What’s the Difference Between a Surcharge and a Convenience Fee?

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Surcharges and convenience fees are ways for businesses to recoup some of the money they spend on processing fees. A surcharge is a fee you can add to every credit card purchase made by your customers. A convenience fee is a charge added when your customers make a purchase using a nonstandard payment type.

Both surcharges and convenience fees are regulated by credit card companies and governments, so it’s crucial to tell them apart if you plan on using one. Here’s what you need to know.

What is a surcharge?

Surcharges are regulated fees that some businesses add to every transaction where a credit card is used. Businesses can only choose to assess a surcharge to their customers when surcharges are legal in their state.

Surcharges are illegal in 11 American states and territories:1

  • California
  • Colorado
  • Connecticut
  • Florida
  • Kansas
  • Maine
  • Massachusetts
  • New York
  • Oklahoma
  • Texas
  • Puerto Rico

Both credit card companies and state governments regulate the terms of how and where surcharges may be used. So if you plan to assess a surcharge to your customers, it’s crucial that you talk to your credit card processing provider as well as seek additional legal counsel if necessary.

Most credit card companies cap the surcharge total at 4%. That said, most states that allow surcharges give businesses the right to choose the transaction percentage assessed to customers.

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What are convenience fees?

Convenience fees can only be charged when the method of payment is considered nonstandard. Movie theaters often charge convenience fees for tickets purchased online, for example, because box office ticket sales are considered standard.

The most common example of convenience fees, however, are fees assessed for nonstandard tax and tuition payments. A convenience fee may be assessed when, say, a credit card is used to pay tuition instead of cash, check, or an ACH transfer.

In fact, certain credit card companies regulate convenience fees to apply in only very specific situations. For instance, Mastercard allows convenience fees for only government, education, and tax-related payments.

Your credit card processing provider may have built-in convenience fee capabilities with their hardware and software, so you should call them before attempting to assess convenience fees. And again, be sure to get a legal opinion on whether you can assess convenience fees in your state.

Alternatives to convenience fees and surcharges

To encourage customers to use noncredit payment methods, some businesses will offer promotions or coupons to anyone who makes cash payments. The box office for a small theater may offer a discount to customers who buy tickets at the box office instepurchasing them online.

Generally, brick-and-mortar credit payments are more desirable than online payments because online transactions tend to have a higher processing fee, so encouraging customers to come into your store with promotions can help mitigate processing fees.

It may also be worth looking for a cheaper processing company. There are a lot of credit card processing companies, and almost all of them have a different pricing structure. Compare your options to see if you can find a cheaper credit card processing provider.

The takeaway

Surcharges and convenience fees are different in both application and regulation. Convenience fees can be assessed only in special circumstances, while surcharges are assessed for every single credit card transaction.

Though surcharges and convenience fees offer a way to offset the cost of processing fees, they can be a legal pain to implement properly. Certain states outright ban extra fees, while other states heavily regulate them. So don’t go it alone—consult your credit card processing provider and get legal counsel before implementing either.

One of the easiest ways to mitigate processing costs is to find a cheaper and better processing provider. We recently reviewed and ranked some of the best processing companies on the market in 2020.


At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.


  1. National Conference of State Legislatures, “Credit or Debit Card Surcharges Statutes.” Accessed December, 8, 2022.
Andrew Mosteller
Written by
Andrew Mosteller
Former Business.org staff writer Andrew Mosteller covered small business expansion, management and advertising.
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