Surcharging Or Convenience Fees: What’s The Best Way To Reduce Processing Fees?

Merchants and retailers are often confused about their options for reducing fees and improving margins:

  1. What is the difference between Cash Discounting and Surcharging?
  2. Can I charge a flat fee or a percentage of the sale?
  3. Can I charge a different amount for American Express?
  4. Is it legal in my state?

While Convenience Fees and Surcharging are similar in name, they are very different in practice.


Example: 3% fee is added to your restaurant bill for paying by Visa Credit card.

Surcharging, also known as “Cash Discounting” by some, is a fee charged to a customer to cover the costs of a credit card transaction. Some credit card processors promote this program as a way to “eliminate 90% of your card fees.” However, there are often two major issues:

  1. The name “Cash Discounting” and the practice of marking up a sale after the total has been shown can upset customers.
  2. Many processors do not follow the highly regulated rules surrounding surcharging. For example, Visa recently lowered their maximum surcharge to 3%, which applies to all card However, many retailers still charge more than 4% or even higher fees.

Our Recommendation: Utilize this feature for online bill pay for larger transactions (i.e., Commercial Fuels)


Convenience Fee

Example: $2 Fee is added to an ACH for the convenience of paying online rather than in person.

A convenience fee is a flat fee added to a transaction for the “convenience” of paying by a non-standard method. Convenience fees can only be charged when another method is available without such a fee. They cannot be used for recurring payments and cannot be charged for face-to-face transactions. They can be utilized in all 50 states, and you can apply different fees to different methods (debit, credit, ACH).

Our Recommendation: Use this feature for bill pay with customers who habitually pay in person by check, cash, or credit card and are frequently late! (Also known as people who say, “The check is in the mail!”)

Looking to incorporate faster online payments or fee-saving features?

Email me today:

KC Cook

Founder & President


p: 919.215.7908



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