According to the National Association of Credit Management, 63% of B2B merchants want a surcharging program, but only 15% have one in place. A key decision merchants face is whether to build a surcharging solution in-house or partner with a third-party provider. Each option comes with strengths and weaknesses. Buying from a provider means choosing a partner that can be trusted to build the right solution. And while building in-house may seem straightforward, it often introduces added complexity in the form of time, cost, technical resources, and ongoing maintenance.
Hidden Complexities in Building In-House
When considering building a solution, it’s important to recognize that if surcharging is not core to your business, there may be unknown complexities that can cause the cost of ownership to be much higher than expected. Some of the complexities include:
Evolving Regulations: Surcharging is currently shaped by 64 government jurisdictions across the U.S. and Canada. These laws are frequently updated, requiring updates to every surcharging solution. Non-compliance with state surcharging rules can result in fines of up to $20,000 per violation. Maintaining federal and state compliance requires investment in multi-jurisdiction legal review, along with ongoing monthly counsel support to interpret rule changes and exceptions.
Conflicting Card Network Rules: There are more than 350,000 distinct card types, each of which can affect surcharge compliance and calculation. Card network rules often conflict with one another. For example, American Express may require equal treatment across card types, while Visa and Mastercard prohibit surcharging debit cards. Managing these conflicts can require the added cost of legal counsel. Card networks can impose fines of up to $1 million for non-compliant surcharge programs.
BIN List Management: Merchants must reference BIN tables to identify which cards are eligible for surcharging. However, no single BIN table can be used as a source of truth, and they are updated multiple times a year. Continuously acquiring up-to-date BIN tables incurs additional costs. Upfront BIN file collection, testing, and reconciliation can require 6–12 months of project management and engineering, along with the operational systems needed to continuously reconcile (BIN tables can conflict with each other) and interpret the data.
Deployment and Maintenance: Successful surcharge program deployment requires every team involved to understand the compliance requirements and communicate them clearly and consistently to customers. This is a hidden, and crucial component. Without it, essential parts of your business can misunderstand the value of the program, frequently waiving surcharges or avoiding the program entirely. This hurts your fee recovery potential.
When a Managed Program Wins
The primary benefit of an in-house solution is compatibility with existing systems. However, the right partner can embed surcharging directly into the integrated payments stack already in place, removing the need to choose between compatibility and compliance expertise.
InterPayments helps merchants implement compliant surcharge programs that work seamlessly within existing payment ecosystems, backed by indemnification. The InterPayments managed surcharge solution is built for seamless deployment, and is already integrated with many popular ERPs including Netsuite, Salesforce, and Microsoft Dynamics. By combining compliance expertise with flexible integrations, InterPayments helps organizations modernize payment operations while navigating the complexities of surcharge management.
Real-World Results
A medical distributor was looking to recover rising card fees within its complex ERP/payment environment. The company initially explored building a surcharging solution internally. However, doing so required significant legal, engineering, and operational investment to stay up-to-date with evolving compliance requirements. The company would have needed to manage BIN data accuracy, debit and Amex rule conflicts, disclosures, and ongoing audit readiness.
As the industry’s leading Managed Surcharge Provider, InterPayments delivered a fully compliant surcharging solution that integrated with the company’s existing payment stack, including its payment portal, payment gateway, and ERP environment.
The results:
- Over $47 million in estimated annual savings
- 86% estimated reduction in fees
- Immediate ROI
Making the Right Choice for You
Merchants evaluating whether to build or buy a surcharge solution should ask the following questions before making a decision:
- If I’m building in-house, is my team able to handle the ongoing work required to stay compliant?
- What is the cost to maintain an in-house surcharging solution, keeping in mind compliance, BIN list updates, and ongoing maintenance?
- Does the third-party solution integrate with the payment technologies I already use?
- How does the third-party solution protect against non-compliance risk?
For any merchant already running on an integrated payments stack, the path to compliant surcharging does not require starting over. The right Managed Surcharge Provider embeds directly into the ERP and billing system already in place, handling the compliance calculations, customer notice requirements, and indemnification. The result is a surcharging program that extends what integrated payments already does, without disrupting it.
Contact us to see how compliant processing fee recovery can be built into your payments stack.