Merchant Guide to Surcharge and Cash Discount Programs

What Is a Surcharge?

A surcharge is a small fee added on top of the listed price when a customer chooses to pay with a credit card. The fee helps the business offset credit card processing costs while following card-brand and state rules.

Key Features

Applies only to eligible credit card transactions (no debit, prepaid, or EBT)
Standard surcharge rate is capped (for example, up to 3.00%) and must be the same at all devices under the same merchant ID
Not allowed for some programs and in certain states/territories, such as Connecticut, Massachusetts, and Puerto Rico
Requires registration with the card brands and clear disclosure signs at the point of sale and on any payment interface

Key Idea

With a surcharge program, customers who use credit cards pay more than the listed price because the fee is added at checkout.

What Is a Cash Discount?

A cash discount is when the merchant gives a lower price to customers who pay with cash or debit instead of a credit card. The regular posted price is treated as the “credit price,” and a discount is given at the time of sale for cash/debit payments.

Key Features

The discount must come off the regular price; the merchant cannot add a fee and then discount it
Customers paying with cash or debit pay less than the listed credit price

Key Idea

A cash discount program rewards cash/debit users with a reduced price rather than charging extra to credit-card users.

Surcharge vs. Cash Discount: Side-by-Side Comparison

Feature	Surcharge Program	Cash Discount Program
What customers see	Regular price, plus a clearly disclosed credit card fee at checkout	Regular “credit” price, with a discount shown for cash/debit payment
Who pays more/less	Credit card customers pay more than the listed price	Cash/debit customers pay less than the credit price
Allowed transactions	Eligible credit cards only; no debit or prepaid cards	Typically offered for cash and debit payments
Compliance requirements	Card-brand registration and specific signage/disclosure rules	Must avoid adding fees and mislabeling the program as a surcharge

Surcharge vs. Cash Discount: Side-by-Side Comparison

Table 1: Surcharge Program vs. Cash Discount Program Comparison

Important Compliance and Signage Requirements

Merchants are responsible for the following to remain in compliance:

Registering for surcharge programs when required by the card brands
Posting clear, prominent signs that show either the surcharge rate or the cash discount, as required by card-brand and state laws
Following state restrictions where surcharging is limited or prohibited
Displaying disclosure information at both the point-of-sale terminal and at the point-of-entry/interface, so cardholders know that a surcharge applies when they pay by credit card
Creating signage that complies with card brand rules and any relevant state laws

Surcharge Program Details

How It Works

With a surcharge program, merchants can add a fixed fee to credit card transactions at checkout to help offset credit card processing costs[1]. The surcharge must be clearly disclosed at the point of sale and point of entry so customers know they are being charged when paying with a credit card[1].

Fiserv’s merchant surcharge program allows eligible merchants to apply surcharges at a standard rate (typically capped at 3.00%) to help cover processing expenses while maintaining compliance with card brand rules[1].

Credit Cards Only

Surcharge can only be applied to eligible credit card transactions
Surcharge cannot be applied to any debit (signature, PIN, PINless, prepaid, or other non-credit payment) transaction[1]

Surcharge by Merchant ID (MID)

Surcharge can be applied at the location level (by MID), but must apply uniformly to all devices or solutions per registered location[1]
If implemented at one location, the same surcharge rate applies to all payment devices at that location

Restrictions

Not allowed for AMEX Direct transactions[1]
Select states/territories prohibit surcharging. Merchant locations in Connecticut (CT), Massachusetts (MA), and Puerto Rico (PR) are not eligible to surcharge[1]
Cardholders whose billing address is in a prohibited state/territory cannot be surcharged, even if the transaction occurs elsewhere[1]
No additional interchange/assessments/pass-thru fees allowed beyond the disclosed surcharge[1]
Oklahoma: Surcharging is permitted with restrictions. Wholesale and Food Service Provider (FSP) clients must comply with state-specific requirements

State-Specific – Oklahoma

The State of Oklahoma surcharge rate will not exceed two percent (2%) of the total transaction amount. This change will take effect on November 1, 2025.

Registration and Compliance Requirements

Registration: Merchant must be registered with the applicable card brands for participation in the surcharge program[1]
Signage and Disclosure: Merchants are responsible for displaying clear and prominent disclosure of the surcharge rate at both the point-of-sale terminal and at the point-of-entry/interface, so cardholders know a surcharge applies when they pay by credit card[1]
State-Specific Rules: Some states may have additional requirements. You are responsible for creating your own signage that complies with surcharging requirements by card brand rules and any relevant state laws[1]
No Mislabeling: Do not misrepresent a surcharge as a fee for a specific service or interchange cost; it must be clearly identified as a surcharge[1]

References

[1] Fiserv & Card Brand Surcharge Program Guidelines. (2025). Merchant Surcharge

All information in this guide is based on current card brand rules, Fiserv surcharge program policies, and federal/state regulations regarding surcharging and cash discount programs as of January 2026. Merchants should consult with their payment processor or legal advisor for specific guidance related to their location and business operations.