor experience. Onboarding takes less than five minutes once RECOUP integration is complete and although there are always experienced Scratchologists standing by to help, it is easy for anyone in the merchant's organization to accomplish, including non-technical individuals such as an admin.

 SCRATCH goes much further than just providing the technology to help merchants recoup credit card acceptance fees. Our experienced team will help merchants of any size create acceptance policies, logistic strategies, and best practices that maximize surcharging success while ensuring compliance. 

If you are considering adding surcharging to your revenue optimization strategy, we can help. 



Lorde Astor West

 SCRATCH | Founder & CEO

Astor is a pioneer of the modern Web and Arizona native. Since 2003 she has been helping businesses keep what they earn by developing technologies that streamline and automate complex processes.  Astor has created an eclectic portfolio of innovative brands that include Cloud, FinTech, Data, Media, and E-commerce. To date Astor has developed a cloud rapid development framework, several platforms, and countless cloud Apps.  Astor is a mother, grandmother, and wife who loves building innovative technologies that help businesses keep what they earn, walking her rescues and promoting local businesses. 


The SCRATCH flagship surcharging app makes costly credit card fees a thing of the past
Customizable Dashboard

Control every aspect of your profit recovery

Compliant Surcharging

Everything you need to transfer the cost of accepting credit cards in one integration

Request a Demo

We can help you get rid of unnecessary fees so you can get back to being awesome!

Want to Talk to an Expert?

We'd love to set up a call to chat about how we can grow your business

Put a little more SCRATCHTM in your pocket.

SCRATCHTM is proprietary platform that is designed and developed to help businesses increase revenue and keep what they earn.

Predictive SurchargingTM and SCRATCHTM are trademarks of SCRATCH Software Inc. © 2019 All Rights Reserved

I Personal Data | Built with Papr.Cloud

Stop paying processing fees with RECOUP a compliant surcharging technology from SCRATCH a super smart Profit Recovery Platform that helps businesses keep what they earn. Start Surcharging Today and Stop paying to accept credit cards. Contact us to find out more about adding Surcharging Platform Technology.