A surcharge is a fee assessed to credit card transactions by Merchants to their customers as an additional charge to cover specific costs associated with credit card processing.
Surcharges can cause legal complications if each requirement for compliance and registration is not met or the surcharge is not properly configured. The information provided in this guide will outline the steps to properly register and configure a surcharge (where allowed by law).
Getting Started
To begin surcharging you must follow the steps below:
Notify your Relationship Manager that you would like to start a surcharge program to begin setup of the Merchant Group.
The Payrix representative will enable the surcharge parameter allowing you to send the surcharge amount (required by Visa) with transactions.
Note: The surcharge parameter is for reporting purposes only so it does not have any effect on how the fees should be calculated.
After the surcharge function and parameter are enabled, set the surcharge collection workflow that works best with your business type. See Potential Surcharge Workflows below to view diagrams outlining other optional setups:
Tip: If you do not find a scenario that meets your needs, contact your Relationship Manager to further scope your request.
Responsibilities by Platform
Referrer Platform
Payrix Platform
Referrer Platform
Payrix Platform
Calculate the surcharge amount charged to the Merchant from a percentage (3%) into an integer (300) and add the amount to the total parameter for a given surcharged transaction.
Pass the fee onto the customer on behalf of the Merchant.
Collect the surcharge fee paid by the credit card customer to the Merchant, from the Merchant transaction amount, on behalf of the Referrer using our Fees system.
Surcharge Program Setup Requirements
The use of a surcharge program can result in legal complications. As a result, it’s imperative to follow each of the compliance requirements below to adhere to card brand and state/local regulations.
Compliance Requirements
Surcharges are only permitted on credit cards; they cannot be assessed on debit cards.
Surcharges cannot be assessed in states where surcharges are prohibited by law.
The maximum recommended surcharge amount is 3% to adhere to Visa and Mastercard restrictions.
There must be a separate line item for the surcharge on the checkout page and receipt.
Merchants must disclose their full surcharge policy on their checkout page before transaction completion.
Card Brand & Acquirer Registration Requirements
Visa - The surcharge parameter must be used to notify Visa of a transaction surcharge through Payrix (via backend Field 28). Values populated in authorization and clearing(Field 28), Visa considers this to be a notification of the surcharge.
The Login ID for the user that last modified the Fee.
Format: t1_log_x...
entity
string
The entity ID for the entity the Fee is being applied to.
Format: t1_ent_x...
org
string
The Org ID for the group the Fee is being applied to.
Format: t1_org_x...
type
integer
The type of Fee being charged to the entity.
1 - Fee. A Standard Fee.
name
string
Custom name for the Fee.
Recommended name: 3% Credit Card Surcharge
schedule
integer
The Fee trigger.
7 - Capture. The Fee triggers at the capture time of a Transaction.
scheduleFactor
string
A multiplier that you can use to adjust the schedule set in the 'schedule' field, if it is set to a duration-based trigger, such as daily, weekly, monthly, or annually. This field is specified in basis points and its value determines how the interval is multiplied.
0
start
string
The date that the Fee will take effect.
Today’s date.
Format: YYYYMMDD
collection
integer
Applies the fee based on the volume of a resource.
1 - Txn. The total amount of all transactions..
collectionFactor
integer
A multiplier that you can use to adjust the set of data to be used in the collection calculation. This field is specified in basis points and its value determines the period of time to be used.
1
Format: 2.00 = 2x multiplier.
collectionIncludeCurrent
Whether to include the current period for the colleciton calculation.
1 - Don’t inlcude
um
integer
The unit of measure for this Fee.
3 - Surcharge. The Fee is a percentage of the related event amount as a surcharge.
amount
string
The amount of the fee by unit of measurement (um)
300 - 3% Surcharge
currency
string
The three-digit symbol for the currency that the Fee will be charged and collected in.
USD - US Dollars
txnFee
integer
Indicator to extract fee from txn supplied fee. When set, amount will correspond to the fee amount in the txn and only that amount will be extractable, anything over that amount will not be extracted.
1 - Enabled. Fee will be calculated based on transaction fee.
inactive
integer
Whether or not this fee is active.
0 - Active
frozen
integer
Whether or not this fee is temporarily frozen.
0 - Not frozen
2: Add the Credit-Only Fee Rule
Request URL & Header
Example Request Body:
Parameter
Type
Required
Descriptions
Required Value
Parameter
Type
Required
Descriptions
Required Value
fee
string
Required
The Fee ID for the Fee you want to apply the Fee Rule to.
Fee ID from Step 1 response body.
Format:t1_fee_x....
name
string
Optional
Custom name for the Fee Rule for easy identification.
Recommended name:
Credit-Only Surcharge Rule
description
string
Optional
Custom description for the Fee Rule for clarification.
Recommended description:
Only allows surcharging on credit cards.
type
string
Required
The type of rule you’ll be applying to the specified Fee.
methodType - Method type. The Fee applies based on the given payment method.
application
string
Required
When this Fee Rule will be applied.
both - Both. The rule should apply to the fee and to the calculation of collections.
value
string
Required
credit
inactive
integer
Required
Whether or not this Fee Rule is inactive.
0 - Active.
frozen
integer
Required
Whether or not this Fee Rule has been frozen.
0 - Not frozen.
Example Response Body:
Parameter
Type
Description
Expected Values
Parameter
Type
Description
Expected Values
id
string
The ID of the newly created Fee Rule.
Format: t1_frl_x...
created
string
The Date and Time that the Fee Rule was created.
Format: YYYY-MM-DDTHH:MM:SS.MS
modified
string
The Date and Time that the Fee Rule was last modified.
Format: YYYY-MM-DDTHH:MM:SS.MS
creator
string
The Login ID for the user that created the Fee Rule.
Format: t1_log_x...
modifier
string
The Login ID for the user that last modified the Fee Rule.
Format: t1_log_x...
name
string
Custom name for the Fee Rule for easy identification.
description
string
Custom description for the Fee Rule for clarification.
type
string
The type of rule you’ll be applying to the specified Fee.
methodType
Method type. The Fee applies based on the given payment method.
application
string
When this Fee Rule will be applied.
both
Both. The rule should apply to the fee and to the calculation of collections.
value
string
This field refers to either the numerical amount for type parameter selections that require an amount.
credit
Credit Card. The fee rule will only apply when the payment methodType is credit.
inactive
integer
Whether or not this Fee Rule is inactive.
0 - Active
frozen
integer
Whether or not this Fee Rule has been frozen.
0 - Not Frozen
Applying a Surcharge through a Transaction
After your fee and fee rule have been enabled using the Portal or API, you can apply the Surcharge using one of the following methods:
1: Separate Transaction & Surcharge Calculation: POST /txns
This process directly calculates the fee amount, ensuring the amount is 100% of the value provided in the fee parameter.
Step 1: In the fee parameter, enter the calculated surcharge amount (3% of the transaction total)
Step 2: In the total parameter, enter the original transaction total, plus the surcharge total.
Example: 3% Surcharge for $100 original transaction total = $103.00 total amount.
Step 3: Using the Portal, create a fee or adjust the existing surcharge fee with the following values:
Add Fee Parameter
Required Value
Note
Add Fee Parameter
Required Value
Note
When to trigger the fee?
Capture
The Fee triggers at the capture time of a Transaction.
How much is the fee?
Percentage
Amount
100%
100% of the amount of the value sent using the fee parameter for POST /txns.
Fomatted as 10000.
Fee Start Date
{yourStartDate}
It is recommended to use “today’s” date as the Fee Start Date to make the Fee effective immediately.
Transaction Fee
Enabled
Checkbox available under the “Advanced Options” section of the lightbox.
Example Transaction:
2: Combined Transaction & Surcharge Calculation: POST /txns
This process reverse-calculates the fee amount, ensuring that the 3% is calculated from the transaction amount alone, rather than the transaction amount + surcharge amount together.
Step 1: In the fee parameter, enter the calculated surcharge amount (3% of the transaction total)
Step 2: In the surcharge parameter, enter the calculated surcharge amount (3% of the transaction total)
Step 3: In the total parameter, enter the original transaction total, plus the surcharge total.
Step 3: Using the Portal, create a fee with the following values:
Add Fee Parameter
Required Value
Note
Add Fee Parameter
Required Value
Note
When to trigger the fee?
Capture
The Fee triggers at the capture time of a Transaction.
How much is the fee?
Surcharge
Amount
3%
3% of the pre-caluclated transaction amount as shown of the value sent using the fee and surcharge parameters for POST /txns.
Fomatted as 300
Fee Start Date
{yourStartDate}
It is recommended to use “today’s” date as the Fee Start Date to make the Fee effective immediately.
Transaction Fee
Enabled
Checkbox available under the “Advanced Options” section of the lightbox.
Example Transaction:
Apply a Surcharge through a PayFields Token
As PayFields does not currently offer a direct connection to the surcharge parameter available through the /txns endpoint, a workaround is to tokenize the payment method only using PayFields, then create a subsequent POST /txns API request using the new token as the payment method with the Surcharge applied.
In the following scenario, we are applying a 3% surcharge for credit card payments.
Step 1: Create your payment page through PayFields like normal, using the following parameters to create a new payment token from payment methods submitted by customers:
Step 2: When a transaction is created, PayFields are configured to automatically tokenize the payment method (see the code snippet example below) when a transaction is submitted. Locate the token value in the response data for the transaction.
For this example, we’ll use $100 as the amount for the initial transaction total.
Example Token: 123abc456defxxxxxxxxxxxxxxxxx
Example PayField Tokenization:
Step 3: Make a request to the following endpoint:
Example Request URL:
Step 4: In the response body, locate the payment method type via the method and type parameter.
The method parameter must be 1, 2, 3, 4, or 5.
The type parameter should display as credit.
Example Response:
Step 5: Once the method and type have been verified as a credit card payment, make a request to the following endpoint to create the credit card capture transaction and apply the 3% surcharge to the original transaction amount:
Example Request Body:
Result: Your PayFields payment page credit card transaction has now been properly assessed the surcharge from the tokenized credit card and the Merchant has been assessed the surcharge through their Referrer.
Debit Card Handling
You can handle this compliance rule by querying our /tokens endpoint to determine if the card is credit or debit. If it is debit then you can handle this in a few ways:
Comparing Surcharges, Convenience Fees, and Service Fees
As the following fee types are similar in setup and collection process, it’s important to understand the differences between them to avoid legal complications and possible chargebacks.
Surcharges
Surcharges, or Surcharge Fees, as mentioned earlier, are specifically designed for credit card-only transactions at all times. These types of fees are inclusive of all credit card transactions under a Merchant or Group and can be applied consistently as long as card brand and legal requirements are met.
Convenience Fees
Convenience Fees are fee charges passed on to customers for the ability to pay for a product or service using an alternative payment method that is not standard for a business.
Generally, a convenience fee cannot be implemented in in-person settings (such as physical card terminals) – typically this refers to Internet and over-the-phone transactions.
Service Fees
Service Fees are actually a type of convenience fee that comes with specific rules and regulations resulting from certain limited qualifying MCCs, as opposed to a general convenience fee mentioned above where the fee can be assessed generally for alternative payment method usage. For comparison, we will classify Service Fees under Convenience Fees.
Conclusion
While both Convenience Fees and Surcharges are similar in their setup and collection processes, there are important legal and compliance distinctions as well as different requirements for when each fee type can be applied.
Convenience Fees
Allowed only on Card-Not-Present transactions.
Applies to alternative payment methods from the Merchant’s standard payment options.
The fee is a flat or fixed amount.
Applicable to credit and signature debit.
Disclosed before the completion of the transaction and the cardholder is allowed to cancel.
Included as part of the total sale.
Allowed on credit and signature debit.
Surcharges
Allowed on Card-Not-Present and Card-Present transactions.
Applicable only to credit cards, not debit.
The fee is a percentage of the sale.
Cardholder Disclosure of Surcharge policy required.
Disclosed before the completion of the transaction and the cardholder is allowed to cancel.
Included as part of the total sale.
30 days notice must be provided to the Mastercard card brand network, Payrix and/or the acquiring bank before starting to surcharge.