As of January 2025, Nevada MSPs are permitted to use credit card surcharging to offset payment processing costs. Across the state, some businesses, including MSPs, are adopting this approach to minimize operational costs.
However, MSPs must adhere to strict state, federal, and card brand guidelines, or they risk penalties and fines. Mismanaged surcharging practices could also result in legal or reputational issues.
This guide delves into Nevada’s surcharging regulations, offers best practices for MSPs, and explains how payment automation tools streamline compliance and operations.
Disclaimer: This content is for informational purposes only and not legal advice. Consult with a legal expert for guidance specific to your MSP.
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What is Credit Card Surcharging for MSPs in Nevada?
Credit card processing fees tend to cost businesses between 2% and 4% of every transaction. These processing fees are made up of interchange costs and processor markups, among other costs.
Particularly for businesses that process recurring payments or many credit card transactions, these costs don’t take long to reduce profits substantially.
To offset these costs, some businesses choose to implement credit card surcharging.
This involves adding a fee (usually 2% to 3% of the transaction total) to a client’s invoice that the client is responsible for paying if they pay with a credit card.
Rather than a merchant (in this case, the MSP) being solely responsible for 100% of processing costs, the end clients can pay a surcharge fee, which, according to federal law, must be under 4% of the total transaction amount.
For instance, an MSP processing $120,000 in monthly credit card payments at a 3% fee incurs $3,600 in monthly processing costs—or $43,200 annually.
The MSP fully recovers this expense by applying a 3% surcharge to client invoices, improving its bottom line.
Alternatively, some MSPs may opt for a partial surcharge to balance cost recovery with client satisfaction.
Applying a 1.5% surcharge transfers $1,800 per month to clients while the MSP absorbs the remaining $1,800. In one year, this approach saves the MSP $21,600.
For any surcharging approach an MSP takes, transparency is fundamental.
As the following sections explain, transparency is essential for client goodwill and a core component of compliance with state, federal, and card brand regulations.
Understanding Credit Card Surcharging Laws in Nevada
Although there have been efforts to eliminate credit card surcharging in Nevada, including in 2013 with bill BDR 52-1024, the practice is still permitted as of January 2025.
Federal guidelines cap surcharges at 4%, and Nevada’s Attorney General reinforces these standards. AG Ford also explains: “The surcharge may not exceed how much the merchant pays to accept the card.”
In other words, if a merchant discount rate (MDR) is lower than 4%, the surcharge cannot exceed the MDR.
For example, if an MSP in Nevada has a merchant discount rate (MDR) of 2.5%, they can only apply a surcharge of up to 2.5%, even though the federal cap allows up to 4%.
This ensures surcharges reflect the actual cost of credit card processing rather than serving as a profit for the merchant.
Consider an MSP in Nevada processing $120,000 monthly credit card transactions at an average 2.5% processing fee. Without surcharging, this results in $3,000 in monthly fees or $36,000 annually.
By imposing a 2.5% surcharge, the MSP completely recovers these costs.
Alternatively, the MSP might implement a partial surcharge of 1.25%, shifting $1,500 of the monthly fee to clients while absorbing the remaining $1,500. Over a year, this approach saves $18,000 while providing competitive pricing and client satisfaction.
Along with adhering to these caps, businesses must also be transparent in their credit card surcharging practices.
AG Ford explains that “sellers must post signs at the point of entry and the point of sale that clearly explain the surcharges, and the charge must be itemized on the receipt.”
According to the Durbin Amendment of the Dodd-Frank Act, surcharges can only be applied to credit card transactions and never to prepaid or debit transactions, even if they are processed as credit.
In summary, to comply with Nevada's surcharging laws, MSPs must:
- Disclose surcharge policies before transactions
- Itemize fees on receipts
- Ensure surcharges do not exceed actual processing costs
- Only apply surcharging fees to credit card transactions
Thoughtful implementation promotes compliance and strengthens client relationships, making surcharging a valuable tool for managing financial burdens.
Because surcharging regulations vary by state and have extensive requirements, Nevada MSPs are recommended to seek legal assistance to guarantee accurate implementation.
Implementing Credit Card Surcharging for Nevada MSPs
Introducing credit card surcharges can be a delicate process for MSPs, directly affecting the client experience. The path to success lies in presenting surcharges as a transparent and fair method to manage costs rather than a burden on the client.
Clients appreciate honesty, especially when financial decisions are clearly explained.
Before implementing surcharges, MSPs can have phone calls or send emails explaining how these fees offset rising operational expenses.
Providing real-world examples—such as sharing data on how processing fees impact profitability—helps clients see the necessity of the surcharge.
Additionally, introducing surcharges as part of an effort to sustain high-quality services while avoiding price increases overall may foster goodwill.
For example, an MSP could explain that the surcharge prevents the need to raise rates for all clients.
MSPs can go further by offering alternative payment methods, such as ACH transfers or debit card options, to give clients flexibility and avoid surcharges.
This approach builds trust and demonstrates a commitment to client satisfaction, making the transition smoother and more acceptable.
The following guide offers practical steps to help MSPs integrate surcharges without compromising trust.
MSPs can refer to the following four steps to ensure their surcharging practices are effective, compliant, and do not compromise client trust.
Step 1: Establish a Clear Surcharge Policy and Structure
A well-defined surcharge policy is essential for successful implementation.
This policy should specify the surcharge percentage, the conditions under which it applies, and how it will be communicated to clients. Including the policy in client agreements ensures transparency and sets clear expectations.
Use the policy as an opportunity to explain that surcharges are a cost-recovery measure, not a profit-making strategy.
While many MSPs prefer fixed percentage surcharges, others opt for tiered or flat-fee models based on their unique business needs.
Examples of Surcharge Structures
1. Fixed Percentage Surcharge
An MSP applies a 2.75% surcharge on all credit card transactions or the merchant discount rate (MDR), whichever is lower.
•Example: A $15,000 invoice incurs a $412.50 surcharge (2.75%), bringing the total to $15,412.50.
2. Tiered Surcharge System
The surcharge varies based on the invoice amount. The surcharge for invoices under $7,500 is 2%; for invoices above $7,500, it is 3%.
•Example: A $6,000 invoice incurs a $120 surcharge (2%), while a $10,000 invoice incurs a $300 surcharge (3%).
3. Flat Fee Surcharge
A flat fee of $45 is applied to all transactions, regardless of size.
•Example: A $9,000 invoice totals $9,045 after adding the flat surcharge fee.
It bears repeating that, regardless of the approach taken, surcharges must not exceed the merchant's actual processing costs.
For instance, if a $1,200 transaction incurs a processing fee of 2.5%, the actual cost to the merchant is $30.
In this case, a $45 flat fee would exceed the processing cost and violate credit card network restrictions (e.g., Visa and Mastercard). To comply, the surcharge must be reduced to $30 to align with the merchant's processing fees.
MSPs should establish their surcharge structures carefully. They must focus on compliance with state and federal laws while preserving clarity and fairness for clients.
Step 2: Notify Credit Card Institutions and Clients
Another influential component of surcharging compliance involves adhering to card brand regulations.
For example, merchants must provide written notice to credit card networks, such as Visa and Mastercard, at least 30 days before introducing surcharges.
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 should also be informed about the surcharge policy ahead of time. A well-communicated payment policy builds trust and helps clients understand the surcharge is a cost-recovery tool, not a profit mechanism.
Further, proactive communication reduces chargebacks associated with unexpected or misunderstood fees.
Chargebacks are costly for MSPs, with an average expense of $190 per dispute, according to Swipesum. Clear communication about surcharges is essential to prevent these losses.
For instance, if a $9,000 invoice includes a $270 surcharge (3%) but fails to itemize this charge, the client may contest it, believing it was an error.
This misunderstanding could lead to a chargeback, costing the MSP the disputed amount, additional fees, and administrative time.
If the MSP prioritizes transparency and client communication about fees, it reduces payment disputes and safeguards revenue.
Step 3: Update Invoicing & Billing Systems
Most MSPs in Nevada will need to update their invoicing and billing systems to comply with surcharging rules effectively.
As noted earlier, merchants must notify credit card brands, such as Visa and Mastercard, at least 30 days before implementing surcharges.
Beyond this requirement, invoicing systems must meet specific card brand guidelines to avoid penalties and disputes.
For example, Visa caps surcharges at 3%, while Mastercard aligns with the federal limit of 4%. Managed service providers must ensure their invoicing systems are configured to calculate surcharges accurately and display them as separate line items.
This level of transparency helps reduce client misunderstandings and minimizes the risk of chargebacks.
Automated solutions like FlexPoint simplify compliance.
For instance, a $7,500 invoice with a 3% surcharge automatically adds $225 as a separate line item, clearly showing clients how the fee is applied.
FlexPoint’s automated compliance features also ensure Visa and Mastercard surcharge limits are strictly adhered to, reducing the risk of non-compliance.
This includes calculating surcharges based on the applicable merchant discount rate (MDR) and ensuring fees never exceed card network or federal caps.
Suppose an MSP processes a $10,000 transaction with a 2.5% MDR.
In that case, FlexPoint automatically calculates and displays a $250 surcharge as a separate line item, ensuring the charge remains within regulatory limits.
Upon implementing systems like FlexPoint, MSPs can focus on business growth while upholding compliance with surcharging regulations.
Step 4: Monitor and Review Compliance
Compliance isn’t a one-time task for MSPs. Regularly reviewing surcharging practices ensures businesses meet federal and card network regulations.
For example, when Visa reduced its surcharge cap to 3% in 2023, businesses that failed to adjust their surcharges risked fines and reputational damage. Monitoring these changes allows MSPs to stay ahead of regulatory updates.
Frequent compliance checks protect MSPs from penalties and help preserve client trust.
The Role of FlexPoint in Streamlining Credit Card Surcharging
High transaction volumes are a hallmark of MSP operations in Nevada, but credit card fees significantly impact profitability.
FlexPoint addresses this challenge with payment automation software tailored to the needs of MSPs.
Payment Processing Plans
MSPs can choose from two distinct payment processing plans:
- Interchange+ Plan
- Customer Surcharge Plan
a. Interchange+ Plan
Nevada MSPs benefit from transparent pricing based on interchange rates with the Interchange+ plan.
This plan aligns costs with the interchange rates specific to each card type. This transparent model ensures fees are adjusted based on the type of 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 typically have higher interchange rates, which leads to higher fees for transactions.
This plan is perfect for MSPs who prefer not to surcharge clients but still get optimal rates for credit card payments.
b. Customer Surcharge Plan
The Customer Surcharge Plan is an ideal solution for MSPs looking to offset credit card processing fees by applying a flat percentage surcharge to transactions. This shifts the cost of processing to clients, easing financial pressure on the MSP.
MSPs can focus on enhancing profitability by reducing or eliminating these fees from their overhead with the Customer Surcharge plan in place.
This straightforward plan applies a consistent surcharge to all credit card transactions, making it a practical choice for MSPs prioritizing cost recovery and client transparency.
FlexPoint also offers MSPs a shared-cost option, allowing them to split processing fees with clients. This approach balances cost reduction with sustaining trust and strong client relationships.
With these flexible plans, FlexPoint equips MSPs to implement the most effective cost-saving strategies for their operations.
How FlexPoint Enhances Surcharging Compliance and Transparency
FlexPoint streamlines credit card surcharging for MSPs, automating surcharge calculations and ensuring compliance with state laws, federal regulations, and card network policies.
Its automation guarantees surcharges remain below the federal 4% limit and produces accurate, transparent invoices.
Here’s an example of a Nevada MSP’s $15,500 invoice with a 2.75% surcharge:
FlexPoint’s Integration with MSP Tools for Seamless Billing
Supported integrations include:
- QuickBooks Desktop
- QuickBooks Online
- Xero
- ConnectWise
- SuperOps
- HaloPSA
- Autotask
These integrations streamline financial processes, reducing the need for manual work. MSPs automate key functions like invoicing, billing, and reconciliation, which are traditionally labor-intensive and prone to errors.
For instance, FlexPoint’s integration with QuickBooks Online automatically updates financial records with surcharges, fees, and other billing data.
This eliminates manual entry, ensuring accuracy and freeing up time for other business priorities.
Enhanced features, such as branded client payment portals and live financial tracking, give MSPs the tools to streamline payment management and maintain visibility over their cash flow.
Offering Flexibility in Surcharging
MSPs in Nevada leverage FlexPoint to customize surcharging practices without jeopardizing client relationships or operational needs.
For example, MSPs might waive surcharge fees for some loyal clients or high-value accounts. They can also choose to apply them for other transactions to maintain profitability.
FlexPoint’s automation ensures compliance with card brand rules.
For example, if a client pays with Visa, the system automatically applies a surcharge that does not exceed 3%, adhering to Visa’s guidelines.
Transparency is built into the process, with surcharges shown clearly before payment and customizable payment portals giving clients control over payment methods.
For instance, a client using American Express might switch to Discover to take advantage of lower surcharges. This creates a smoother and more cost-effective payment experience for everyone involved.
Conclusion: Streamlining Payments with Effective Surcharging Strategies
Credit card surcharging is a helpful way for MSPs to recover processing fees, but execution must be precise to avoid compliance issues and maintain client trust.
Transparent communication is paramount. Surcharges should be prominently listed on invoices, and clients must be aware of these fees before payment.
Compliance with federal and Nevada regulations and card brand rules ensures surcharge caps are not exceeded.
If your team handles these tasks manually, they quickly become time-consuming and prone to errors, especially for busy MSPs.
FlexPoint’s platform automates surcharging for Nevada MSPs, ensuring regulatory compliance and meeting client expectations. Thus, payment processing is seamless and efficient.
Enhance your MSP’s bottom line and compliance with automated credit card surcharging solutions from FlexPoint.
Stay within Nevada’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 Nevada for MSPs
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