How to Offset Credit Card Processing Fees

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In today’s world, accepting credit cards is a must for businesses. However, the total can be a hard pill to swallow. As the payments space progresses, the idea of offsetting the cost of credit cards gets more and more popular. Is there any way to avoid credit card processing fees? Can a business eliminate credit card processing fees without impacting the experience of customers?

Why Should You Consider Eliminating Credit Card Processing Fees

We will start with a simple example. Your company generates around $ 5,000,000 in revenue per year. Generally speaking, about 40% of payments are made via credit card. This can vary by business type but for example’s sake, let’s use that number. That means your business receives $2,000,000 credit card payments per year. Hence, there will be a credit card processing fee on all those payments. An average credit card processor will take 3% for you to accept and get funded via that payment method. Annually, that is $60,000 that you, as the business, would pay to give your customers the ability to pay via credit card. This is not a small amount for a business to add to its profit and loss.

Surcharge Solution

The trendiest way to offset this cost is by using a surcharge. In a nutshell, this is adding a flat percentage to each transaction so your customer pays the 3% that you would have to pay to accept the card. You might be aware of the surcharge program. It is a 100% legal program that enables businesses to maximize their revenues. Yes, it will allow you to accept credit card payments without processing fees. However, the company will make money from your customers. You can consider a surcharge program and implement the following two ways. Simply put, you add 3% to the fee so you can use that to cover the cost of accepting the card.

You can integrate the surcharge solution into your business’s credit card processing system. The program can work seamlessly with different types of credit cards. Hence, you will not experience any hassle in the end. You will find these solutions easy to implement and profitable. The key benefit is that there will be no processing fee.

Common examples of a surcharge

All businesses can and should consider the use of a surcharge. There are a few types of businesses that we have seen use regularly.

  • Restaurants: When a transaction size is small, like in a restaurant, then the idea that customers may not pay the surcharge mostly goes away. Specifically, in a restaurant, where margins are small, this can really help a business grow.
  • Transactions over $5,000: With credit card processing, you may find that funds can be held as the processor goes through their risk review process. One of the most common reasons for this is a large transaction as the bank verifies the transaction and confirms the business can hold the risk in case of fraud or chargeback. As the business owner, you can phrase it as ‘we give the option to take this via credit card so you can get your rewards, but we add this fee for doing so’.

Is surcharging legal?

Yes, adding a surcharge is legal. There are a few things to keep in mind:

  • It is still not legal in a number of states: The legislation is constantly getting passed, but in Connecticut, Colorado, Kansas, and Massachusetts it is still illegal. While we expect that to be changed eventually, if you are in one of those states, keep that in mind.
  • Minimum transaction size: You can not add a surcharge to a transaction less than $10.
  • Debit cards: Surcharges can only be added to credit card transactions. Debit cards do not give customers rewards and are cheaper for businesses to accept.
  • Maximum percentage: You can not add a percentage greater than 3.5%. Businesses should not be paying more than 3.5% on their credit cards, or really even close to that. If you added a percentage greater than that, you would be making money, which is illegal.

Other Options to offeset credit card processng fees

Outside of a surcharge, the other option a business has to avoid credit card processing fees is to take payments in other ways. Of course, cash is always an option. The most common way outside of credit cards is via ACH. ACH is when your customers use their bank account directly to pay you. As a business owner, this is significantly cheaper than accepting a credit card. The only downside with this route is that the funding takes a few extra days compared to credit cards, typically 3-5 days.

The reason this is not as common as credit cards is because customers want their rewards and with this, they are not using a credit card to claim those rewards.

The Potential Downside

Yes, you can eliminate credit card processing fees. However, when it comes to your customers, they might experience frustration with another fee and not go through with the order. Studies show that the vast majority of the time, customers will still move forward. To use food delivery as an example, customers are used to a few percentages added for delivery, tip, tax, and more.

Some customers prefer credit card payments and will not consider alternatives. We will cover all the possible aspects in the following. Keep reading if you want to know how to offset credit card processing fees.

Many businesses think they do not need to bother about credit card processing fees since it costs only roughly three percent. They think about three percent only. However, they ignore the total amount. Credit card processing fees can increase your profits more than your expectations. Hence, you will have to plan for adequate steps to maximize your benefits.

How Will Zero Credit Card Processing Fees Impact Your Customers?

If you choose a surcharge solution, you will not have to pay credit card processing fees. However, your customers will have to pay for it. Hence, they will not have a great experience. They might not appreciate your payment system. If they use credit cards, they will have to pay processing fees. They might not welcome this step. If they do not use credit cards, they can make cash payments. For cash payment, they will have to keep cash always. It might not be a viable solution as most prefer to go cashless.

Another option is debit card payment. If they are comfortable with the debit card payment, they can go ahead. In brief, it might take time for you to win the trust of your customers. You will have to focus on quality to inspire your customers to consider your service regardless of the payment method. In the end, you are here to make profits and build a trustworthy environment. You can achieve both with consistency and careful planning.


When it comes to how to offset credit card processing fees, surcharging is becoming very common for a reason. Businesses can and should accept credit cards, but you are within your right to add a fee. If you decide that you may lose customers because of it, it is not something that is necessary by any means. You will have to consider all the possible opportunities to make more profits regardless of your business type.

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