Mastercard’s U.S. Surcharge Rules: Businesses Must Follow These

U.S. Businesses are Allowed to Charge Customers for Using Credit Cards

Under Specific Conditions and Policies

Accepting credit card payments in the United States comes with processing fees that can cut into a business’s revenue. To compensate against these added costs, some merchants add a surcharge—an extra fee for customers who pay with a credit card. However, Mastercard has set clear rules to regulate this practice, ensuring fairness and transparency. These policies are designed to protect consumers and maintain trust in their use of Mastercard branded card payments. This article outlines Mastercard’s surcharge regulations in the United States.

Mastercard Surcharge Rules in the U.S.

Notification Requirements

• Merchants must notify both Mastercard and their payment processor (acquirer) at least 30 days in advance before implementing a surcharge​.
• Acquirers must register merchants imposing surcharges with Mastercard within 10 days of receiving notice​.

Surcharge Disclosure Rules

• The surcharge must be clearly disclosed at the store entrance and at the point of sale, or, for online transactions, on the checkout page before payment​.
• The surcharge must not be greater than the merchant’s cost of acceptance for Mastercard transactions​.
• The receipt must display the surcharge amount separately and identify it as a fee for paying with a credit card​.

Surcharge Limits

• The surcharge cannot exceed the lesser of:
  1. The merchant’s average Merchant Discount Rate for Mastercard transactions, or
  2. The maximum surcharge cap set by Mastercard, which is published periodically and stands at 4% as of the publishing of this article​.
• Surcharges cannot be applied to debit or prepaid card transactions, even if the card is processed as “credit”​.

Brand-Level and Product-Level Surcharges

• Merchants cannot apply surcharges at the issuer level—surcharges must be applied either at the brand level or product level:
  • Brand-level surcharge: A single surcharge applied to all Mastercard credit card transactions, regardless of the issuing bank.
  • Product-level surcharge: A surcharge applied based on the specific Mastercard product type (e.g., Standard Mastercard, World Elite Mastercard)​.

Fair Treatment Across Card Brands

• If a merchant accepts multiple credit card brands, it cannot impose a surcharge on Mastercard unless it also applies surcharges to competing card brands under the same conditions​.
• If a competing card brand prohibits surcharges, Mastercard must also remain surcharge-free​.

Restrictions on Third-Party Surcharges

• Only the merchant selling the goods or services can impose a surcharge.
• Third-party service providers cannot apply surcharges to Mastercard transactions​.

Mastercard’s Penalties for Improper Surcharging

Mastercard strictly enforces its surcharge rules and imposes penalties for non-compliance. Violations can lead to fines, and repeated offenses may result in restrictions on accepting Mastercard payments.

Non-Compliance Assessments

• Mastercard may fine acquiring banks if their merchants apply improper surcharges​.
• Penalties may be applied per transaction or to the merchant as a whole, depending on the severity of the violation​.

Violation Triggers for Compliance Action

A compliance action may be triggered if a merchant:

• Charges a surcharge above the allowed limit.
• Applies a surcharge to debit or prepaid card transactions.
• Fails to disclose the surcharge properly before the transaction.
• Does not list the surcharge separately on the receipt​.

Escalating Penalties

Mastercard imposes strict penalties for businesses that violate its surcharge rules. According to the Mastercard Rules, non-compliance can result in escalating fines based on the frequency and severity of the violations. Here are the defined penalties:

• First Violation – Up to $25,000
• Second Violation (within 12 months) – Up to $50,000
• Third Violation (within 12 months) – Up to $75,000
• Fourth and Subsequent Violations (within 12 months) – Up to $100,000 per violation

Additionally, Mastercard may impose fines per occurrence, with the following structure:

• First 30 days – Up to $2,500 per occurrence
• Days 31–60 – Up to $5,000 per occurrence
• Days 61–90 – Up to $10,000 per occurrence
• Subsequent violations – Up to $20,000 per occurrence​.

Repeated violations could lead to further enforcement actions, including the possibility of revoking a merchant’s ability to accept Mastercard payments. These rules ensure that merchants follow proper surcharge policies and do not impose excessive fees on cardholders.

Merchant and Acquirer Liability

• The acquiring bank is responsible for ensuring that merchants comply with Mastercard’s rules.
• Mastercard may penalize both the merchant and the acquiring bank for repeated or serious violations​.

How to Report Improper Mastercard Surcharging

If you believe you were improperly charged a surcharge when using your Mastercard, you can take the following steps:

1. Keep your receipt as proof of the surcharge.
2. If there was no proper disclosure, take photos or videos of the store signage and checkout area.
3. Call your card’s customer service and report the issue.
4. Submit a report directly to Mastercard via their surcharge issue form​.
5. Leave reviews online to warn other consumers if necessary.

Bottom Line

Merchants looking to offset credit card processing costs must carefully followMastercard’s surcharging rules to avoid fines and compliance issues. While surcharges can help businesses recover costs, failure to comply can result in severe penalties, including losing the ability to accept Mastercard payments. Before reporting a violation, it’s essential to understand what Mastercard allows to ensure the surcharge was indeed improper.