Frequently Asked Questions
Surcharging is legal. But like sales taxes, the rules are tricky unless you devote your whole life to them. Fortunately for you, we do.
In addition, we put our money where our mouth is. We guarantee your surcharge compliance, which means we're 100% aligned with your interests. We're incentivized to get them right 24/7/365.
Here are some common questions our customers asked before entrusting InterPayments' surcharge technology.
How is InterPayments’ surcharging different?
First, InterPayments is a Data-as-a-Service technology solution – not a payment gateway, ISO, or processor. In fact, we work with many of them today and can work with all of them. You can surcharge without a rip-and-replace of your current payments providers.
Second, guaranteed compliance. We commit to it in our contracts. Our surcharge service works just like your sales tax vendor to maximize your credit card fee recoveries. InterPayments dynamically calculates the compliant surcharge amount on each of the 350,000 card types outstanding real-time, before card authorization.
Third, surcharge anywhere you accept credit cards using your existing payment providers. You're not stuck surcharging a single fixed rate. Or one payment device. Our API installs anywhere you accept payments: virtual terminals, receivable automation platforms, ERPs, customer portals, ecommerce shopping carts, etc. InterPayments consolidates your surcharging across multiple platforms using your existing payments technology.
Fourth, tailor surcharges the way you want – at the click of a button. Surcharging is not a one-size-fits-all program. InterPayments offers you complete control over where, when, how much, and who you surcharge. Choose which orders, product lines, or transactions to surcharge.
What are the surcharging rules?
Here are today's major rules across all 50 states, the federal government, and the card networks/payment processors.
- No customer surcharge surprises: customers must know you may impose a surcharge before they choose their payment method.
- Surcharge disclosure: the surcharge amount must appear as a separate line item on payment confirmation.
- Alternative no-surcharge payment options: customer must have at least one payment option that does not carry a surcharge.
- State surcharge restrictions: as of December 2021, 3 states prohibit surcharges (CT, ME, CO) and the other 47 states have differentiated rules about how merchants may surcharge.
- Maximum 4% surcharge amount: the surcharge amount may never exceed 4% of the transaction amount.
- No profit rule: you may not profit from a surcharge; i.e., the surcharge may never exceed your cost of accepting a card.
- Card type restrictions: certain card networks prohibit surcharges on certain card types (credit, debit, prepaid, etc.).
- Treat all card brands equally: you must surcharge all card brands in the same manner.
- 30 day surcharge registration: certain card brands and acquirers require registering your surcharge program at least 30 days before your first surcharge.
- 60 day surcharge notice: certain card brands and acquirers require notifying subscription/recurring billing customers of an impending surcharge 60 days prior to the first surcharge.
Like sales taxes, there are many nuances and details to these major rules and they continue to evolve. Sleep well knowing InterPayments automates and guarantees your 24/7 compliance, even as rules evolve over time.
can be surcharged?
Credit cards, Purchase Cards (P Cards), Virtual Cards (V Cards), and Single Use Account (SUA) Cards can be surcharged across all card brands.
Certain card brands prohibit Debit and Prepaid Cards surcharges.
Which credit card processing fees
does InterPayments recover?
100% of any PER TRANSACTION FEES up to the maximum of 4.0% total:
- Interchange fees: to card issuing banks
- Scheme fees (aka Network or Assessment fees): to card networks
- Acquirer markups: to acquirers and/or merchant banks
- Payment Processing fees: to the payment processor
- Gateway fees: to the payment gateway
- Authentication fees: if not included in the base processing per transaction fees
Can I surcharge at Level 2/3 transaction rates?
Yes, you can surcharge at Level 2/3 transaction rates. This is critical for B2B merchants on interchange plus processing terms. You are prohibited from profiting from a surcharge and so your surcharge amount must reflect Level 2/3 rates to remain compliant.
InterPayments enables Level 2/3 surcharges for B2B merchants. Many B2B merchants apply Level 2/3 transactions in some payment channels or MIDs and not others. Our technology configures these appropriately to ensure you're compliant and your customers aren't assessed too high a surcharge.
Can I surcharge specific customers and not others?
What about surcharging different order values?
Yes, you can surcharge specific customers and not others. Credit card fees is a cost of accepting a transaction, similar to shipping charges or sales tax. However, you cannot discriminate amongst customers based upon the credit card type they are using or based upon other federal/state laws that prohibit customer discrimination. InterPayments guarantees your surcharge compliance.
Yes, you can surcharge different order values. With InterPayments, you can set surcharge amounts by order value yourself at the click of a button.
Can I surcharge some payment channels and not others?
Yes, you can surcharge some payment channels and not others. Most merchants accept payments in multiple channels: web, phone via service rep, IVR, etc. but don't want to surcharge them all.
InterPayments enables the most optimal surcharge program for your business. We customize your entire surcharge program wherever and however you accept payments.
What’s the difference
between a Surcharge, Convenience Fee, Service Fee, and Cash Discounting?
A Surcharge is only applied to offset high cost credit cards fees. It can be applied to all channels of sales (phone payments, e-commerce, physical in person, etc.). The surcharge can never exceed the merchant's cost of accepting a credit card. State governments and the card brands govern surcharging rules.
A Convenience Fee can be applied to any card type, but only in narrow circumstances. It's a single fixed $ or % fee to use a more “convenient” way to pay via a card. It can only be applied to card-not-present card payments, if that payment channel is a non-standard payment method. There must be one channel of sales where a Convenience Fee is not applied. Card brands govern convenience fee rules.
A Service Fee is only allowed for specific non-profit entities, such as government and education. It's a single fixed $ of % on any card payment method. Card brands govern convenience fee rules.
Cash Discounting allows merchants to advertise a higher "standard" credit card price across all products, but discount the checkout price for non-credit card payment methods (such as cash or debit cards). Federal and state governments plus the card brands govern cash discounting rules.
Surcharge – a B2B invoice payment. The merchant can pass along the credit card processing fees across all of their payment channels: electronic invoice payments, telephone payments, and physical in store payments.
Cash Discount – gas stations. Gas stations post two gasoline prices - a credit card price and a lower "cash" price.
Do I need to tell anyone
that I’m surcharging?
Yes. InterPayments handles this for you as part of our service. One major surcharge rule requires customers to have ample awareness of the surcharge; InterPayments ensures they do.
First (required), InterPayments notifies the card brand networks (that require notice) and your merchant acquirer 30 days before your first surcharge.
Second (required), per state and card brand regulations, InterPayments ensures your customers are notified of the surcharge prior to authorizing every credit card transaction.
Third (recommended), InterPayments provides you with a customer notice process and letter to notify customers prior to surcharging. It's baked into our onboarding process and service.
Is the surcharge
a separate transaction?
No. The surcharge must be included with the transaction per card brand rules.
How do you determine if a card
can be surcharged and by how much?
First, you must determine whether the card type can be surcharged. Only credit cards can be surcharged. InterPayments automates this decision-making in real-time, before the transaction is authorized.
Second, you must determine whether the cardholder's location can be surcharged. For physical in person payments (aka called card present), the cardholder's location is based upon the physical location where the card is used, such as a merchant's store. For online or phone payments (aka card-not-present), the cardholder's billing zip code determines whether the card can be surcharged. A few states still prohibit surcharging and most states have specific surcharging rules to consider.
Third, if the transaction can be surcharged, you must ensure your surcharge amount does not exceed your cost of acceptance or 4% (and possibly a lower rate in other states).
InterPayments automates and guarantees the entire surcharge decision-making in real-time, before the transaction is authorized. Anywhere you accept payments.
Can I surcharge recurring payments?
Yes, you can surcharge recurring payments. Like any other payment, it requires your customer to agree to the surcharge at the first payment you decide to assess a surcharge.
InterPayments enables recurring payment surcharging. There are nuances InterPayments helps you consider, such as how to compliantly notify the customer (especially when a card on file changes).
What happens to the surcharge
if I refund a transaction?
Refunds apply to the surcharge amounts, just like with sales taxes. If you refund an entire order amount, you also refund the entire surcharge amount. If you issue a partial refund, you would issue a partial refund of the surcharge amount (on a pro-rated basis). InterPayments provides a refund API that you calculate the refund amount for your automatically.