Credit card surcharging presents a practical way for managed service providers (MSPs) in New Hampshire to recover transaction costs associated with credit card payments.
If they pass some or all of these fees on to clients, MSPs can reduce costs and protect profit margins without absorbing the entire expense of processing charges.
However, implementing surcharges requires compliance with both state and federal regulations.
Transparency is key. Clients must understand the reasons behind the fees, and transparent disclosure prevents potential payment disputes. MSPs that thoughtfully handle surcharging can balance cost recovery with maintaining strong client relationships.
This guide explores New Hampshire’s credit card surcharging laws, offers implementation tips, and explains how payment automation tools simplify compliance.
Disclaimer: This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, legal advice. Perform comprehensive due diligence and consult with a qualified legal professional to address specific questions related to your MSP.
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What is Credit Card Surcharging for MSPs in New Hampshire?
Credit card surcharging allows MSPs to pass along credit card processing costs to clients by adding a fee to transactions.
These fees, typically ranging from 2% to 4% of the transaction amount, help MSPs reduce operating expenses while maintaining financial stability. By recovering these costs, MSPs can instead allocate resources toward growth initiatives.
For example, if a New Hampshire MSP invoices a client for $8,000 and applies a 2.5% surcharge, the client pays an additional $200 to cover the credit card processing fee.
This strategy would save the MSP $2,400 in credit card costs over a year, freeing up cash for staff training, equipment updates, and marketing initiatives.
Even with modest transaction volumes, these cost savings accumulate fast.
MSPs frequently accept recurring payments for IT support, software subscriptions, and cloud hosting services.
The recurring nature of these transactions magnifies the impact of processing costs, making surcharging an effective cost-reduction technique.
Rather than absorbing these ongoing costs, surcharging offers MSPs a way to offset expenses while maintaining profitability. This approach also ensures clients share in the responsibility for transaction fees tied to the convenience of credit card payments.
However, clear and transparent communication is necessary when implementing surcharges. Clients should see detailed explanations of fees on invoices and learn about surcharges during initial contract and invoice discussions.
Flexibility in applying fees—such as offering reduced rates to long-term clients or waiving charges for high-value accounts—can further strengthen client relationships.
Thoughtful surcharging implementation practices ensure alignment between an MSP’s financial goals and client expectations, fostering mutual trust and satisfaction.
Understanding Credit Card Surcharging Laws in New Hampshire
As of December 2024, credit card surcharges are legal and allowed in New Hampshire. MSPs can offset processing costs by passing these fees on to their clients.
However, card networks such as Visa and MasterCard have stricter limitations, such as Visa's 3% fee cap. These limitations are intended to assure fairness and protect clients from excessive costs.
Any company that uses surcharging must also comply with state consumer protection regulations.
The Durbin Amendment of the Durbin Amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, for example, prohibits the application of surcharges on Debit or Prepaid Card purchases.
Regularly revising billing procedures and service agreements ensures they comply with state and federal regulations.
However, if you are unsure of your surcharging options in New Hampshire, we recommend consulting with a lawyer or qualified legal professional.
MSPs must disclose any surcharges on invoices or receipts so clients are aware of the fee before completing a transaction.
This involves defining each invoice's surcharge percentage and amount as its own line item.
Implementing Credit Card Surcharging for New Hampshire MSPs
Data from PYMNTS reports that nearly three-quarters of respondents would be less likely to pay with credit cards if a surcharge is charged. Almost half of respondents would look for another merchant/vendor that does not charge them.
Considering these insights, MSPs must carefully implement surcharges to balance cost recovery with client retention.
This section outlines a step-by-step guide to implementing surcharges and offers best practices for ensuring compliance without sacrificing client trust.
Step 1: Establish a Clear Surcharge Policy and Structure
The first step for MSPs is to create a comprehensive surcharging policy.
The policy must follow New Hampshire and federally mandated criteria for card brand surcharging.
These rules specify how much a surcharge can be charged, when it can be imposed, and which credit card transactions would be affected.
MSPs should make that policy available to clients to avoid confusion or misunderstanding.
The policy will also outline the MSP's surcharging structure for implementing these charges.
For example, the MSP might use a flat fee or one of the following structures:
1. Fixed Percentage Surcharge:
A flat 2.8% fee on all credit card payments.
Example: A $1,500 invoice with a 2% surcharge adds $30, bringing the total to $1,530.
2. Tiered Surcharge System:
A sliding scale based on transaction amounts—2% for invoices under $2,000 and 3% for invoices over $2,000.
Example: A $5,000 invoice with a 3% surcharge adds $150, for a total of $5,150.
Step 2: Notify Credit Card Institutions and Clients
MSPs must notify clients and relevant credit card companies before implementing surcharges.
Card networks like Visa and Mastercard require formal notification at least 30 days before applying surcharges.
For instance, Visa states:
“U.S. merchants must first notify Visa and their acquirer of their intent to surcharge at least 30 days before implementing surcharging. Merchants can submit a notification form to Visa.”
Clients should also be notified in advance of any changes to billing practices.
This information should also be included in service agreements and direct communication, such as email announcements, explaining the rationale behind the surcharge.
For example, you might share the following communication with your clients:
“Beginning [date], a 3% surcharge will be applied to credit card transactions to recover the costs of payment processing. This fee ensures we can continue to deliver high-quality services without increasing base prices.”
Advance notification helps clients prepare and minimizes the risk of payment disputes or chargebacks.
For example, suppose a client receives a $8,000 invoice with a 3% surcharge but wasn’t informed in advance. In that case, they may dispute the transaction, leading to additional costs and administrative burdens for the MSP.
If you did not disclose this surcharge in advance, you risk losing the surcharge amount and being liable for chargeback fees and related arbitration expenses.
These fees can be significant and are worth preventing when feasible. Swipesum reports that the average chargeback cost for a business is $190 per dispute.
Step 3: Monitor and Review Compliance
When you first begin surcharging your client, your invoicing practices must be adjusted accordingly. One example is adding surcharges as individual line items on each invoice.
Rather than simply including the surcharge in the total fee, listing the surcharge specifically along with other charges helps minimize misunderstandings, arguments, and chargebacks.
FlexPoint’s automated billing and payment solutions simplify the process by calculating and presenting invoice surcharge costs. We’ll discuss how you can do this in an upcoming section.
Step 4: Monitor and Review Compliance
MSPs should regularly review their surcharge practices to comply with New Hampshire laws, federal regulations, and card network policies.
Periodic payment audits can identify discrepancies or areas requiring adjustment.
For example, in 2023, Visa lowered its surcharge cap to 3% from 4%, requiring many businesses to modify their billing practices.
Another compliance consideration is adjusting surcharging fees according to merchant discount rates (MDR). An MDR is a fee that a payment processing company charges merchants and businesses for debit or credit card transactions.
Mastercard allows surcharges up to 4% if the merchant’s discount rate exceeds this amount. If the rate is lower, the surcharge must match the actual cost.
Mastercard explains:
“If a merchant’s merchant discount rate for Mastercard credit cards is 2.50%, the cap on the surcharge that this merchant may charge a consumer is 2.50%, not 4%.
The 4% cap only becomes relevant in the rare instances where a merchant is paying more than 4% for Mastercard acceptance.”
These instances highlight the significance of remaining current on regulations and card network rule changes. MSPs should also request customer input to ensure surcharges are applied equitably and openly.
Regular monitoring and system updates safeguard MSPs from noncompliance issues and promote favorable client relationships.
Failure to adjust to the new surcharge limitations may result in disputes or financial penalties.
By following these four steps, MSPs in New Hampshire can successfully introduce surcharges to reduce transaction fees while maintaining excellent customer experiences.
The Role of FlexPoint in Streamlining Credit Card Surcharging
FlexPoint is MSP-specific payment automation software tailored to MSPs' needs. It simplifies credit card surcharging while ensuring compliance with regulations.
An invaluable tool for MSPs in New Hampshire, FlexPoint offers features designed to enhance transparency and operational efficiency.
Payment Processing Plans
FlexPoint provides two customized payment processing plans to address the unique needs of MSPs in New Hampshire:
- Interchange+ Plan
- Customer Surcharge Plan
We’ll discuss each of these plans below.
a. Interchange+ Plan
The Interchange+ plan is a transparent pricing model that adjusts processing costs based on the interchange rates of specific card types.
This flexibility ensures MSPs pay fees aligned with the actual costs of processing each transaction.
Cards like Discover have lower interchange rates, reducing processing fees.
Premium cards, such as American Express or high-reward credit cards, incur higher interchange rates, which lead to slightly higher transaction processing fees.
Interchange+ is an optimal solution for MSPs that prefer to absorb credit card processing fees rather than pass them on to clients. This approach can be particularly beneficial for MSPs prioritizing client retention and loyalty.
Customer Surcharge Plan
The Customer Surcharge plan enables MSPs to apply a flat percentage surcharge to credit card transactions, shifting processing fees to clients.
A consistent surcharge applied across all credit card transactions provides simplicity and predictability.
There is also the option to share processing fees with clients, where the MSP absorbs part of the cost while passing the remainder to clients.
For instance, an MSP could apply a 2.5% surcharge on all credit card transactions for which the client is entirely responsible.
Alternatively, they might absorb half the fees while passing the rest to clients, fostering goodwill and preserving relationships.
These flexible plans make FlexPoint a versatile choice for New Hampshire MSPs, whether they aim to absorb, share, or entirely pass on processing fees.
How FlexPoint Enhances Surcharging Compliance and Transparency
FlexPoint streamlines surcharging by automating surcharging and guaranteeing adherence to New Hampshire laws, federal regulations, and card network guidelines.
Invoicing with FlexPoint is straightforward, which will reduce administrative duties and improve client satisfaction. Invoices are easy to create and include detailed line items for surcharges.
Consider a client receiving a $7,500 invoice with a 2.8% surcharge.
To disclose all of the charges transparently, the invoice might look like this:
FlexPoint’s Integration with MSP Tools for Seamless Billing
FlexPoint empowers MSPs in New Hampshire by integrating directly with leading platforms such as QuickBooks Desktop, QuickBooks Online, Xero, ConnectWise, and SuperOps.
MSPs can simplify their payment and invoicing processes by integrating them into one unified system rather than overseeing multiple systems.
FlexPoint's value is fundamentally rooted in MSP payment automation.
By efficiently managing routine duties such as generating invoices, applying surcharges, and reconciling payments, MSPs can concentrate on their primary business activities.
Real-time updates across connected instruments are another distinguishing feature of FlexPoint.
For instance, when payments or surcharges are applied, MSPs observe immediate changes in their financial records.
FlexPoint provides a branded client payment portal that is both user-friendly and branded to improve client communication.
Clients can review surcharge calculations, alter payment methods, and access detailed invoices.
This transparency promotes trust and reduces the likelihood of misunderstandings that could otherwise lead to payment friction.
Offering Flexibility in Surcharging
FlexPoint allows you to enable or disable surcharges for each client at your discretion.
This feature empowers MSPs to handle client relationships with greater flexibility and precision.
For example, you might absorb credit card processing fees as a gesture of appreciation for loyal or high-value clients while applying surcharges to others.
This functionality allows you to tailor your surcharging approach to align with business goals, finding a balance between cutting costs and fostering client satisfaction.
Conclusion: Streamlining MSP Credit Card Payments with Effective Surcharging Strategies
Credit card surcharging provides a straightforward method for New Hampshire MSPs to minimize processing costs.
Success lies in maintaining transparent billing practices and adhering to federal, state, and card brand regulations.
FlexPoint’s automated tools are designed to simplify this process, ensuring compliance and clarity at every step.
FlexPoint’s platform ensures charges are calculated accurately and presented clearly on invoices, whether you apply a flat rate or a tiered surcharge structure.
FlexPoint also allows you to turn surcharges for specific clients on or off, allowing you to customize billing practices based on individual relationships.
Integration with popular financial tools like QuickBooks and Xero further enhances FlexPoint’s functionality.
MSPs can seamlessly sync their payment and invoicing data, creating a unified system for managing surcharges, tracking payments, and maintaining accurate records.
This streamlined approach reduces administrative burdens while ensuring your billing practices remain precise and up-to-date.
With FlexPoint, New Hampshire MSPs can confidently adopt surcharging, knowing automation and integration work together to support compliance, efficiency, and strong client relationships.
Enhance your MSP’s bottom line and compliance with automated credit card surcharging solutions from FlexPoint.
Schedule a demo to see how FlexPoint can transform your financial operations and maximize profitability.
Additional FAQs: Credit Card Surcharging in New Hampshire for MSPs
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