Credit card processing fees are one of the largest and most persistent operating costs for merchants. For years, regulations prevented most U.S. businesses from passing those fees on to customers. That’s changing — state by state, court case by court case — and 2025 and 2026 have brought some of the most significant shifts in surcharge law in over a decade.

For merchants running complex retail or ERP environments — NetSuite, Dynamics 365, Shopify POS, NCR, Aptos, Lightspeed, and dozens of others — the bigger challenge isn’t understanding the regulation. It’s implementing surcharging across a platform stack without triggering a development project. That’s exactly the problem SensePass solves: enabling compliant credit card surcharge implementation for POS and ERP platforms at the gateway level, with no developer involvement, no platform modification, and no downtime.

This article covers both: the regulatory landscape you need to understand in 2026, and the practical implementation path.

What Is a Credit Card Surcharge?

A credit card surcharge is an additional fee — typically expressed as a percentage of the transaction — added to a customer’s bill specifically when they choose to pay by credit card. It is distinct from a cash discount (where all customers pay the higher price and card-paying customers receive no reduction) and from a convenience fee (which applies to specific payment channels, not payment methods).

The purpose is straightforward: credit card acceptance costs merchants money. Interchange fees, assessment fees, and processor margins typically add up to 1.5%–3.5% per transaction. Surcharging allows merchants to recover some or all of that cost from the customers who generate it.

Critical rule: Surcharges apply only to credit cards. Debit cards — including debit cards run as credit — cannot be surcharged under federal law (the Durbin Amendment). This is not a state rule; it is a nationwide prohibition.

The Regulatory Landscape in 2026: What’s Changed

Surcharge law in the United States is a patchwork of state statutes, federal court rulings, and card network rules — and it has been moving rapidly. Here is the current picture as of mid-2026.

States Where Surcharging Is Currently Prohibited

Connecticut and Massachusetts prohibit credit card surcharges under state law. Maine also prohibits surcharging, though offering a cash discount is permitted in both Maine and these states. California’s Senate Bill 478, effective July 1, 2024, prohibits surcharging under state consumer protection law — though as of 2026, surcharging in California is considered legal following federal court rulings that found the ban violated First Amendment protections on pricing communication; merchants in California should verify current legal counsel guidance before implementing.

States Where Laws Changed in 2025–2026

The pace of change is accelerating:

• Kansas repealed its surcharge ban effective January 1, 2025. Merchants must incorporate the credit card fee into the listed price to comply with the new framework.
• Oklahoma’s surcharge ban was found unconstitutional by federal courts, with card brand onboarding for surcharge accounts expected in early to mid-2026.
• Illinois introduced a cap of 1% or the actual processing fee, and starting July 2026 will also prohibit charging interchange fees on the tax and gratuity portions of a transaction if the acquiring bank is notified during authorization or settlement.
• North Carolina currently allows surcharging, but House Bill 13 (introduced in 2025) could impose new restrictions.

Card Network Rules That Apply Everywhere

State law sets the floor, but card network rules apply in every state where surcharging is legal. Key requirements:

• Merchants must notify their payment processor at least 30 days before implementing a surcharge. The processor then notifies the card networks.
• The maximum surcharge cannot exceed the merchant’s actual cost of acceptance or 4% of the transaction amount for Mastercard (3% for Visa), whichever is lower.
• Surcharges must be disclosed clearly at the point of entry and point of sale — both in-store and online.
• Surcharges cannot exceed the merchant’s actual cost of accepting the card. Profiting from a surcharge is a card network violation.
• Surcharging on debit cards is prohibited nationwide under the Durbin Amendment — this is not state-specific.

Quick State Reference

Status	States
Prohibited	Connecticut, Maine, Massachusetts (California: contested — verify locally)
Capped below network max	Colorado (2%), Illinois (1% or cost)
Permitted with disclosure	All remaining states, subject to card network rules
Recently changed	Kansas (ban repealed Jan 2025), Oklahoma (ban overturned 2025–2026)

Note: Surcharge law is one of the fastest-moving areas of payment regulation. Always confirm your state’s current status with legal counsel before implementing. This table reflects the landscape as of mid-2026.

The Implementation Problem: Why Surcharging Is Hard on Complex Platforms

Understanding the rules is the easy part. For merchants running established retail or ERP technology, implementing surcharging correctly is where it gets difficult.

Most POS and ERP platforms were not built with surcharging as a first-class feature. Adding it typically requires one or more of the following:

A development engagement. Many platforms require a developer to modify checkout logic, add surcharge line items to transaction records, and ensure the fee flows correctly into the GL or reporting layer. This takes time, costs money, and creates a maintenance dependency every time the platform updates.

Platform-level configuration. Some systems support surcharging but require configuration within the platform itself — not at the gateway level. This often means separate setups per location, per channel, or per payment method, with inconsistent disclosure handling across touchpoints.

Processor coordination. Enabling surcharging requires your processor to flag your merchant account as surcharge-eligible. If your platform is tightly coupled to a specific processor, any change to that relationship can affect your surcharge configuration.

Multi-channel inconsistency. Businesses operating across in-store, e-commerce, phone, and ERP-driven invoice payments often end up with surcharging enabled in some channels and not others — creating compliance risk and customer experience inconsistency.

The underlying problem is that surcharging logic lives in the wrong place. When it’s embedded in the POS, it’s fragile. When it’s configured at the platform level, it’s siloed. The correct place for surcharging logic is the payment gateway — a layer that sits between every platform and the processor, and where the rule can be applied once, consistently, across all channels.

How SensePass Enables Credit Card Surcharge Implementation Across Any Platform

SensePass is a payment orchestration gateway that connects to over 50 platforms — POS systems, ERPs, e-commerce platforms, and payment terminals — through a single integration. Because surcharging is configured at the SensePass gateway layer, it applies automatically across every connected channel without modification to the underlying platform.

This means merchants running any of the following environments can enable compliant credit card surcharging through SensePass — without touching the platform, without engaging a developer, and without reconfiguring each system individually:

ERP & Back Office
Oracle NetSuite, Microsoft Dynamics 365, Oracle PeopleSoft

Enterprise & Mid-Market POS
Oracle MICROS, NCR, Aptos, Toshiba Tec, Fujitsu, Computer Dimensions, PAR / Brinx, Flooid, VRP, RMH, Ptech POS, Vela POS, Sonido Software, Cust2mate, New Store, XY Retail, Teamwork

SMB & Cloud POS
Lightspeed, Vend

Payment Terminals
Dejavoo, Valor PayTech

E-Commerce Platforms
Shopify POS, WooCommerce, Magento, BigCommerce

Forms & Invoicing
Gravity Forms, Jotform

Specialized Verticals
Anthology, Prism RBS

How It Works in Practice

When a customer initiates a credit card payment — whether at a physical terminal, through an online checkout, on an invoice payment link, or through an ERP-driven AR workflow — SensePass identifies the payment method type. If it is a credit card (not debit), the configured surcharge percentage is applied automatically, disclosed to the customer at the appropriate point in the transaction flow, and passed to the processor correctly.

The surcharge appears as a discrete line item in the transaction record. It is not embedded in the product price. It is not calculated by the POS. It is not dependent on platform configuration. It happens at the gateway, every time, consistently.

For merchants with multi-location or multi-channel operations, this means a single surcharge configuration governs in-store, online, phone, and ERP-originated payments — with no channel-by-channel setup and no risk of inconsistent disclosure.

For ERP payment integration scenarios specifically, where invoices are generated inside NetSuite, Dynamics 365, or PeopleSoft and paid via customer portal or payment link, SensePass applies the surcharge at the gateway level — meaning no modification to the ERP’s invoice or billing logic is required.

Compliance Handling

SensePass manages the disclosure requirements that card networks mandate for surcharging programs. Customers are notified of the surcharge before the transaction is completed, on the appropriate channel — satisfying both card network rules and state disclosure requirements.

The 30-day processor notification requirement is handled as part of the SensePass surcharge enrollment process. Merchants do not need to coordinate separately with their card networks.

What This Means for Your Cost Structure

For merchants currently absorbing credit card processing fees entirely, enabling surcharging has a direct and measurable P&L impact. At a blended processing rate of 2.5% on $1 million in annual credit card volume, the annual fee burden is $25,000. A compliant surcharge program that recovers the processing cost from card-paying customers eliminates that expense — or substantially reduces it — without raising shelf prices.

Even a partial recovery matters. Many merchants choose to surcharge at 1.5%–2% rather than the full cost of acceptance, balancing cost recovery against customer experience. At that level, on $1 million in volume, the annual recovery is $15,000–$20,000.

Combined with L2 and L3 interchange optimization for B2B transactions, a surcharge program represents a second lever for reducing credit card processing fees — one that operates on the cost-recovery side rather than the rate-reduction side.

Getting Started: What to Check Before Enabling Surcharging

Before activating a surcharge program through SensePass, there are a few practical steps worth completing:

Confirm your state’s current legal status. Use the table above as a starting point, then verify with legal counsel. Surcharge law is moving quickly, and the answer may have changed since this article was published.

Verify your card mix. The benefit of surcharging is greatest when credit cards represent a high proportion of your payment volume. If most of your customers pay by debit or ACH, the surcharge applies to a smaller base.

Set your surcharge rate. It must not exceed your actual cost of acceptance or the card network caps (3% Visa, 4% Mastercard). Most merchants set a flat percentage — typically 2%–3% — applied uniformly to qualifying credit card transactions.

Review your customer communication. Surcharging requires clear disclosure before the transaction. SensePass handles the transaction-level disclosure, but updating your website, receipts, and in-store signage ensures full compliance with disclosure requirements across all touchpoints.

For merchants on SensePass for Oracle NetSuite or the Dynamics 365 payment gateway, surcharge activation is a configuration change — not a development project. For merchants on any of the other 50+ connected platforms, the process is the same: configured once at the gateway, applied everywhere.

The Bottom Line

Credit card surcharging is no longer a niche strategy. As regulations have liberalized across most of the United States, and as processing fees continue to represent a meaningful operating cost, surcharging has become a mainstream cost-management tool for merchants of all sizes.

The barrier has never been the regulation — it’s been implementation. Modifying POS logic, engaging developers, reconfiguring ERP billing workflows: for merchants running complex platforms, the implementation cost often outweighed the benefit.

SensePass removes that barrier. By placing surcharge logic at the gateway layer, it makes compliant credit card surcharge implementation for POS and ERP platforms a configuration decision rather than a development project — across NetSuite, Dynamics 365, NCR, Aptos, Shopify, Magento, and every other platform in your stack.

→ See how SensePass connects to your platform and enables surcharging