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Processing credit card surcharges

As a merchant, you may choose to offset your credit card processing fees by transferring a portion of the cost to your customer through a credit card surcharge. Credit card surcharges are an additional fee applied to any transactions paid with a credit card at the time of sale. These fees are typically a percentage of the total bill added as a separate line item.

Regulations regarding surcharges

  • US

    If you choose to add credit card surcharges to your business, there are a number of rules and regulations that must be followed to ensure full transparency and compliance. These examples have been selected to highlight some of the common policies involved in surcharging and are not meant to serve as an exhaustive list. Regulations vary depending on your region. For a full list of regulations, contact your local regulators.

    • You must notify credit card companies in advance to the surcharge taking effect.
    • Surcharging must be restricted to credit cards only. Debit cards and prepaid cards are exempt from surcharging.
    • Effective April 15 2023, the surcharge amount must not exceed your total current credit card fees and cannot exceed 3% of the transaction total, even if your own processing fee is above 3%.
    • You must disclose surcharges as a merchant fee and clear signage must alert customers of the surcharge at the point of entry, the point of sale, and on every receipt.
    • Merchants should also consider whether they comply with all applicable state and/or federal laws.
  • Canada

    If you choose to add credit card surcharges to your business, there are a number of rules and regulations that must be followed to ensure full transparency and compliance. These examples have been selected to highlight some of the common policies involved in surcharging and are not meant to serve as an exhaustive list. Regulations vary depending on your region. For a full list of regulations, contact your local regulators.

    • You must notify credit card companies in advance to the surcharge taking effect.
    • You must disclose surcharges as a merchant fee and clear signage must alert customers of the surcharge at the point of entry, the point of sale, and on every receipt.
    • The cardholder must be given the opportunity to cancel, without penalty, after the surcharge is disclosed.
    • Surcharges can only be assessed on the final total amount charged for the goods or services, after any discount has been applied.
    • Surcharges cannot be assessed on a transaction in addition to a service fee.
  • Australia

    If you choose to add credit card surcharges to your business, there are a number of rules and regulations that must be followed to ensure full transparency and compliance.  These examples have been selected to highlight some of the common policies involved in surcharging and are not meant to serve as an exhaustive list. Regulations vary depending on your region. For a full list of regulations, contact your local regulators.  

    • You must notify credit card companies, such as Visa and Mastercard, in advance to the surcharge taking effect.
    • You must disclose surcharges as a merchant fee and clear signage must alert customers of the surcharge at the point of entry, the point of sale, and on every receipt.
    • Third parties are not permitted to impose a surcharge. Surcharges must be applied by the merchant through their POS or card processor.
    • The surcharge amount must not exceed the processing rate you are being charged by your payment processor.
    • The cardholder must be given the opportunity to cancel, without penalty, after the surcharge is disclosed.
    • Surcharges can only be assessed on the final total amount charged for the goods or services, after any discount has been applied.

Creating surcharges

Surcharges can be added as a separate line item to a transaction through Lightspeed Restaurant. To begin adding surcharges to transactions through Lightspeed Restaurant, the item will first need to be created in the Lightspeed Back Office. For more information, see the Adding items article.

  1. Log in to the Back Office with your Lightspeed credentials.
  2. From the navigation menu, select Menu management > Items.
  3. Click Create.
    Image shows the Items homepage in the Restaurant POS Back Office. A button labeled 'Create' has been highlighted.
  4. From the dropdown, select Single item.
    Image shows the Items homepage in the Restaurant POS Back Office. A dropdown menu below the 'Create' button has been opened, and the option titled 'Single Item' has been highlighted.
  5. Enter the desired item details, such as name and accounting group.

    We recommend naming the item "Credit Card Surcharge," to comply with card brands' requirement to notify the guest of the fee. Clearly naming the surcharge prevents you from being flagged during our regular audits of credit card surcharge fees. We also recommend using a separate "Service Fees" Accounting Group to capture all your service fee items.

    Image displays the New Item details page in Restuarant POS Back Office. A pop-up window has been highlighted. The highlighted pop-up has editable fields for Item Name, Accounting group and Price.
  6. To set the price as a percentage of the bill, rather than a flat fee, click Change price type.
  7. Select Price as a Percentage > Confirm.
    Image displays the New Item details page in Restuarant POS Back Office. A pop-up window has been highlighted. The pop-up window has selectable options for different pricing options. The option labeled as 'Price as a percentage' has been highlighted.
  8. Enter the desired percentage.
  9. Click Save.

Adding surcharges to the POS screen

Once the surcharge has been created, you can add the surcharge as a menu button to quickly apply the surcharge to open orders. Creating a menu button allows you to manually select when to apply the credit card surcharge to an order.

  1. Navigate to Menu management > Menus.
  2. Select the Menu you wish to edit.
    Image displays the homepage for Menu management in the Back Office.
  3. Click Add button.
  4. From the dropdown, select Item.
    Image displays a menu configuration page. A button named 'Add button' and dropdown menu has been highlighted.
  5. Select the item created during the Creating surcharges step.
  6. Click Add 1 button.
    Image displays a menu configuration page. A popup window has been highlighted. The popup shows an item titled 'Credit Card Surcharge' has been selected, and a blue button titled 'Add 1 button' is active.
  7. To save your changes, click Update and reload devices.
    Image displays a menu configuration page. A button titled 'Update and reload devices' has been highlighted.

Setting up automatic surcharging

You can configure your POS to automatically add a surcharge to every order processed through Lightspeed Restaurant. This option allows you to set the surcharge as a default charge that you can then manually remove at the POS if necessary.

  1. Navigate to Settings > Account Profiles.
  2. Select the order profile you wish to edit.
  3. Navigate to the section titled Auto service charge.
  4. Select the service item created during the Creating surcharges step.
    Image shows the configuration page for account profiles in the Back Office. A section titled 'Auto Service Charge' has been highlighted.
  5. Click Save.

FAQs

  • If you have enabled automatic surcharging for your POS, you will need to manually remove the charge from cash and other non-credit card payments. This can be done directly from the Order screen of the POS.

    1. Navigate to the Register screen by tapping Register in the lower navigation menu.
    2. Add all items to the order by selecting them from the menu on the right-hand side.
    3. Below the order summary, tap your surcharge fee item to remove the charge from the order.

      We recommend that you name this fee 'Credit Card Surcharge' so the purpose of this fee is clear to your staff and guests.

      Image shows the Restaurant POS Register screen for iOS. An order with several items has been generated, and a section detailing the Credit card surcharge, Subtotal, Tax and Total has been highlighted.
    4. Tap Yes to remove the percent-based charge.Image shows a popup window that reads 'This will disable the percentage-based charge. Please confirm' with the option to select No or Yes.
    5. Tap Pay to select the method of payment and amount received.
    6. Tap Pay to complete the transaction.

What's next?

Managing items

Learn how to edit item settings in Lightspeed Restaurant.

Editing items

Accounting

Learn more about accounting groups in Lightspeed Restaurant.

Accounting groups

Reporting

Learn more about product reports and how to keep track of surcharges.

Product reports

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