Progressive Payment Solutions

Is it Illegal to Pass on Credit Card Processing Fees to the Consumer?

Find out what processing fees are the most common, what each fee means, and what credit card processing fees are allowed by each state.

You’ve experienced it countless times: trying to pay for something with a card, only to be told by the cashier that “we have a purchase minimum for credit card transactions.”

Or, the sign that greets you on the door that announces a surcharge imposed with all credit card transactions.

You might have thought to yourself, “is this legal to charge me a credit card processing fee as a consumer? Don’t they have to just accept my payment, even if I’m paying with a credit card?”

To answer that question, we’ll take a close look at the three most common credit card processing fees charged to consumers:

  • Surcharges
  • Convenience fees
  • Minimum purchase requirements

We’ll also see what each state’s laws say about processing fees, along with the credit card companies.

NOTE: If you need specific questions answered about your processing fees, click here to set up a free meeting with a Progressive Payment representative. They can also tell you about Zero-Fee Processing, which is described below.

Let’s start by looking at the most common credit card processing fee: surcharging.

P.S. You can watch the video version of this blog on YouTube.

1. Credit card surcharges

As you may have seen in our article dedicated to surcharging, this fee is from a merchant charging the consumer extra to pay for processing their credit card.

A credit card surcharge is a regulated fee that a merchant adds to every credit card purchase. These fees are regulated by both the credit card companies and state governments.

While 4% is the average surcharge fee, most states allow businesses to set their own surcharge percentage.

Now that we know what a surcharge is, we’ll next address another common processing fee consumers pay: convenience fees.

2. Convenience fees

“Convenient for who?” you might ask yourself. Basically: convenient for you, the consumer. This fee gets its name from how a merchant views a consumer who chooses a “convenient” credit card over a merchant’s standard form of payment, which is cash or check. 

A convenience fee may also be issued from a purchase made from a non-standard location, such as online instead of a physical location. Again, “convenient” for the consumer, not the merchant. 

Therein lies the difference between a surcharge and a convenience fee: surcharging is applied by a merchant to all credit card processing transactions, but convenience fees depend on a variety of factors, such as location or purchase type. 

These fees may be subject to regulation by the credit card companies. For example, Mastercard only allows education, government, or tax-related payments to include a convenience fee.

Since these fees vary with credit card companies, it’s best to talk with your payment processor to understand if your business is allowed to pass on a convenience fee.

One more common fee remains to be discussed, and that’s minimum purchase fees. Let’s see what those entail.

3. Minimum purchase requirements

As you may have guessed, this one is applied when a consumer’s total is less than a specified amount, a practice that used to be illegal but is now legal. Customers may have to pay a minimum amount or meet a certain threshold before a merchant will allow them to pay with a credit card.

A common minimum purchase threshold is $10. This is to recoup the loss a merchant has to suffer from paying the fees associated with processing a credit card.

Now that we know what the three most common credit card processing fees consumers have to pay, let’s see what states allow them.

Why cash discounting is different than surcharging

Fortunately for your business, you can use a federally-authorized system to pass on all of your credit card fees to customers: cash discounting, also known as zero-fee processing.

Instead of just handing  off processing fees to the consumer, it gives them an option to use cash instead, thus avoiding fees altogether.

If they choose not to use cash, they pay the fees via a simple line item added to their total. Thus, your business will legally eliminate paying every single processing fee

It gets better: it works for your business too. How can you be sure? Because all sorts of different types of businesses have already been using it for years. Read our blog about how cash discounting works for your business.

Ready to never pay processing fees again? Then get started by scheduling a free call with our Progressive Payment representative and start saving hundreds to thousands of dollars each month. 


As you can see, Cash Discounting (a.k.a. Zero-Fee Processing) is the only guaranteed way you can legally pass on credit card fees to the consumer in all 50 states–which is why we want you to set up a free consultation today to start using it. 

Otherwise, whether or not you can legally pass on credit card fees to the consumer depends on where you’re doing business and how you do it. The fact is, different states have different rules. Some allow it, others limit it to certain entities, while still others outright forbid them.

Just how does Cash Discounting work? Learn more by reading about it here, along with seeing real-world examples that show you how this system will work for you.

Or if you’re ready to eliminate all of your processing fees, schedule a free appointment with our PPS representative today.

Just how does Cash Discounting work? Find out for yourself by reading about it here, along with real-world examples that show you why this may be the program for you.

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