Credit card surcharging allows managed service providers (MSPs) in Mississippi to recover transaction costs associated with credit card payments.

Passing some or all of these fees on to clients allows MSPs to manage payments-related expenses and protect profit margins without shouldering the entire cost of processing fees.

They must carefully adhere to applicable federal, state, and card brand guidelines for credit card surcharging. This includes not exceeding surcharging limits and effectively conveying surcharge details to clients. 

This guide covers Mississippi’s credit card surcharging laws, includes implementation tips, and explains how payment automation tools can support compliance efforts.

Disclaimer: This material is for informational purposes only and should not be relied on as legal advice. Perform thorough due diligence and pursue guidance from a qualified legal professional regarding specific questions related to your MSP.

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What is Credit Card Surcharging for MSPs in Mississippi?

Credit card surcharging can protect profitability and ease the burden of payment processing fees for MSPs that process large transaction volumes or handle recurring payments.

These fees typically range from 2% to 4% per transaction. These costs typically stem from interchange fees, network assessments, and payment processor markups. 

Over time, these expenses can add up and affect an MSP’s ability to invest in growth.

Consider a Mississippi-based MSP processing $80,000 in monthly credit card payments with an average fee of 2.75%. This amounts to $2,200 monthly in fees—totaling $26,400 annually.

If the MSP adds a 2.75% surcharge, the MSP can shift this cost to clients, cutting costs by $26,400 annually. The MSP redirects this cash flow toward hiring, software upgrades, and business development.

Some MSPs may choose a blended approach, sharing a portion of the fees with clients. 

For instance, if the MSP adds a 1% surcharge, clients would cover $800 monthly while the MSP absorbs $1,400. 

Over a year, the business still recovers $9,600—an amount they can use to offset operational costs or fund growth initiatives.

Transparency is imperative, regardless of the surcharge percentage. 

Mississippi MSPs must abide by state laws and payment network guidelines, and clients must be informed of surcharging practices. Unambiguous communication prevents misunderstandings and fosters enduring client connections.

Mississippi's surcharging regulations and recommended practices for MSPs to maintain compliance and client trust are described in the following sections.

Understanding Credit Card Surcharging Laws in Mississippi

As of December 2024, credit card surcharging is permitted in Mississippi. 

This means MSPs operating in Mississippi can pass on processing fees to clients as long as they comply with federal regulations.

Surcharges only apply to credit card payment methods, not debit or prepaid card transactions, according to a fundamental federal guideline. This is mandated by the Durbin Amendment of the Dodd-Frank Act, which prohibits surcharges on debit and prepaid cards, even if they are run as credit transactions.

Additionally, as per an amendment to Section 17-25-1 of Mississippi Senate Bill 2035, counties and municipalities in Mississippi are prohibited from imposing surcharges or transaction fees on payments made by credit card, charge card, debit card, or other forms of electronic payment. 

‍Since MSPs don’t fall under this category, they can surcharge credit card transactions.

Learn more about the Mississippi Department of Finance and Administration (DFA) Administrative Rule on Payments by Credit Card and Electronic Payment for State Agencies here.

Mississippi MSPs that use surcharges must tell clients before collecting payments—transparency is an essential component of surcharging compliance. Invoices or receipts must also include the fee as a separate line item.

MSPs ensure compliance by updating billing and invoicing systems to include surcharge information on invoices, receipts, and payment portals. This strategy gives clients clear visibility into the cost and decreases the chance of payment disputes. 

Other best practices for compliance include creating official surcharge policies and keeping a clear record of all associated contacts.

If more questions arise, we strongly recommend that you consult a legal professional familiar with Mississippi’s surcharging laws.

Understanding the relationship between state, municipal, and federal rules helps MSPs avoid regulatory missteps and sustain healthy client relationships.

Implementing Credit Card Surcharging for Mississippi MSPs

While adding a surcharging fee to invoices may seem simple, the process requires planning, clear communication, and a structured technique. 

MSPs risk payment disputes, client dissatisfaction, and non-compliance with card network policies without these elements.

To guarantee success, establish a detailed surcharging plan, use tools that support transparency, and stay ahead of regulatory updates. 

Below is a step-by-step guide to help Mississippi MSPs implement surcharging properly.

Step 1: Establish a Clear Surcharge Policy and Structure

A well-defined policy is the starting point for any surcharge program. This policy outlines how and when fees will be applied and ensures clients know of the process before they see it on their invoices. 

Mississippi MSPs should document the surcharge percentage, calculation method, and how it will appear on client invoices.

MSPs can structure surcharges in several ways, depending on how they bill clients: a fixed percentage, a flat fee, or a tiered system. 

Below are examples of three possible structures:

1. Fixed Percentage Surcharge:

The MSP applies the same surcharge percentage to every credit card payment.

Example: An MSP applies a 2.75% surcharge for every credit card transaction. If a client is billed $15,000, the surcharge adds $412.50, bringing the total payment to $15,412.50.

2. Flat Fee Surcharge:

The MSP applies a set fee for each payment, regardless of the invoice amount. However, as state and federal regulations require, surcharging fees charged to clients cannot exceed the actual payment processing cost. 

This structure can pose challenges for businesses that process invoices ranging from very high to low amounts, as they will still need to adjust surcharge fees occasionally. 

Example: The MSP adds a $50 fee for each credit card payment. If a client pays a $2,000 invoice, the total amount becomes $2,050. 

If the MSP sends an invoice for a smaller amount, they must adjust the surcharge accordingly so it does not exceed actual processing costs. 

For example, if the invoice total was $200 and the MSP’s processing costs were 3%, it could not charge the client more than $6 in surcharging fees.

3. Tiered Surcharge:

The surcharge varies based on the size of the payment.

Example: The MSP applies a 1.5% fee on payments under $4,000 and a 2.75% fee on payments over $4,000. 

For a $3,200 payment, the client pays an extra $48 (1.5%). For a $5,600 payment, the client pays an additional $154 (2.75%).

This flexibility allows MSPs to create a surcharge model that aligns with their clients' payment behaviors. Make it clear in client contracts to minimize confusion regardless of the structure.

Step 2: Notify Credit Card Institutions and Clients

Before applying surcharges, MSPs must notify credit card networks like Visa, Mastercard, and American Express. Each network has specific requirements about how and when fees can be applied. 

For example, Visa requires businesses to submit a notice at least 30 days before introducing surcharges. Most networks have online forms to make this process more straightforward.

Communication with your clients also prevents misunderstandings and reduces the likelihood of chargebacks.

Here’s an example of what can happen without proper communication:

A client receives an invoice for $6,000 but sees an additional $180 fee for a 3% surcharge. They may contact their credit card issuer and dispute the transaction if they were not told about the surcharge. 

When this happens, the MSP may be required to refund the $180 and face a chargeback fee from the payment network.

According to Swipesum, the average cost of a chargeback is $190 per dispute. Proper client communication reduces the risk of having to pay those fees.

Step 3: Update Invoicing & Billing Systems

Once a surcharge policy is in place, set billing systems up to display surcharge details. 

Clients should see the surcharge listed as a separate line item on their invoices. This illustrates how the total amount was calculated.

Here’s an example of how an invoice should display a surcharge:

• Service Charges: $8,000
• Surcharge (2.75%): $220
• Total Payment: $8,220

Some billing systems automate this process for MSPs. 

FlexPoint's automated billing and payment systems automatically calculate and display surcharge fees on invoices and receipts, eliminating the need for error-prone manual calculations.

Step 4: Monitor and Review Compliance

MSPs in Mississippi should regularly review their surcharge practices to confirm compliance with card network rules. 

While Mississippi does not currently prohibit surcharges as of December 2024, payment networks like Visa and Mastercard enforce strict policies, and the federal surcharge limit must also be observed.

• Visa caps surcharge fees at 3%.
• Mastercard allows up to 4%, but only if the processing cost is that high. If a business's processing fee is 2.5%, the maximum surcharge allowed is 2.5%, not 4%.

Again, this means MSPs cannot charge more than their actual processing cost, even if Visa or Mastercard allows a higher limit.

Consider this example:

An MSP charges a 3% surcharge on payments, but their actual processing cost is 2.4%. This would violate card network rules, as the surcharge cannot exceed the actual fee. 

If Mastercard or Visa finds out, the MSP could be fined, lose the ability to surcharge, or be required to reimburse clients for overcharged amounts.

Review your invoicing practices and surcharging policy quarterly to avoid these consequences. If processing fees change, surcharge rates should be updated accordingly. 

Keeping records of all communications with clients and card networks is also good practice. In the event of a dispute, these records can protect the MSP in case of a dispute.

‍The Role of FlexPoint in Streamlining Credit Card Surcharging

FlexPoint provides MSPs with strategic ways to manage credit card fees.

With multiple payment plans designed for flexibility and compliance, FlexPoint lets MSPs choose how fees are handled—whether they’re absorbed, shared, or passed on to clients. 

This system offers MSPs control of processing fees while providing straightforward client billing.

Payment Processing Plans

FlexPoint offers two primary payment plans tailored to the needs of MSPs:

• Interchange+ Plan
• Customer Surcharge Plan

These options allow MSPs to customize their payment strategy and choose the most suitable plan for their cash flow and client relationships.

a. Interchange+ Plan

The Interchange+ plan suits MSPs who prefer to cover the interchange costs rather than pass the entire credit card processing costs on to clients.

Interchange rates vary depending on the card. For example, the cost of processing a Discover card will differ from the cost of processing a premium rewards card like American Express.

With the Interchange+ plan, MSPs have complete visibility into these costs. This makes it easier to forecast expenses and adjust pricing models accordingly.

b. Customer Surcharge Plan

The Customer Surcharge plan allows MSPs to shift the cost of processing fees to their clients. Instead of absorbing the fees, the MSP adds a fixed percentage to each credit card transaction, and clients pay the additional cost.

MSPs can avoid covering processing fees out of pocket while providing clients with transparent, upfront pricing.

This plan is ideal for MSPs looking to protect their cash flow. 

Some MSPs prefer to take a middle-ground approach to processing fees. They split the cost rather than absorbing or passing the entire fee to clients. 

FlexPoint supports this method by allowing MSPs to cover part of the fee while charging the rest to clients.

How FlexPoint Enhances Surcharging Compliance and Transparency

FlexPoint streamlines the surcharging process, ensuring full compliance with Mississippi state regulations, federal laws, and card network policies. 

This process includes automatically applying the correct surcharge percentage while guaranteeing the fees do not surpass the federal limit of 4% or card brand limits, such as Visa’s. 

FlexPoint creates transparent invoices that lessen confusion and help prevent payment disputes.

Here’s an example of a typical invoice for a Mississippi-based MSP client receiving a $9,000 invoice with a 3% surcharge.

FlexPoint’s Integration with MSP Tools for Seamless Billing

Mississippi MSPs often rely on familiar accounting and business tools like QuickBooks Desktop, QuickBooks Online, Xero, ConnectWise, and SuperOps to manage their financial workflows. 

Switching between multiple platforms can lead to inefficiencies, manual entry errors, and extra administrative work.

FlexPoint addresses this issue by directly integrating with popular platforms and syncing payment data in real time for MSPs. 

MSPs simplify payment tracking, reconciliation tasks, invoicing, and billing by connecting with various MSP software.

Each process is time-consuming when done manually, especially as the number of transactions increases. 

One of the most popular integrations for MSPs is with QuickBooks Online. This connection allows for the real-time synchronization of payment data, ensuring up-to-date financial records.

For example, a Mississippi MSP processes a $6,800 client payment through FlexPoint.

The system automatically syncs the payment, surcharge, and processing fee details with QuickBooks Online. Then, the MSP's financial records are updated instantly, with no manual entry required.

Without this automation, the MSP would need to enter the payment, calculate and log the surcharge, and manually reconcile it with their bank statement. With FlexPoint, every step happens automatically.

FlexPoint also gives MSPs access to other features that enhance financial visibility and operational efficiency. 

Branded client portals give clients a customized payment experience with branded payment portals where they can view and pay invoices online.

Offering Flexibility in Surcharging

Managing surcharges can be a balancing act for MSPs. 

FlexPoint allows Mississippi MSPs to customize surcharging strategies client-by-client while complying with Mississippi's laws and card network guidelines.

This flexibility allows MSPs to maintain high client satisfaction rates while protecting their bottom line.

MSPs can cover surcharges for long-term clients while passing fees on to others at their discretion.

Conclusion: Streamlining Payments with Effective Surcharging Strategies

Surcharging allows Mississippi MSPs to recover credit card processing fees, maintain profit margins, and protect client relationships. 

However, striking this balance demands more than adding a fee to invoices.

MSPs must comply with state and federal regulations, clearly communicate surcharge policies to clients, and establish a transparent and easy-to-manage process. 

When these elements are in place, MSPs avoid disputes, reduce legal risks, and build stronger client relationships.

FlexPoint simplifies this process for Mississippi MSPs. 

Its MSP-focused platform handles surcharging with built-in compliance features that follow Mississippi's guidelines and federal regulations. With automation handling the calculations, MSPs can focus on client service and business growth.

Enhance your MSP’s bottom line and compliance with automated credit card surcharging solutions from FlexPoint. 

Stay within Mississippi’s regulations and simplify your MSP payment processes using FlexPoint today.

Schedule a demo to see how FlexPoint can transform your financial operations and maximize profitability.

Additional FAQs: Credit Card Surcharging in Mississippi for MSPs

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