The short answer
A surcharge is an extra fee you add to a sale because the customer paid by credit card.
In Canada, the card networks changed their rules to allow it. Visa says its new rules took effect on October 6, 2022, after a court-approved legal settlement.
There are limits:
- Credit cards only. Not debit. Not prepaid.
- A cap of 2.4%, or your own card fee rate if that is lower.
- Notice to your processor first, and clear signs for customers.
- Not in Quebec, where the province’s consumer protection office says card fees are prohibited.
Visa’s FAQ is also clear that laws come first: “A Provincial and/or Federal law or regulation would supersede Visa Rules.”
What Visa’s rules say
These come from Visa’s surcharging FAQ for businesses. TD’s surcharging guide for its own merchants describes the same rules for the card networks.
1. Only credit cards. Visa allows surcharges on consumer and corporate credit cards. It does not allow them on Visa debit or prepaid cards.
2. The cap. Your surcharge cannot be more than the lower of:
- 2.4% of the sale, or
- the average rate you pay to accept Visa credit cards.
That average rate is your effective rate: your card fees divided by your card sales. TD’s guide says its merchants can find it on their monthly statement.
3. Notice first. Visa says to give your processor (Visa calls it your acquirer) at least 30 days’ written notice before you start.
4. Telling customers. Visa says you must show the surcharge:
- at the point of entry, such as your door or the first page of your website,
- at the point of sale, with the exact amount or percentage, and a statement that the surcharge is charged by you, not by Visa, and only applies to credit, and
- on the customer’s receipt.
5. No stacking. Visa says if you surcharge credit cards, you cannot also charge a service fee on Visa credit. It also says convenience fees are not permitted in Canada.
6. Refunds. Visa says you cannot charge a surcharge on a refund. The surcharge goes back to the customer with a full refund, and is pro-rated on a partial refund.
Brand level or product level
Visa’s rules allow two ways to surcharge. Visa’s FAQ says a merchant can choose one, but not both:
- Brand level: a surcharge on all Visa credit cards. The cap is your average effective merchant discount rate for Visa credit cards.
- Product level: a surcharge on only some Visa credit cards, such as Visa Infinite. The cap is your average effective merchant discount rate for that product. The surcharge must be the same for every card of that product.
Either way, Visa says the surcharge can never be more than 2.4%.
TD’s own rule is narrower. TD’s surcharging guide, written for TD Merchant Solutions customers, says: “if a Merchant chooses to apply a surcharge, it will apply to all credit card transactions.” That is TD’s rule for its merchants, not a card network rule. Other processors may allow brand or product level surcharging; each processor’s own guide sets its rule.
Debit cards and Interac
Surcharges on debit work differently.
- Visa Debit and Mastercard Debit. TD’s guide says a merchant must not surcharge them.
- Interac debit. Interac’s fee page says “Merchants may not directly apply a surcharge to any cardholder for the use of the Interac Debit Service.” It allows a surcharge of up to $0.25 only when it is applied by the acquirer, disclosed, and the customer can cancel at no cost. TD’s terms also say its merchants must not directly apply a surcharge to an Interac debit sale.
More on debit in Interac Debit: How It Is Priced.
Quebec and the Consumer Protection Act
Quebec is different. Quebec’s consumer protection office (the Office de la protection du consommateur) says:
- “A merchant cannot charge fees when you use a debit or credit card to pay for a purchase.”
- The advertised price must be the full amount the customer pays, apart from amounts a law requires the merchant to collect, such as sales tax.
- Telling the customer at the cash register, or putting up a sign, “does not entitle the merchant to charge such fees.”
TD’s guide lists surcharging as an option “except in Quebec”. TD’s terms also say its merchants must not charge fees that are prohibited under the Quebec Consumer Protection Act.
Registering with the networks
Visa’s FAQ says your processor collects the details: your business name, address, phone number, email, how many locations will surcharge, which channel (in store or online), and whether you surcharge by brand or by product.
TD’s guide says merchants who plan to surcharge Mastercard credit cards must also register on Mastercard’s website, at mastercard.ca/surchargedisclosure.
TD’s guide also says your payment system must be able to add the surcharge to each sale, send it with the sale, and print it on the receipt. Ask your processor whether your terminal or checkout can do that.
What surcharging involves for you and your customers
Here is what changes if you choose to surcharge, based on the rules above:
| Area | What changes |
|---|---|
| Paperwork | Written notice to your processor at least 30 days before you start (Visa). Mastercard registration (TD’s guide). |
| Signs | At the door or website entry, at checkout, and on the receipt |
| Equipment | Your terminal or checkout must add and report the surcharge |
| Cards | Credit only. No debit or prepaid |
| Refunds | The surcharge is refunded too |
| Other fees | No service fee on Visa credit at the same time. No convenience fees in Canada |
| Quebec | Card fees are prohibited, according to the province’s consumer protection office |
Whether to surcharge is your decision. This page sets out the rules.
Where to go from here
Your own cap depends on your effective rate for credit cards, which comes from a monthly statement. How to Read Your Merchant Statement shows where to look, and the effective rate calculator does the maths. For what goes into that rate, see What Is Interchange? Discounts for paying another way are a separate topic: see Dual Pricing and Cash Discounts in Canada. Visa’s US rules are different: see Cash Discounts and Surcharges Under Visa’s US Rules.
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