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What is a Credit Card Surcharge?

Tricia Christensen
Updated May 16, 2024
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A credit card surcharge could refer to an extra fee charged for purchase, usually at point of purchase with the credit card or any other paying mechanism a credit company might offer, such as checks. It might also refer to charges assessed to receive a credit card payment, as is common in any sales establishment or with a vendor of any sort. There can be some strict rules governing what credit card surcharge types are allowable, and under what circumstances credit cards are accepted.

In many places, credit companies do not allow vendors to assess a credit card surcharge to purchases made by consumers. This is true of companies like Visa® and Master Card®. Some states in the US don’t allow surcharges at all on any cards, and with companies like American Express® or Discover, these fees can’t be passed on to a consumer if a vendor accepts Visa® and Master Card®, too. What is permissible is for vendors to offer a lower price for people who pay with cash or checks, called a cash discount, and offers like these may be found in all states. It’s also the case that in many foreign countries, it’s legal to assess an additional percentage to a purchase as an exchange rate charge.

A lot of times if vendors can assess a credit card surcharge, they are doing so to make up for the fact that they have to pay a percentage of the money they collect by credit to each credit card company. Essentially, they’re trying to recoup their losses. Even small vendors find themselves in this scenario, and there are few places where this occurs more obviously than companies like PayPal®, which is used by many small vendors or service providers as a bank. Companies like PayPal® allow vendors to accept credit cards, but they can charge 3% or more for each transaction, which can significantly reduce amount made. In this case PayPal ® keeps the money it collects, though some of it may need to be returned to credit card companies.

Other times, credit card companies benefit by assessing a fee. This is common when people withdraw cash from their credit account or if they use things like checks for purchase that draw money from available credit. Fees on these amounts may vary, but are usually added onto a credit bill and become money owed.

There are a variety of fees for credit cards that don’t really represent a credit card surcharge. These include fees for late payment, fees for exceeding balance, and many others. The difference between these and surcharges is that the credit card surcharge is typically an amount added to total purchase, instead of being separated out from the purchase and added to a bill at a later point.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen , Writer
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.

Discussion Comments

By bear78 — On Apr 10, 2011

There was a piece about excessive surcharges in the paper the other day. It said that many companies, especially airlines are using credit card surcharges to make more profit.

I thought that banks had a clear description on how much surcharge businesses can apply, but apparently there is no such restriction. Businesses are overcharging credit card users and not even informing them.

I think these surcharges were not introduced to penalize credit card users. I'm sure it's intended to improve business. Unfortunately, it has turned out to be a burden on buyers. I just hope that restrictions will be placed on credit card surcharges as soon as possible.

Maybe businesses should be required to report the original cost of their products and services as well as the surcharge that was charged. And if the surcharge is above a certain percentage of the original cost, that business should be penalized somehow. I think this would solve the problem.

By turquoise — On Apr 08, 2011

When I went abroad for my best friend's destination wedding, it was the first time that I saw discounts being offered if you paid with cash. I had never seen it in the States.

It worked out great for us because we were shopping with cash and bought so many things for cheaper. The discounts were really good. I bought a wall ornament for my mom there for $40. It would have been $55 if I had paid with a credit card.

For more expensive things like a dishwasher, the discounts were even greater if you paid with cash. I also saw that there were a lot of credit card payment plans available in stores too. So people could buy something and make monthly payments over a period of six months or a year, for example. The vendors did not prefer customers to do this though. Maybe they had to pay a greater surcharge for those credit card transactions, I don't know.

I think this is unfair on vendors if they have to pay such significant surcharges to banks. Credit card have become the most common way to shop now. I wish banks would lower or eliminate these surcharges. It would help both vendors and customers if they did.

By discographer — On Apr 07, 2011

Is the credit card surcharge why some stores and restaurants have a minimum charge policy when you pay with a credit card? I haven't seen this in large stores, but especially in small family run businesses and cafes.

I guess since they have to pay a surcharge to the credit card company, they have to reflect this on the customers somehow or they will lose money.

Tricia Christensen

Tricia Christensen


With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia...
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