Surcharging is the practice of charging an additional percentage fee to credit card transactions in order to offset payment processing costs.
Your ability to implement a surcharge primarily depends on the legal status of surcharging in your area. As of this writing, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, and Oklahoma all have laws prohibiting surcharging. You can learn more about state surcharging laws by visiting NCSL.org.
If your state does allow surcharging, the major credit card companies require that you follow certain procedures and rules before you add a surcharge to your transactions:
- You must give credit card brands a 30 day notice of your intention to surcharge. You cannot surcharge until after the 30 days have passed.
- You must notify your members of your intention to surcharge, no later than the day you implement them.
- You cannot implement a surcharge that is greater than the cost of your processing fees.
Bear in mind that, despite its legal status, surcharging is sometimes frowned upon in the general public. Implementing a surcharge may discourage your membership from paying online, which could lead to resentment and/or late payments.
As alternatives to surcharging, you may consider baking the cost of your processing fees into the cost of your membership dues. Another option is encouraging your membership to make small donations to help you cover the costs of your processing fees.
To read more about surcharging, click here.