Small Business Guide
Surcharge vs cash discount
Tired of watching processing fees eat your margin? Two programs let you pass that cost along. They sound similar but feel very different to your customer. Here is the plain version of each, and how to pick.
Surcharge
You add a fee when someone pays by credit card. The listed price stays the same, and card payers pay a little more to cover the processing cost. Cash and debit are not surcharged. It is the most direct way to offset fees, but customers see an added charge, so signage and a clean setup matter.
Cash discount (dual pricing)
Your listed price already includes the card cost, and anyone who pays cash gets a discount. Same math, friendlier framing. People tend to like getting a discount more than paying a fee, even when the dollar amount is the same.
The rules to know
- Surcharging is allowed in most states, but a few restrict or ban it, and the rules change. Cash discount is more broadly accepted.
- The card networks set their own requirements: caps on the surcharge, clear signage at the door and register, and registering the program before you start.
- Debit cards are generally not surchargeable, even when run as credit.
- Your equipment has to apply it correctly and print it clearly on the receipt, or the program will not hold up.
This is general information, not legal advice. Confirm the rules for your state before you turn either program on.
Common questions
What is a credit card surcharge?
A surcharge is an extra fee added to a sale when the customer pays by credit card, to offset your processing cost. The card price is higher than the listed price; cash and debit are not surcharged.
What is a cash discount (dual pricing)?
With cash discount, your listed price already includes the card cost, and customers who pay cash get a discount off that price. Same idea from the other direction: the card price is the standard price, and cash is cheaper.
What is the difference between surcharge and cash discount?
Surcharge adds a fee on top for card payers. Cash discount builds the cost into the listed price and rewards cash payers with a lower price. Customers often react better to a discount than to a surcharge, even when the numbers are similar.
Is surcharging legal?
Surcharging is allowed in most of the country but the rules vary by state, and the card networks have their own requirements (caps, signage, and registering the program). Cash discount is more broadly accepted. This is general information, not legal advice. Check your state and confirm the setup before you turn it on.
Which one should I use?
It depends on your margins, your customers, and your state. Many owners prefer cash discount because a "discount" lands better than a "fee." Norvet helps you set up either one correctly, with compliant signage and equipment, so it holds up.
Want to stop eating the fees?
We will help you decide between surcharge and cash discount for your business and set it up the right way, with compliant signage and equipment. Free, no obligation.
Related: how processing fees work.