As of February 2025, credit card surcharging is permitted for New Mexico MSPs. This process helps them recover processing fees by passing these costs to clients. Instead of absorbing the entire expense of credit card transactions, surcharges help offset fees and maintain profitability.

However, implementing surcharges requires compliance with federal laws, state regulations, and card network policies. 

New Mexico MSPs must adequately disclose fees, stay within surcharge limits, and notify clients to avoid disputes or compliance issues.

This guide outlines New Mexico’s surcharging laws, provides actionable steps for implementation, and explains how automation tools like FlexPoint help MSPs manage compliance and simplify payments.

Disclaimer: This content is for informational purposes only and does not constitute legal advice. MSPs should consult a qualified attorney to ensure compliance with New Mexico’s surcharging regulations.

{{toc}}

What is Credit Card Surcharging for MSPs in New Mexico?

Credit card processing fees include interchange fees, network assessments, and payment processor markups. These fees generally range from 2% to 4% per transaction. 

While the cost may seem minimal for individual transactions, the total expense adds up quickly, especially for MSPs handling high transaction volumes or recurring payments.

Without a surcharging strategy, these costs gradually reduce available resources for hiring, system upgrades, and service expansion.

Consider a New Mexico-based MSP that processes $100,000 in monthly credit card payments, with an average fee of 3%. The MSP would incur $3,000 in processing costs each month. 

Over the course of a year, this results in $36,000 in payments-related costs.

Once the MSP implements a 3% surcharge on credit card payments, it will shift this expense to clients, effectively saving $36,000 annually.

Alternatively, some MSPs embrace a shared-cost approach to balance profitability with client retention.

If the MSP applies a 1.5% surcharge, clients cover $1,500 per month while the MSP absorbs the remaining $1,500. This method still allows the MSP to recover $18,000 annually while maintaining stronger client relationships.

Regardless of the approach, transparency is mandatory.

New Mexico MSPs must comply with federal laws, state regulations, and policies established by card networks such as Visa, Mastercard, Discover, and American Express.

The following sections will cover New Mexico’s surcharging laws, best practices for implementation, and strategies to help MSPs recover processing costs while maintaining compliance and strong client relationships.

Understanding Credit Card Surcharging Laws in New Mexico

New Mexico does not impose additional credit card surcharging restrictions beyond federal requirements as of February 2025. 

However, MSPs must still follow national regulations and adhere to rules set by individual card networks.

Federal law prohibits surcharges on debit and prepaid cards, even when processed as credit.

This restriction, part of the Durbin Amendment of the Dodd-Frank Act, applies in New Mexico. MSPs can only apply surcharges to credit card transactions (and NOT for Prepaid and Debit card transactions), and failing to do so could result in compliance violations.

Further, federal regulations limit surcharges to 4% of the total transaction, ensuring MSPs cannot charge clients beyond this amount—even if their processing fees exceed it. 

Specific card networks also enforce their own regulations:

• Visa limits surcharges to 3%, which precedes the federal cap when applied to Visa transactions.
• Mastercard allows surcharges up to 4%, provided they do not exceed actual processing costs.
• Merchants cannot charge more than their actual credit card processing expenses, even if the cap allows for a higher surcharge.

New Mexico lawmakers have previously considered tighter regulations on credit card surcharging.

House Bill 545, introduced in 2013, sought to introduce additional restrictions, but it did not pass. This bill would have placed greater limits on MSPs applying surcharges if enacted.

While no state-specific surcharging laws are currently in place beyond federal and card network rules, past legislative attempts indicate that future restrictions remain possible. 

MSPs must be aware of potential regulatory changes to ensure continued compliance.

Transparency remains paramount when applying surcharges. New Mexico MSPs must disclose fees before processing payments and itemize surcharges on invoices and receipts to prevent disputes and maintain compliance. 

Failing to do so leads to client dissatisfaction and regulatory penalties.

For effective implementation, fees cannot exceed actual processing costs. MSPs must also provide clear disclosures to clients and integrate surcharges into billing systems. 

Automated invoicing tools like FlexPoint can simplify compliance by accurately calculating surcharges, preventing overcharges, and ensuring transactions meet legal and card network standards.

MSPs should monitor legislative developments in New Mexico, as future changes to surcharging laws could impact compliance requirements. 

Proactively adjusting policies in response to new regulations helps MSPs avoid legal risks while maintaining financial stability.

Note: This content is for informational purposes only and does not constitute legal advice. MSPs should consult a qualified attorney to ensure full compliance with New Mexico’s surcharging regulations.

Implementing Credit Card Surcharging for New Mexico MSPs

Managing credit card transaction fees is a challenge for MSPs in New Mexico, especially when processing large volumes of payments. 

Surcharging offsets these costs but must be implemented carefully to avoid client dissatisfaction or compliance issues. 

Adding a surcharge to invoices without proper communication leads to confusion, disputes, or even lost business.

Data from PYMNTS indicate mixed attitudes toward surcharging—76% of consumers say surcharges would make them reconsider using credit cards, while 40% would actively seek alternative businesses to avoid the fee. 

If surcharges are not presented clearly, clients might assume they are an extra profit source rather than a necessary measure to recover processing expenses.

For surcharging to be successful, New Mexico MSPs must be upfront about their policies, explaining why the fees exist and how they help maintain stable service pricing. 

Instead of absorbing processing fees into operating costs or raising overall rates, passing them to clients ensures those who choose the convenience of paying by credit card cover the associated expenses.

The steps below outline the best practices for implementing surcharges while keeping billing transparent and fair.

Step 1: Establish a Clear Surcharge Policy and Structure

A well-defined surcharge policy ensures consistency and compliance. 

This policy should outline when surcharges apply, the percentage or fee structure, and how clients will be informed. Including it in client agreements helps set expectations and minimizes confusion.

MSPs often choose from one of three surcharge models:

1. Fixed Percentage Surcharge:

A uniform percentage is applied to every credit card transaction.

Example: A 3%surcharge on a $10,500 invoice adds $315, making the total $10,815.

2. Tiered Surcharge System:

Different rates apply depending on invoice size.

Example: A 2% surcharge for invoices under $4,000 and a 3% surcharge for invoices over $4,000.

• A $3,800 invoice incurs a $76 surcharge (2%), totaling $3,876.
• A $5,500 invoice incurs a $165 surcharge (3%), totaling $5,665.

3. Flat Fee Surcharge:

A fixed amount is added to every transaction, but it cannot exceed actual processing costs. 

Example: A $40 surcharge applies to all transactions.

• A $2,800 invoice totals $2,840 (4% cap = $112).
• A $7,200 invoice totals $7,240 (4% cap = $288).

However, surcharges must never exceed the merchant's processing costs. If a $1,200 transaction incurs a 2.5% processing fee ($30), charging a $40 flat fee would exceed this amount, violating Visa and Mastercard regulations. 

In this case, the surcharge must be reduced to $30 to remain compliant.

Step 2: Notify Credit Card Networks and Clients

New Mexico MSPs must inform Visa, Mastercard, and other credit card networks at least 30 days before implementing surcharges. This ensures compliance with card network policies and prevents unexpected issues.

For example, Mastercard states:

“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.”

Client communication is equally significant. 

MSPs should clearly explain why surcharges are applied, emphasizing that they offset processing fees rather than serve as a profit mechanism.

According to Swipesum, a lack of transparency can lead to chargebacks, which cost businesses an average of $190 per dispute.

For example, a $8,200 invoice with a 3% surcharge should list the $246 fee separately. 

A client may dispute the charge if this fee is not clearly disclosed, believing it was added incorrectly. This could result in a chargeback, forcing the MSP to absorb the cost and incur additional penalties.

Step 3: Update Invoicing and Billing Systems

Invoices should itemize all fees, including surcharges. Invoicing and billing systems must be updated accordingly to ensure these details are included on every invoice.

Each invoice should list these fees separately to provide full transparency and minimize potential disputes. Clients need to see precisely how surcharges apply to their transactions. 

FlexPoint’s automated billing system streamlines this process by calculating and applying surcharges accurately, ensuring they are displayed clearly for every payment.

Step 4: Monitor and Review Compliance

When Visa lowered its surcharge cap from 4% to 3% in 2023, MSPs that failed to update their surcharge rates risked fines and penalties.

This underscores why surcharge compliance is a continuous process. MSPs must regularly review their surcharge practices to ensure they comply with all relevant regulations.

Additionally, MSPs must ensure surcharges never exceed the merchant discount rate (MDR). 

For example, if an MSP's processing cost is 2.9%, they cannot apply a 4% surcharge, even though the legal cap allows it.

Ongoing compliance efforts should include:

• Regularly auditing surcharge calculations to prevent overcharging.
• Monitoring industry updates for changes in New Mexico regulations.
• Maintaining clear documentation of surcharge policies and client communications.

Proactively managing surcharging policies helps New Mexico MSPs reduce costs, avoid regulatory pitfalls, and maintain strong client relationships.

The Role of FlexPoint in Streamlining Credit Card Surcharging

Recurring credit card payments and high transaction volumes are integral to an MSP’s business model. While these transactions provide steady revenue, they also incur considerable processing fees, which can reduce profits over time.

Managing these costs manually is tedious and leads to inconsistencies and unnecessary expenses. 

FlexPoint simplifies this challenge with MSP-specific payment automation software that streamlines transactions, reduces costs, and assures compliance with surcharging regulations.

Payment Processing Plans

FlexPoint offers two tailored payment plans, allowing MSPs to decide whether to absorb processing fees at a lower rate or transfer these costs to clients through surcharging.

• Interchange+ Plan
• Customer Surcharge Plan

a. Interchange+ Plan

New Mexico MSPs that prefer handling processing fees internally benefit from the Interchange+ plan, which calculates costs based on real-time interchange rates. 

Since each credit card type has its own associated interchange fees, transaction costs adjust accordingly.

For example, payments made with Discover cards often have lower interchange rates, minimizing the MSP's processing fees. 

Conversely, American Express and high-reward credit cards typically have higher interchange costs, which increase overall fees.

For MSPs focused on client retention and seamless billing, Interchange+ eliminates added invoice costs, creating a smooth and predictable payment experience.

b. Customer Surcharge Plan

For those looking to offset processing fees, the Customer Surcharge plan allows MSPs to apply a fixed surcharge percentage to credit card transactions, effectively shifting processing costs to clients.

This structured approach eliminates payment processing expenses from the MSP’s overhead, making it an effective cost-saving strategy. 

With a consistent surcharge percentage, MSPs ensure predictable expenses without negatively impacting revenue.

Here’s an example:

A New Mexico MSP issues a $9,500 invoice and applies a 3% surcharge. The invoice would reflect an additional $285, bringing the total to $9,785.

This method keeps expenses transparent while helping MSPs maintain profitability.

FlexPoint also offers the flexibility to implement a shared-cost model, where MSPs absorb part of the processing fees while passing the rest to clients. This approach helps maintain strong client relationships while reducing overall financial strain.

With these flexible payment options, FlexPoint allows New Mexico MSPs to implement the strategy that best aligns with their business model.

How FlexPoint Enhances Surcharging Compliance and Transparency

FlexPoint automates surcharging calculations and ensures compliance with New Mexico’s laws, federal regulations, and card network guidelines.

With built-in automation, MSPs rest assured that surcharges stay within the 4% federal cap and that invoices are accurate, reducing the risk of disputes.

Here’s an example of a New Mexico MSP’s invoice with a 3% surcharge:

New Mexico MSP Client INVOICE

Company Name: [Your MSP]
Invoice #: 008223
Invoice Date: March 1, 2025
Due Date: May 1, 2025

Bill To:
[Client Company Name]
[Client Address]
[Client Contact Name]
[Client Email]

Description:

• Cloud Data Storage
• Cybersecurity Risk Assessment
• VoIP System Installation

Subtotal: $11,800.00
Surcharge (3% of Subtotal): $354.00
Total Due: $12,154.00

Payment Terms:
Payment is due within 60 days of the invoice date. The surcharge complies with federal regulations (under the 4% limit), New Mexico state laws, and card network guidelines.

Notes:
Thank you for your business! If you have any questions about this invoice, please contact us at [Your Contact Information].

‍

With automation and compliance tools designed specifically for MSPs, FlexPoint simplifies credit card surcharging, improves transparency, and helps New Mexico MSPs maintain profitability while keeping their clients informed and happy.

FlexPoint’s Integration with MSP Tools for Seamless Billing

FlexPoint integrates with industry-leading platforms, allowing MSPs to maintain their preferred financial and business management tools while enhancing efficiency.

Its compatibility with widely used software solutions ensures New Mexico MSPs automate crucial financial processes with minimal disruption.

Some of the key FlexPoint integrations include:

• QuickBooks Desktop
• QuickBooks Online
• Xero
• ConnectWise
• SuperOps
• HaloPSA
• Autotask

With these integrations, New Mexico MSPs consolidate invoicing, billing, and reconciliation into a single automated workflow, eradicating manual data entry and decreasing administrative overhead.

For example, when integrated with QuickBooks Online, FlexPoint instantly syncs surcharge details, service fees, and payment statuses. This ensures financial records reflect accurate data without requiring manual updates.

Instead of relying on manual entry—which increases the risk of miscalculations—New Mexico MSPs gain access to error-free financial reporting that supports better business decisions.

Beyond automation, FlexPoint provides additional tools that enhance financial clarity and improve the client experience:

• Branded Client Payment Portals: Allow clients to review invoices, update payment methods, and process transactions through a professional, user-friendly interface.
• Real-Time Reporting: Delivers up-to-date financial insights, helping MSPs track revenue, surcharges, and outstanding balances.

With these capabilities, FlexPoint helps New Mexico MSPs simplify financial management, maintain compliance, and ensure smooth payment handling without disrupting daily operations.

Offering Flexibility in Surcharging

FlexPoint allows New Mexico MSPs to manage surcharges strategically while abiding by compliance guidelines. 

MSPs can decide how to apply surcharges based on client relationships. They can offer flexibility to waive fees for long-term clients while implementing them for others to recover credit card processing costs. 

This approach helps MSPs balance financial stability with client retention.

Automating surcharges with FlexPoint helps MSPs comply with rules set by card brands like Visa, Mastercard, Discover, and American Express. 

The system automatically enforces correct surcharge limits, preventing managed service providers from exceeding the permitted percentage for each card brand. 

For example, if a client pays with a Visa, FlexPoint will cap the surcharge at 3%, keeping it within regulatory limits.

Strong client relationships hinge on transparency, and FlexPoint provides clear invoicing that details surcharges upfront. Clients are fully informed about added fees before completing a payment, easing the risk of disputes. 

Additionally, FlexPoint allows clients to update their payment methods easily, eliminating the need for manual adjustments by the MSP. 

If a client usually pays with American Express but wants to switch to Visa to lower their surcharge rate, they can do so without hassle or need to contact your MSP for help.

Conclusion: Streamlining Payments with Effective Surcharging Strategies

Credit card surcharging permits New Mexico MSPs to cut processing fees, but success depends on proper implementation. Without a transparent approach, MSPs risk compliance violations and strained client relationships.

Transparency is key. Surcharges must be clearly itemized on invoices, and clients must be informed about them before payments are processed. Failure to disclose fees properly can lead to disputes and potential penalties.

Adhering to federal, state, and card network guidelines ensures surcharge limits are followed correctly. However, managing compliance manually is time-consuming and error-prone for busy MSPs.

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

Stay within New Mexico’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 New Mexico for MSPs

{{faq-section}}