How do you calculate a credit card surcharge?
Add the per-payment fee to the invoice, divide by one minus the card rate, then subtract the invoice. The processor charges its rate on the surcharge too, so adding 3% recovers less than 3%.
Surcharge that nets the invoice = (invoice + per-payment fee) ÷ (1 − card rate) − invoice
Example: a 1,000 dollar invoice at 2.9% plus 30 cents.
- Full net-up: 1,000.30 ÷ 0.971 − 1,000 = 30.18 dollars (3.02%)
- Your cost on the invoice: 29.00 + 0.30 = 29.30 dollars (2.93%)
- Surcharge at your cost: the customer pays 1,029.30 and you keep 999.15
A surcharge held to your cost always leaves a small gap, because the fee on the surcharge is still yours.
What is the maximum credit card surcharge?
Visa caps a US surcharge at the lower of your merchant discount rate for the card or 3%. Visa’s Q&A also sets these rules:
- Credit cards only: debit and prepaid cards can’t be surcharged, even when run as credit
- Notify your acquirer at least 30 days before you start
- Post notices at the point of entry and the point of sale
- Show the surcharge as its own line on every receipt
State rules vary and the sources disagree on some states. Pick your state in the tool to see what Visa, QuickBooks and Square each list for it.
How do you pass on credit card fees to customers in QuickBooks Online?
Turn on surcharging in QuickBooks Payments: Settings > Account and settings > Sales > Invoice payments > Edit, then Percentage based surcharging. Choose credit card, ACH bank payments or both, accept the terms and save.
- QuickBooks sets the surcharge rate; you can’t type your own
- Surcharged invoices turn off debit, prepaid, Apple Pay, American Express and Discover
- You can turn it off on one invoice from Manage > Payment methods
How do you pass on credit card fees in Square or Stripe?
In Square, go to Settings > Account & Settings > Payments > Credit card surcharges and create one. Square caps it at 3% and applies it to credit cards on its point of sale apps and Square Invoices, but not on Virtual Terminal, Square Kiosk or Square website sales.
Stripe’s automatic surcharge on Checkout is in private preview, US only, and runs through a provider app (Yeeld or InterPayments). Either way, Stripe’s docs say the surcharge must stay within card network limits and your cost of acceptance.
Is ACH cheaper than card for large invoices?
Usually, yes: ACH fees are a lower percentage, and some processors cap them per payment. The saving is the card fee minus the ACH fee on each payment.
Example: a 4,500 dollar invoice on Stripe’s standard rates costs 130.80 dollars by card and 5 dollars by ACH Direct Debit, which is capped at 5 dollars. Twelve of those a month save 1,509.60 dollars.
The tool works this out for your processor and your own count of large invoices.
Questions
Can I add a surcharge to debit card payments?
No. Visa says debit and prepaid cards cannot be surcharged, even when the customer picks “credit” at the terminal.
Is a cash discount the same as a surcharge?
No. Visa allows a discount for paying another way, but a card fee added at checkout may be treated as a surcharge under its rules.
Does it matter which card brands I surcharge?
Yes. Visa lets you surcharge all Visa credit cards or certain Visa credit products, but not both. It also expects Visa to be surcharged on the same terms as an equal or higher cost brand that limits surcharging.
Is anything I type sent anywhere?
No. The math runs in your browser and nothing is uploaded. Close the tab and it is gone.
Sources
- U.S. Merchant Surcharge Q and A, Visa,
- Add a surcharge to customer invoice payments with QuickBooks Payments, Intuit QuickBooks,
- Set up and manage credit card surcharges, Square Support Center,
- Collect surcharges, Stripe Docs,
- Stripe fees, Stripe,
