Should you pass along swipe fees to your customers?

Here's what you need to know if you're considering adding swipe fees


Swipe fees can weigh on a business’s bottom line. But examine your business contracts and state law before passing them on to customers who pay with debit or credit cards

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Many merchants who are doing more credit and debit card transactions since the pandemic are wondering if it’s time to pass on the extra costs to their customers. While consumers tend to spend more when they use credit cards, swipe fees can add up, particularly for credit cards. If you are struggling to turn a profit, adding a surcharge (if you are allowed) may help you. However, it could also potentially annoy some customers and cause them to shop elsewhere, so it is important to consider that possibility before you make a decision.

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Merchants who wonder if they can add surcharges to credit and debit card purchases should first review the contracts they’ve signed with the card networks, such as Visa and Mastercard. That’s about as much fun as reading the dictionary, but you really need to know what these contracts say. Visa has published a guide for merchants who plan to add surcharges.

Generally speaking, you must notify the card company that you intend to add a surcharge, post notices at the point of sale and be clear about what the surcharge is. Make sure you know what your state’s rules are if you add a surcharge, as there may be additional requirements for disclosure. Your state Department of Consumer Protection is a good place to start your research.

“Most of what retailers can and cannot do involving credit and debit cards is governed by their contracts with the card companies, not by state or federal law,” wrote J. Craig Shearman, former vice president of government affairs and public relations for the National Retail Federation in an email. “So the question is not ‘Is it legal?’ but rather, ‘Do the card companies allow it?’”

Under a court settlement that went into effect in January 2013, retailers in many states are allowed to add a surcharge to credit (but not debit) card payments made by Visa and Mastercard. Currently, merchants can pass along fees in the form of a surcharge equal to what they pay to accept the card, up to 4%.

It also depends on what your state allows. While most states allow surcharges, a few do not. In such states, you are allowed to offer a discount to people who pay cash.  To make sure that consumers are aware they can save money in this way, you might want to post signs saying you are offering a discount to those who pay with cash. If you are in a shopping center where there is an ATM nearby, consider posting a sign telling customers where the cash machine is located. That may encourage some to make a withdrawal and pay you in cash.

If you add a surcharge, make sure that you include it on your receipts to customers and document it in your reports to your processor and credit card networks. Your merchant processor should be able to guide you on the proper steps to take to get set up.

One other thing to bear in mind: There are other ways to save on merchant processing fees than adding surcharges for credit card purchases or offering discounts for paying cash. As you may know, swipe fees aren’t the only type of fees merchant account providers may charge, and you’ll need to look at all of those fees to figure out which service is most economical for you.

See related: How to accept credit card payments

But, the lowest price doesn’t always mean you’ve received the best deal. If you ever have a problem with your merchant account, you will want to know that you can get a quick response, and not just a bargain-basement price. It can’t hurt, though, to ask other merchants you know which provider they use and how happy they have been with their rates. Sometimes, shopping around can pay off.

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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