What Is A Surcharge Fee? Is It Legal?

Whether you are a consumer or a new retail business owner, surcharges are something you might have heard of. This is the fee that you read on bills, especially on credit card bills. In fact, these are the fees imposed on credit cards only. So what is the surcharge fee?

It is usually a payment processor's fee that the merchant pays on every credit card transaction. If this fee is imposed on merchants, then why is it being added to the consumer's bill? Is it legal in the US to transfer this fee to the product beneficiary? Shouldn't the merchant be the one paying this fee? These are the common questions that come to your mind.

So, let's discover the fair answer to all of these questions and uncover the truth.

What Is The Surcharge Fee?

A surcharge is an extra charge, tax, or fee that is added to the original price of goods or services. It is often added on behalf of the government. This fee is not usually mentioned in the original price of the goods or services. Instead, it is added at the time of transaction processing.

Merchants have this surcharge on every transaction made through a credit card. If this fee is not transferred to consumers, it can accumulate a huge amount and reduce the profit margins of business owners. This fee can be a percentage of the total charged amount or a fixed price. Usually, it is 3% of the sales amount. This fee is also known as the checkout fee.

Merchants primarily collect this fee in three domains.

  1. To recover the transaction fee applied to every credit card purchased.
  2. To abide by state laws and charge customers for government taxes and fees without raising the cost of the product.
  3. To encourage the use of cash or debit cards as alternative forms of payment.
What is Surcharge fee

Example Of Surcharge

Here are some examples of this levy.

What Are The Surcharge Fees For A Credit Card?

It is the processing fee that a merchant must pay to a credit card processor or service provider for each transaction involving a credit card. Therefore, to compensate for this processing fee, a credit card surcharge is imposed on customers who wish to pay for their goods via credit card. This fee can only be applied to a credit card, not a debit card. The transfer of this cost, whether it is legal or not, varies by country, state, or region. In some countries, it may be totally prohibited, while in others, it may be allowed within certain limits.


For example, in the United States, the transfer of this cost to the customer is legal, except in Puerto Rico, Massachusetts, and Connecticut.


A credit card surcharge is also referred to as a CC surcharge. It is usually a percentage of the transaction. For example, if a customer makes a purchase of $200 with a credit card, the total amount charged to the customer can be $204. This extra $4 is the surcharge.


Merchants implementing credit card surcharges need to comply with the rules and regulations set by the credit card networks.

Surcharge Fees For A Credit Card

Why is A Surcharge Charged?

There are multiple reasons why this fee is charged, and they usually serve to cover extra costs or special circumstances related to a certain transaction or service.

What Is A Surcharge At A Restaurant?

A surcharge at a restaurant is an additional fee that the restaurant charges for various purposes. This charge is normally added to the total amount due and is usually noted on the menu. It is not the same as tipping; rather, it is billed separately and for a set amount. Common types of surcharges adopted by restaurants are as follows:

Some Guidelines For The Merchants

Take Aways

The surcharge is an additional cost that is applied to credit card transactions. Merchants apply fees in various ways. It is primarily a transaction cost fee that the payment agent has imposed on the merchant. Other than this, it might be the result of government taxes, fuel adjustments, or changes in the price of raw materials. 

The impact of surcharges on customers depends on how clearly the surcharges and their reasons are explained and how well businesses communicate and listen to customers’ concerns. Building trust and having transparent conversations with the customers can be helpful in applying for and introducing surcharges in the business.


Why am I paying a surcharge?

Although there are many different kinds of surcharges, the following are the main reasons you pay this charge.


  • As a credit card processing fee
  • Regulatory fees
  • To promote alternative payment methods.
  • Fuel cost, etc.
How do you avoid a surcharge fee?

The surcharge is typically added to the credit card payment bill. To avoid it, you can pay the bill with a debit card or in cash.

What does a surcharge mean on a bill?

It is an additional expense over the list price of goods and services. This could be an adjustment to the price of fuel, a transaction processing fee, or another kind of charge adjustment. 

William Bennett Author Of Poslinksolution

William Harrison

William is a consultant providing expertise in business management. He has successfully integrated POS systems into various businesses, demonstrating a passion for improving processes and offering financial advice. With a decade of experience in dealing with POS systems, payment gateways, and ATMs, he is also a passionate writer about finance and accounting.