Everything small business owners need to know about surcharging, convenience fees, and dual pricing in 2026.
A credit card surcharge (also called a surcharge fee or checkout fee) is an extra charge added to a transaction when a customer pays with a credit card. The surcharge covers the merchant’s cost of accepting the credit card payment — typically 1.5% to 3% of the transaction amount.
Instead of absorbing the processing fee (which ranges from 1.5% to 3.5% depending on your processor), the merchant passes that cost directly to the card-paying customer. Customers who pay with cash, debit, or check pay the standard listed price.
Example: A $100 purchase with a 3% surcharge would cost $103 when paid by credit card, or $100 when paid by cash or debit.
These terms get confused constantly. Here’s the actual difference:
A convenience fee is a charge for using an alternative payment channel — NOT the same as a surcharge.
Dual pricing (also called cash discount) is the simplest and most compliant option for most businesses:
This is what AGMS recommends for most businesses. It achieves the same goal as surcharging ($0 processing cost) with fewer restrictions. Learn more about our $30/month cash discount program →
Yes — credit card surcharging is legal in most of the United States as of 2026. However, there are important restrictions:
All other states allow surcharging, but some have specific disclosure and cap requirements.
Cash discount / dual pricing avoids most of these complications:
The surcharge amount depends on your processor and state:
Real-world impact on customers:
Most customers don’t object to small surcharges, especially when clearly disclosed. Gas stations have done this for years.
The fastest, simplest, and most compliant way to eliminate processing fees:
Setup takes 2-3 business days. No coding, no configuration, no registration paperwork.
If you specifically need surcharging (credit-only fee, not dual pricing):
AGMS can help with either approach. Contact us for guidance →
No. Under card brand rules and federal law (the Durbin Amendment), you cannot surcharge debit card transactions — even when the customer selects “credit” at the terminal.
Your terminal must be able to distinguish between credit and debit cards and only apply the surcharge to credit transactions. This is one of the technical complexities of traditional surcharging.
Cash discount / dual pricing is different: With AGMS’s dual pricing program, the service fee applies to ALL card transactions (credit and debit), because the mechanism is a discount for cash — not a surcharge on cards. This is a key legal distinction and one reason cash discount is simpler to implement.
If you want to cover the cost of ALL card types (including debit), AGMS Cash Discount is the right choice.
To understand surcharging, you need to understand what you’re paying:
Paid to the card-issuing bank (the customer’s bank). This is the largest component and is set by Visa/Mastercard. Varies by card type — rewards cards cost more than basic cards.
Paid to the card network (Visa, Mastercard, Amex). Small but unavoidable.
Paid to your payment processor. This is where you have leverage — and where AGMS saves you money.
Or skip all of it: AGMS Cash Discount — $30/month, $0 processing →
A surcharge fee is an extra charge (typically 1.5%-3%) added to a credit card transaction to cover the merchant’s processing cost. The customer pays the surcharge on top of the purchase price when using a credit card. Cash and debit payments are not surcharged.
A convenience fee is a flat charge for using a non-standard payment channel — like paying a bill by phone or online instead of by mail. It’s NOT the same as a surcharge. Most small businesses cannot legally charge a “convenience fee” on in-store transactions.
Yes, in most states. Credit card surcharging is legal in 48 states. Connecticut, Massachusetts, and Puerto Rico prohibit surcharging. Cash discount / dual pricing is legal in all 50 states.
No. You cannot surcharge debit card transactions under federal law and card brand rules. However, cash discount programs (like AGMS’s $30/month plan) can apply a service fee to all card types including debit, because the mechanism is a cash discount — not a surcharge.
The maximum surcharge is 3% or your actual cost of card acceptance, whichever is lower. The surcharge must be the same for all credit card brands.
A surcharge adds a fee only to credit card transactions and requires card brand registration. Dual pricing displays two prices — a lower cash price and a higher card price — and is legal in all 50 states with no registration needed. AGMS recommends dual pricing for simplicity and compliance.
The most effective way is a cash discount or dual pricing program. AGMS offers a $30/month plan with $0 processing fees — the service fee is passed to card-paying customers. You keep 100% of every sale.
AGMS Cash Discount Program: $30/month, $0 processing, free terminal, no contracts.
