Passing Card Processing Fees onto Customer

[Vontavius1]

The title of this thread has been edited by a Square Moderator from the original: "When is square going to offer pass to customer fees option like everyone else?"

As a long time square customer 6+ years I've seen the platform change in amazing ways but lately I haven't been feeling valued as a customer the fees continue to go up and now they want to charge for everything and they don't even allow us to pass the credit card fees to the customers. We're considering switching to Tranch which allows you to pass the fees to the customer.  As a marketing agency & business owner it's important for us to think about profitability and loyalty. I do want to note for years I've been requesting late fees we've been manually doing it I'm happy they finally added it.

[Donnie-M · Accepted solution]

@Vontavius1 

Here is the problem in a nutshell:  The rules are changing and it is illegal, legal, and grey area.  The credit card companies dictate some of the rules, and there is not a 1 size fits all approach that would work for square without running afoul of one of these rules.  The big one is, how do you differentiate a debit card versus credit card? 

"Surcharge fees are strictly limited to credit card transactions only. Even if a client wishes to run a signature debit transaction, where a debit card is processed as a credit transaction, you are still not allowed to implement a surcharge."

So the short answer is, contact your congressman to fix the issues so we can comply with a standard model.  I just want you to have all the information to direct your energy towards the right places.

https://www.lawpay.com/about/blog/credit-card-surcharge-rules/ 

"

Credit card surcharges allow merchants to pass on processing fees to customers who pay with credit cards. These surcharges are legal in most U.S. states, although some states still have restrictions or outright bans. To implement surcharges, businesses must notify credit card institutions and their clients, ensure the surcharge does not exceed the processing fee (usually capped at 3%), and list it as a separate line item on invoices. Compliance with Payment Card Industry Data Security Standards (PCI DSS) is also essential for businesses accepting credit card payments.

It is illegal to charge a surcharge on a debit card because debit card transactions do not incur the same processing fees as credit cards, and regulations are in place to protect consumers from excessive fees on these transactions."

[Donnie-M · Accepted solution]

@Vontavius1 

Here is the problem in a nutshell:  The rules are changing and it is illegal, legal, and grey area.  The credit card companies dictate some of the rules, and there is not a 1 size fits all approach that would work for square without running afoul of one of these rules.  The big one is, how do you differentiate a debit card versus credit card? 

"Surcharge fees are strictly limited to credit card transactions only. Even if a client wishes to run a signature debit transaction, where a debit card is processed as a credit transaction, you are still not allowed to implement a surcharge."

So the short answer is, contact your congressman to fix the issues so we can comply with a standard model.  I just want you to have all the information to direct your energy towards the right places.

https://www.lawpay.com/about/blog/credit-card-surcharge-rules/ 

"

Credit card surcharges allow merchants to pass on processing fees to customers who pay with credit cards. These surcharges are legal in most U.S. states, although some states still have restrictions or outright bans. To implement surcharges, businesses must notify credit card institutions and their clients, ensure the surcharge does not exceed the processing fee (usually capped at 3%), and list it as a separate line item on invoices. Compliance with Payment Card Industry Data Security Standards (PCI DSS) is also essential for businesses accepting credit card payments.

It is illegal to charge a surcharge on a debit card because debit card transactions do not incur the same processing fees as credit cards, and regulations are in place to protect consumers from excessive fees on these transactions."

[Stacelyn24]

Here's a link to add Service Charges to your customers to help with some of the fees.  You may like this option until that feature is implemented.

https://squareup.com/help/us/en/article/7625-get-started-with-service-charges

[Academic]

Are you aware Square was fined heavily by the Card Association for being non-Compliant?  I think it was around $1,000,000.00 and Square has sent a memo urging all their client base to NOT IMPLEMENT A SURCHARGE ON ANY CARD, BE IT CREDIT OR DEBIT.  I know of a local business that got hit with a $5000 fine for being non-compliant and he was using Square.  Today, he is using my services.  We protect businesses from being fined and yes, we can charge a debit card run as credit, a fee.

[Minion]

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@Academic wrote:

Are you aware Square was fined heavily by the Card Association for being non-Compliant?  I think it was around $1,000,000.00 and Square has sent a memo urging all their client base to NOT IMPLEMENT A SURCHARGE ON ANY CARD, BE IT CREDIT OR DEBIT.  I know of a local business that got hit with a $5000 fine for being non-compliant and he was using Square.  Today, he is using my services.  We protect businesses from being fined and yes, we can charge a debit card run as credit, a fee.

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Do you happen to have proof of your fines that you say Square was hit with, or are you just trying to solicit other Square users?  While Square has their own preferences on surcharging and can terminate any account if they find them to be abusing the system, VISA and MC also have strict guidelines that a business can follow to be compliment and legally pass on the fees.   So your "local" business clearly did not due their due diligence on the requirements set forth by Visa and MC to pass on those fees and hence that was why they were hit with the fine BY Visa or MC and not Square. That is on them and the risk that they took a s a business owner.  @Academic 

[JodyG7]

I googled Square being fined and found this:

April 2025

”BLOCK, the financial service firm formerly known as Square, has been hit with a $40 million dollar penalty by NYDFS for what regulators describe as serious compliance deficiencies.  Also stated that Square was hit with a $80 million dollar fine.” Maybe that is why Square doesn’t support surcharges 

[CorradoCervelli]

Hi to everyone. I need to apply credit card fees to the customers when they checkout with cards. 
Is there any way to do it.

thanks

[JK_Fiber_Art · Accepted solution]

Seems this question comes up all the time - bottom line - currently Square does not have a feature or option to support surcharges or passing the cost of doing business (credit card fees) to the customer or client.   Not sure if this policy will change down the road however, I believe there may be other credit card services or transaction processors that do have this feature.   What's the alternative -there are other methods to recoup your costs, for example - applying a Service Charge, offering Cash Discounts or simply increasing your prices.  Customers like incentives like cash discounts, not itemized extra line items.  If your items or services are priced right - you can cover your costs and still be competitive.   Note, major Credit Card Companies (Mastercard, Visa, etc.) have specific guidelines and policies concerning Surcharges - see this info from Mastercard.   Visa has similar info here.  There's also state and local regulations to consider - one has to check to see what is or is not OK. 

[Academic]

NO.  Square got fined heavily for being non-compliant and they are urging all businesses to no charge a fee on credit cards.  Square in not a Registered Acquirer; they are an aggregate, thereby they are non-compliant and cannot protect you from being fined by VISA.  Fines start at $5000 and run up to %50,000.

Good luck 

[Donnie-M]

@Academic  - There's some misinformation here about Square's processing status.

Square operates as a registered payment facilitator with proper acquiring bank partnerships (JPMorgan Chase, Wells Fargo, etc.) - they're not an "aggregate" and are fully compliant with card network requirements.

I can't find any public records supporting the claim that Square was fined $1 million by card associations. Do you have a source for this?

Square's current stance on surcharging is due to the complexity of state-by-state compliance requirements, not past fines. They've actually announced they're developing a network-compliant surcharging feature.

Let's keep the facts straight for everyone following along.

[JodyG7]

I offer a cash price and a credit price to my menu’s items.  Square charges me 2.60%, so I markup my credit price by 2.60%.  It’s a little work, but I’m transparent 

[akent]

How are you adding this? We are a small business, and the CC fees are killing us! I tried to set up a surcharge fee, but I cannot get it to actually add to a cart to charge it. 

[woodchopper1]

Thanks for raising this.  The business absorbing all the fees is simply not viable.  When issuing large invoices, it is ridiculous to have to manually add a fee, then add a discount for the customer if not using card.  I understand this is the way for square to gain fees, but does it matter if the option to pay the fee is with the business or the customer?   Please add this feature!