How To Save On Payment Processing Fees Without Getting Fined or Terminated by Visa
Have you ever gotten a call from a merchant processor claiming to offer free credit card processing? How about a free POS system?
Yeah, we often have customers asking us about how payment providers can offer free credit card processing, and sometimes free POS equipment, when they’re already paying thousands of dollars per month for these services.
The truth is, payment processing is only free to the business owner when they pass the fees directly to the customer.
Here’s what most business owners don’t know: Visa and Mastercard rules prohibit charging that fee on a debit card, even when a customer runs it as credit. So business owners who want to pass along their processing costs have to do it through a compliant method — raising prices, cash-discounting, surcharging, or dual pricing.
Skip that step, or get it wrong, and the fines add up fast. Visa can assess an immediate $1,000 fine on first notice, and non-compliance penalties escalate well beyond that the longer a violation goes uncorrected — on top of the risk of losing your ability to accept cards altogether.
With most consumers preferring to pay digitally, losing the ability to accept credit and debit cards could be detrimental to a business — so it’s worth taking the time to pass along credit card costs the right way.
If you want to save money on payment processing by passing fees to customers, those are your options:
- Increase Prices: Raising your prices to account for payment processing fees.
- Cash-Discounting: Offering a discount for customers paying with cash or ACH.
- Surcharging: Charging customers a percentage fee when paying with a credit card.
- Dual Pricing: Giving customers a ‘card price’ and a ‘cash price’ at checkout.
| Method | How It Works | Fee Cap | Applies To |
| Increase Prices | Build the cost into your everyday pricing | No cap — it’s your price | All payment types |
| Cash Discounting | Discount off the standard price for cash, check, or ACH payers | No official cap — set by the merchant (2–4% is common) | Cash, check, ACH |
| Surcharging | Add a fee only on credit card transactions | 3% (Visa) / 4% (Mastercard) — or your cost of acceptance if lower | Credit cards only — never debit or prepaid |
| Dual Pricing | List a cash price and a card price side-by-side on every item | No official cap — it’s a discount, not a fee | All payment types — not limited to credit cards |
Before switching on a surcharge program, you’re required to notify your acquirer at least 30 days in advance — Mastercard also requires notifying Mastercard directly. Dual pricing isn’t a registered card-brand program the way surcharging is, so this notice requirement doesn’t apply to it.
Increase Prices
Build the cost of accepting cards into your everyday pricing, so every customer covers a share of it, no matter how they pay.
The easiest way to cover the cost of accepting credit cards is by factoring it into the cost of your product or service, just like you do with every other business expense. This, of course, requires looking at what it costs to deliver your product or service and making sure you’re charging what you need to charge to achieve your target profitability. Adjusting your prices, and perhaps your unique selling proposition, is probably something you should consider quarterly to make sure you are achieving the results you want to see in your business. We’d recommend doing this even if you choose not to use cash-discounting, surcharging, or dual pricing as a method for offsetting your credit card processing costs. If you’d like help adjusting your unique selling proposition, in conjunction with reviewing your payment processing costs, reach out to us at PaySuite for a complimentary profitability assessment.
Cash Discounting
Offer a discount — there’s no official cap the way there is with surcharging, though 2–4% is common — to customers who pay with cash, check, or ACH instead of a card.
Cash Discounting is an incentive you can offer customers for paying with cash. If you’re a business that operates by only sending out invoices, you may want to consider using the ACH or Pay by Bank method, which would allow your customers to pay with their routing and account number, so you don’t pay credit or debit card fees. This isn’t ideal if you’re a restaurant or retail business, as most people don’t walk around with their bank account number handy for making payments, and these payments are rarely as fast as credit card payments. Cash payments aren’t as common as credit and debit card payments, but depending on your ideal customer, they may appreciate receiving a discount for paying with cash — Visa and Mastercard don’t set an official cap on cash discounts the way they do with surcharging, though most merchants land around 2–4%. The downside to encouraging cash is that data shows consumers spend less on average when paying with cash versus credit cards, so training your customers to use cash as a payment method may not be as beneficial for the long term.
Surcharging
Add a fee — capped at 3% by Visa (4% by Mastercard), or your actual cost of acceptance if that’s lower — and only ever on credit card transactions, never debit.
Surcharging is one of the most common methods businesses use when attempting to offset credit card processing fees. Typically, businesses add a 3% fee whenever someone is paying for a product or service with a credit card. For example, you walk into a restaurant and purchase a hamburger for $10. When you decide to pay with your credit card, you’re charged an additional 30 cents as a separate line item, bringing your total to $10.30. This is only compliant if you apply the fee to credit cards only — running a surcharge on a debit card breaks Visa’s and Mastercard’s rules and can trigger fines starting at $1,000, with penalties escalating the longer it goes uncorrected.
Dual Pricing
List a cash price and a card price side-by-side on every item. Because it’s structured as a discount rather than a fee, it isn’t subject to Visa’s or Mastercard’s surcharge cap, and — unlike surcharging — the card price can apply to debit as well as credit.
Dual Pricing is another common pricing method that businesses are using to offset their credit card fees. This is when you review the prices of a product at a restaurant or store, and you see a ‘cash price’ and a slightly higher ‘card price’ side by side. The most common example we have is the gas station, where they charge you more per gallon if you’re paying with a debit or credit card versus paying with cash. For this to be compliant — and not treated as ‘surcharging’ — you must list a ‘cash price’ and a ‘card price’ on every item in your establishment so it’s fully disclosed prior to checkout. If it isn’t properly disclosed, you risk being fined by Visa for running a non-compliant program, with fines starting at $1,000 and escalating the longer it goes uncorrected, just like surcharging.
Conclusion
There are several methods you can use to offset your credit card processing fees, and it’s important to make sure you’re operating within the guidelines so your business isn’t negatively impacted by non-compliance fees, your account being terminated, or by customers leaving your business with a negative experience due to confusion about your pricing or fees at checkout. At the end of the day, you want to make sure the program you choose benefits your business, not just the payment processor that encouraged you to implement a program because it’s the most lucrative for them.
At PaySuite, we support all programs that help business owners offset their credit and debit card processing costs and work to help business owners implement systems and processes that will multiply profitability beyond the passing of fees to customers. If you’d like to discuss ways you can reduce costs and implement better systems for driving profit, reach out to us to schedule a conversation. You can also review Visa’s latest publications on surcharging rules and other insights on their website here.
Disclaimer: Payment security requirements and surcharging laws vary by state and change frequently. This post reflects general information at the time of publication and isn’t legal or compliance advice — check with your processor or a qualified attorney before implementing surcharge programs in your state.
