In Nebraska, as of January 2025, businesses are permitted to use credit card surcharging to recover processing fees, preserving profit margins that would otherwise be diminished. Many businesses, including MSPs, across the state are leveraging this option to reduce operating expenses.
That said, successful surcharging requires compliance with Nebraska laws, federal regulations, and guidelines from credit card companies. Missteps in implementation can lead to legal and operational challenges.
This guide breaks down Nebraska's surcharging laws, explores best practices for MSPs, and demonstrates how payment automation tools can simplify compliance and efficiency.
Disclaimer: This content is intended for informational purposes only. It does not replace legal advice. Consult with a legal expert to address questions specific to your MSP.
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What is Credit Card Surcharging for MSPs in Nebraska?
Credit card processing fees typically range from 2% to 4% per transaction.
Over time, these costs—including interchange fees and processor markups—add up, reducing profitability for MSPs that handle high-value or recurring credit card payments.
Credit card surcharging allows MSPs to pass some or all of these costs to clients. When this cost is spread across multiple clients rather than entirely on the MSP, it substantially reduces payment processing expenses.
Their chosen approach will vary, with some MSPs opting to transfer the full amount and others splitting the costs to maintain client goodwill.
Take a Nebraska MSP processing $110,000 in monthly credit card payments at an average 2.75% fee.
This results in $3,025 in monthly fees or $36,300 annually. The MSP recovers these costs by applying a 2.75% surcharge, adding back $36,300 to its bottom line.
Alternatively, a 1.25% surcharge would share the cost with clients. This would shift $1,375 of monthly fees to clients while the MSP absorbs $1,650.
Over a year, the MSP saves $16,500, alleviating financial pressure while maintaining strong client relationships.
Transparency is pivotal for Nebraska MSPs implementing surcharging.
Fee disclosures must comply with state and federal laws, and clear communication with clients is critical to maintaining trust. With the right strategy, surcharging can reduce expenses without compromising client satisfaction.
Thoughtful implementation safeguards profitability and promotes sustainable business growth. The following sections will detail what this implementation process might look like to ensure compliance and efficacy.
Understanding Credit Card Surcharging Laws in Nebraska
Credit card surcharging is permitted in Nebraska. This practice provides MSPs with a mechanism to reduce the high costs associated with credit card processing.
To keep openness and confidence with clients, surcharging must, however, be implemented with adherence to federal rules and industry norms.
Federal regulations cap surcharges at 4% of the transaction amount, and Nebraska does not impose a stricter limit, as per Nebraska Revised Statute 81-118.01.
In many states, county officials and municipalities cannot impose surcharges, even if the practice is generally legal in that state. In Nebraska, this is not the case.
As explained in Nebraska Revised Statute 13-609:
“A county treasurer, county official, or political subdivision official authorizing acceptance of credit card or charge card payments shall be authorized but not required to impose a surcharge or convenience fee upon the person making a payment by credit card or charge card so as to wholly or partially offset the amount of any discount or administrative fees charged to the political subdivision, but the surcharge or convenience fee shall not exceed the surcharge or convenience fee imposed by the credit card or charge card companies or third-party merchant banks which have contracted under subsection (5) of this section.”
It’s also important to note that surcharges can only be applied to credit card transactions. Debit and prepaid card transactions, even when processed as credit, are excluded per the Durbin Amendment of the Dodd-Frank Act.
To demonstrate how credit card surcharging can reduce expenses, consider a Nebraska MSP with $150,000 in monthly credit card transactions.
They process these transactions at an average 2.5% credit card processing fee. In turn, this business incurs $3,750 in monthly payment processing costs, or $45,000 annually.
Implementing a 2.5% surcharge allows the MSP to recover these fees entirely. If a partial surcharge of 1% is chosen, the MSP recovers $18,000 annually, absorbing the remaining $27,000 to maintain competitive pricing and client satisfaction.
MSPs in Nebraska must explicitly disclose their surcharge policies. Clients must be informed of surcharges before completing transactions, and invoices or receipts should list any fees.
This kind of transparency promotes compliance and strengthens client relationships.
Because surcharging regulations vary by state and have extensive requirements, Nebraska MSPs should seek legal assistance to guarantee precise implementation.
With careful planning, surcharging cuts costs while supporting long-term business development.
Implementing Credit Card Surcharging for Nebraska MSPs
Simply listing a surcharge fee on an invoice is not the end of the compliance and transparency process for merchants. MSPs must assure clients are fully aware of these charges before they process their payments.
According to PYMNTS, 76% of consumers say surcharges would make them reconsider using credit cards, while 40% would actively seek alternative businesses to avoid the fee.
This demonstrates how poor communication can jeopardize client relationships.
For example, clients must comprehend that these fees are not meant to generate a profit for the MSP. Instead, it is a measure to reduce an expense.
If clients assume this fee is a profit-generating tactic, they are more likely to be dissatisfied and may seek alternatives to your services.
Nebraska MSPs should focus on transparency and thoughtful surcharge strategies to balance cost recovery and client satisfaction.
The following guide offers practical steps to help Nebraska MSPs integrate surcharges without compromising trust.
Step 1: Establish a Clear Surcharge Policy and Structure
Creating a robust surcharge policy is the first step to successful implementation.
This policy should outline the surcharge percentage, conditions for applying it, and how it will be communicated to clients. Including this policy in client agreements ensures transparency.
Use the policy as another opportunity to explain why surcharges are imposed.
Most MSPs favor fixed percentage surcharges, but some use tiered or flat-fee models to align with their business needs.
Here are examples of each surcharge structure:
1. Fixed Percentage Surcharge:
An MSP imposes a 3% surcharge across all credit card transactions or the merchant discount rate, whichever is lower.
Example: A $12,000 invoice includes a $360 surcharge (3%), totaling $12,360.
2. Tiered Surcharge System:
The surcharge for invoices under $5,000 is 2%; for invoices over $5,000, it is 3%.
For example, a $4,000 invoice adds $80 (2%), while a $6,500 invoice adds $195 (3%).
3. Flat Fee Surcharge:
A $50 surcharge is applied to all transactions, regardless of size.
Example: A $7,500 invoice totals $7,550 after the flat fee.
However, this fee (or any surcharge fee) cannot exceed the processing costs the merchant charges.
So, if a $1000 transaction incurs a 2.5% processing fee, the merchant would actually pay $25.
In this situation, charging a $50 flat fee would surpass the processing cost and contravene credit card network restrictions, such as those imposed by Visa and Mastercard, which state that surcharges must not exceed real costs.
To comply, the flat fee surcharge on this $1,000 transaction must be reduced to $25 to match the merchant's processing fees.
Step 2: Notify Credit Card Institutions and Clients
Nebraska MSPs must inform credit card networks like Visa and Mastercard of their intention to introduce surcharges at least 30 days before introducing them. This ensures compliance with network rules and prevents service disruptions.
For instance, Mastercard explains:
“A merchant's ability to apply a surcharge is conditioned on the merchant's satisfaction of certain disclosure requirements. These disclosure requirements include advance notice to both Mastercard and the merchant's acquirer of the merchant's intention to impose a surcharge no less than thirty days before the merchant implements a surcharge.”
Clients must also be informed well in advance. A clear explanation of the surcharge policy, including its purpose, helps clients understand that the fee offsets credit card processing costs.
Transparent communication is crucial to prevent chargebacks, which cost businesses $190 on average per dispute, according to Swipesum.
For example, a $9,000 invoice with a $270 surcharge (3%) must itemize the fee to avoid payment disputes. If it does not, a client might dispute this charge out of concern it was unjustified or added in error.
This dispute could lead to a chargeback, resulting in the loss of the disputed amount and additional fees and administrative costs for the MSP.
Step 3: Update Invoicing & Billing Systems
Nebraska MSPs must ensure their invoicing systems are set up appropriately to display surcharge fees as separate line items. This will enhance transparency and reduce misunderstandings.
FlexPoint’s automated system simplifies this process by properly calculating and presenting surcharge fees.
For example, a $7,000 invoice with a 3% surcharge automatically adds $210 as a separate line item.
Step 4: Monitor and Review Compliance
Compliance with federal and card network regulations is an ongoing process. Managed service providers must regularly revisit their surcharging practices to align with applicable rules.
When Visa lowered its surcharging cap from 4% to 3% in 2023, many businesses had to adjust their surcharging practices accordingly.
If businesses had not been monitoring these changes and continued to impose a 4% surcharge on Visa payments, a business could be subject to fines and other penalties.
MSPs must also be sure not to impose a surcharge higher than the merchant discount rate (MDR).
If an MSP’s processing fee is 3%, the surcharge can’t exceed this percentage despite Nebraska’s surcharge cap of 4%.
Regular monitoring helps Nebraska MSPs avoid overcharging, maintain compliance, and maintain positive client relationships.
The Role of FlexPoint in Streamlining Credit Card Surcharging
Recurring payments and high transaction volumes are a staple of MSP operations.
However, they also make managing credit card processing fees an ongoing challenge. These expenses cut into profits and complicate financial management.
FlexPoint simplifies this process and helps MSPs lower expenses with payment automation software built for MSPs.
Its tailored features and adaptable plans provide the tools to control costs and streamline your payment processes so your operations remain efficient and profitable.
Payment Processing Plans
FlexPoint offers two primary payment plans tailored to the needs of MSPs:
- Interchange+ Plan
- Customer Surcharge Plan
a. Interchange+ Plan
Nebraska MSPs can streamline their payment processing with the Interchange+ plan. This transparent model aligns costs with the interchange rates specific to each card type and adjusts fees according to the card used in the transaction.
For example, transactions made with Discover cards, known for their lower interchange rates, result in reduced processing fees.
Conversely, American Express and high-reward credit cards carry higher interchange rates, which means higher fees for those payments.
Interchange+ is ideal for Nebraska MSPs who prefer handling processing fees rather than imposing surcharging.
With Interchange+, client invoices are free of additional charges, which creates a smoother client experience.
b. Customer Surcharge Plan
For MSPs that want to offset some of the payment processing costs, the Customer Surcharge plan allows them to apply a flat percentage surcharge to credit card transactions, effectively transferring processing costs to clients.
This approach eliminates or reduces these fees from the MSP’s overhead and proves to be an effective cost-cutting measure.
The Customer Surcharge plan is straightforward to implement. Customers have the option of choosing a consistent surcharge for all credit card payments.
This option strikes the perfect balance for Nebraska MSPs prioritizing clarity and cost management.
FlexPoint also provides the flexibility to split processing fees with clients. This shared-cost model helps MSPs reduce expenses while maintaining trust and healthy relationships with their clients.
With these adaptable plans, FlexPoint empowers Nebraska MSPs to choose the cost management strategy that aligns best with their business needs.
How FlexPoint Enhances Surcharging Compliance and Transparency
FlexPoint simplifies credit card surcharging for Nebraska MSPs by automating calculations and ensuring compliance with state laws, federal rules, and card network requirements.
Its automation ensures surcharges remain under the federal 4% limit and invoices are precise.
Here’s an example of a Nebraska MSP’s $13,200 invoice with a 3% surcharge:
Notes:
We appreciate your business! Please contact us at [Your Contact Information] with any questions.
FlexPoint’s Integration with MSP Tools for Seamless Billing
FlexPoint offers carefully selected integrations so MSPs can continue using their preferred tools.
Among these integrations are:
- QuickBooks Desktop
- QuickBooks Online
- Xero
- ConnectWise
- SuperOps
- HaloPSA
- Autotask
With seamless integration with favored tools, MSPs can manage their billing and payment procedures with less friction and with less manual intervention.
This connectivity allows Nebraska MSPs to automate three essential financial functions that are traditionally time-consuming and error-prone:
Automating these tasks lightens the administrative load so MSPs are free to dedicate more time to other business activities.
For example, FlexPoint’s integration with QuickBooks Online seamlessly synchronizes payment systems. This real-time connection updates financial records automatically with surcharges, fees, and other vital billing details.
Without relying on manual entry for these things, MSPs have the peace of mind their data is error-free. They are left with reliable financial information ready for reporting or analysis.
Additional features like branded client payment portals and real-time reporting further improve financial visibility.
Offering Flexibility in Surcharging
Managing surcharges can be a balancing act for MSPs.
FlexPoint empowers Nebraska MSPs to customize surcharging practices while maintaining compliance with regulations and transparency standards. MSPs can tailor surcharges based on client relationships, waiving fees for valued clients and applying them to others as needed.
MSPs can waive surcharges for loyal, long-term clients while applying them to others, balancing financial health and client satisfaction.
You can also set custom rules for automatic payments to ensure surcharges align with card brand guidelines.
For example, if a client uses Visa, FlexPoint ensures they are not charged more than 3%, as required by Visa’s surcharging policies.
Clients can view surcharges upfront, promoting transparency and reducing disputes. Additionally, personalized payment portals let clients update payment details on their own.
For instance, a client who usually pays with Mastercard might switch to Visa to save 1% on surcharges, making the process seamless for both parties while minimizing payment friction.
Conclusion: Streamlining Payments with Effective Surcharging Strategies
Credit card surcharging offers Nebraska MSPs an opportunity to offset the costs of processing credit card payments. However, proper implementation is critical, or MSPs risk compliance issues and a loss of client satisfaction.
Straightforward communication is paramount—invoices must clearly list surcharge amounts, and clients should understand these charges before processing payments.
Strictly adhering to federal, state, and card brand rules ensures surcharge caps are applied appropriately.
Managing all of these important tasks manually is challenging for busy MSPs. Fortunately, there is an alternative.
FlexPoint’s platform helps Nebraska MSPs automatically incorporate surcharging into their payment processes while staying aligned with all regulatory requirements and client expectations.
Enhance your MSP’s bottom line and compliance with automated credit card surcharging solutions from FlexPoint.
Stay within Nebraska’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 Nebraska for MSPs
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