Credit card processing fees add up quickly for North Carolina managed service providers (MSPs), cutting into their profit margins and increasing operational costs. One way to offset these expenses is through credit card surcharging, which is permitted in North Carolina as of February 2025.
When applied correctly, surcharges help MSPs maintain financial stability without raising service rates across the board.
That said, surcharging isn't just about adding a fee to a transaction—it requires strict compliance with state, federal, and card network regulations. Failing to follow these rules leads to penalties, chargebacks, or damaged client relationships.
Clients must know precisely why surcharges are applied, how much they will be, and where they appear on invoices. Transparent billing reduces disputes and helps maintain trust between MSPs and their clients.
This guide examines North Carolina’s surcharging regulations, outlines best practices for implementation, and explains how automation tools can simplify compliance and payment processing.
Disclaimer: This information is intended for general educational purposes and does not constitute legal advice. To ensure full compliance with North Carolina’s surcharging laws, MSPs should consult a qualified legal professional and stay updated on regulatory changes.
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What is Credit Card Surcharging for MSPs in North Carolina?
MSPs in North Carolina face rising credit card processing fees, which can affect profitability. Credit card surcharging offsets these costs by passing them on to clients instead of absorbing them entirely.
These fees, typically ranging from 2% to 4%, help MSPs manage expenses while keeping service pricing competitive. Lowering these overhead costs lets MSPs reinvest in growth initiatives like hiring, equipment upgrades, or software development.
For example, a North Carolina MSP that processes $12,000 in credit card payments each month with a 2.5% surcharge would collect an additional $300 per month to cover transaction fees.
This amounts to $3,600 annually, which could fund new cybersecurity tools, employee training, or expanded client support services. Even for MSPs with lower transaction volumes, these savings add up quickly.
Recurring payments—such as managed IT services, cloud hosting, and cybersecurity subscriptions—increase the impact of credit card fees. Since MSPs often bill clients monthly, processing costs accumulate over time.
Surcharging shifts some of this financial responsibility to clients who choose the convenience of paying by credit card, helping MSPs maintain healthy profit margins without raising service rates for all clients.
However, implementing surcharges requires consistent communication. Clients should be notified about these fees before they take effect, and invoices should always include a separate line item for surcharges to avoid confusion.
Providing a clear explanation bolsters trust and reduces disputes.
A well-implemented surcharging policy helps North Carolina MSPs balance cost recovery with client satisfaction, ensuring financial stability and long-term business growth.
Understanding Credit Card Surcharging Laws in North Carolina
As of February 2025, no state laws block credit card surcharging in North Carolina, but the practice has strict compliance requirements.
Before processing a payment, MSPs must inform clients of additional fees and ensure surcharge details are clearly visible on invoices, at the point of sale, or online checkout pages.
Additionally, surcharges can only be applied to credit card transactions, not to debit or prepaid card payments, even if they are processed as credit. This restriction is outlined in the Dodd-Frank Wall Street Reform and Consumer Protection Act, which applies nationwide.
MSPs should ensure their payment systems distinguish between credit and debit transactions to remain compliant.
Non-compliance with North Carolina’s surcharge regulations may result in penalties, fines, or other enforcement actions. To minimize legal risks, MSPs should review billing policies, ensure accurate surcharge calculations, and comply with all required disclosures.
Although North Carolina currently permits surcharging under federal guidelines, past legislative efforts have attempted to ban or restrict the practice.
House Bill 626 (H626) was introduced in 2011 to prohibit credit card surcharges. The bill would have classified violations as unfair and deceptive trade practices and potential penalties would include fines and legal action.
However, H626 did not pass and died in committee, leaving credit card surcharging legal in North Carolina under existing federal and card network regulations.
House Bill 209 (HB626), titled the Consumer Credit Card Protection Act, was introduced in North Carolina in 2023.
The bill aimed to prohibit businesses, state agencies, local governments, restaurants, and landlords from imposing extra charges on credit or debit card payments.
The bill proposed civil penalties for violations, with fines of up to $2,500 for a first offense and $5,000 for subsequent violations. These penalties would be enforced by the Secretary of Commerce, except for state agencies and local governments.
This bill did not pass either, and North Carolina businesses, including MSPs, are still permitted to apply credit card surcharges under existing federal and card network regulations.
Even though H626 and HB 209 did not become law, MSPs should stay informed about potential regulatory changes. Some states have passed stricter surcharge limitations, and similar proposals could resurface in North Carolina in the future.
Given the complexities of surcharging regulations, MSPs should consult a legal professional before implementing a surcharge policy to ensure compliance with North Carolina law, federal regulations, and card network requirements.
Implementing Credit Card Surcharging for Rhode Island MSPs
Research from PYMNTS suggests that surcharges influence payment behaviors.
More than 75% of survey respondents said they would reconsider using a credit card if a surcharge was applied, while 40% indicated they might switch to a competitor that doesn’t impose fees.
To avoid harming client relationships, MSPs must implement surcharges thoughtfully. If clients view them as a way to boost profits rather than a necessary cost-recovery measure, dissatisfaction is likely.
The following steps outline how North Carolina MSPs can integrate surcharging while maintaining compliance and trust.
Step 1: Establish a Clear Surcharge Policy and Structure
A specified surcharge policy should outline when surcharges apply, how they are calculated, and how they will be communicated to clients.
MSPs typically choose from fixed percentage surcharges, flat fees, or tiered pricing structures.
1. Fixed Percentage Surcharge
A set percentage is applied to all credit card transactions.
Example: An MSP applies a 3% surcharge on a $7,200 invoice, adding a $216 fee, bringing the total to $7,416.
2. Flat Fee Surcharge
A fixed dollar amount is applied to each transaction, but it cannot exceed 4% of the total invoice (or 3% for a Visa transaction) or the actual processing cost, whichever is lower.
This restriction means flat fees may not always be a viable surcharging method, particularly for smaller transactions where the processing cost falls below the intended flat fee.
Example: An MSP applies a $40 flat surcharge on all invoices.
- A $2,700 invoice would total $2,740, but if the actual processing cost is only $35, the surcharge must be reduced to $35 to comply with regulations (4% cap = $108, but the actual processing cost is lower).
- A $6,300 invoice would total $6,340 (the 4% cap is $252, so the $40 flat fee remains within the limit).
Since surcharges cannot exceed the actual processing cost, a flat fee approach does not always work, particularly for lower-value transactions where processing fees may fall below the standard flat charge.
3. Tiered Surcharge System
The surcharge rate depends on the transaction size but remains within legal limits.
Example: An MSP charges 2.5% on invoices under $3,500 and 3% on invoices $3,500 and above.
- A $3,200 invoice includes an $80 surcharge (2.5%).
- A $5,800 invoice includes a $174 surcharge (3%).
Step 2: Notify Credit Card Institutions and Clients
Before applying surcharges, North Carolina MSPs must notify both clients and the credit card networks they accept, including Visa and Mastercard. Most card networks require at least 30 days' notice before implementing surcharges.
"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."
Failing to provide advance notice creates confusion and disappointment.
For example, if a client expects to pay $4,800 but sees a $48surcharge (1%), they may dispute the charge if it wasn’t disclosed beforehand. Listing the surcharge separately on invoices prevents these disputes and improves clarity.
Step 3: Update Invoicing and Billing Systems
MSPs should update their invoicing systems to display surcharge amounts as separate line items. FlexPoint’s automated invoicing and billing system streamlines this process and ensures surcharges are correctly calculated and applied.
For example, if an MSP invoices $4,100 with a 3%surcharge, FlexPoint automatically adds a $123fee, bringing the total to $4,223. This breakdown minimizes confusion and helps maintain trust with clients.
Step 4: Monitor and Review Compliance
As explained above, North Carolina lawmakers have attempted to restrict or eliminate surcharging through legislation, such as House Bill 626 and House Bill 209 (see more details on these State Bills in the sections above).
These bills sought to limit or ban surcharge amounts altogether, classifying violations as unfair business practices. While these efforts did not pass, they highlight the potential for future restrictions.
MSPs should regularly review their surcharge policies and stay informed on any legal changes that could impact their ability to apply fees.
Failing to comply with surcharge regulations results in fines, chargebacks, and legal consequences. If an MSP overcharges, they may be required to refund clients and pay penalties to card networks.
With a proactive technique, MSPs manage surcharges effectively while safeguarding client relationships and ensuring legal compliance.
The Role of FlexPoint in Streamlining Credit Card Surcharging
FlexPoint is explicitly designed for MSPs. It streamlines credit card surcharging while ensuring full compliance with state and federal regulations.
Payment Processing Plans
To accommodate the needs of MSPs in North Carolina, FlexPoint offers two tailored payment processing plans:
- Interchange+ Plan
- Customer Surcharge Plan
Each plan is designed to provide flexibility in managing payment processing costs while maintaining compliance with card network rules.
a) Interchange+ Plan
The Interchange+ plan is a transparent pricing model that adjusts processing fees based on the interchange rates of different credit card types. Thus, MSPs pay fees that are directly aligned with the actual cost of processing each transaction.
- Cards like Discover typically have lower interchange rates, resulting in reduced processing fees.
- Premium cards, such as American Express or high-reward credit cards, have higher interchange rates, which increase transaction costs.
This plan best suits MSPs who prefer to absorb processing fees rather than pass them on to clients.
Eliminating surcharges can be a valuable option for MSPs focused on client retention. This may give them a competitive advantage and strengthen client relationships.
b) Customer Surcharge Plan
The Customer Surcharge Plan allows MSPs to recover credit card processing fees by passing them to clients in a structured, compliant manner.
Instead of absorbing the full cost of payment processing, MSPs can apply a controlled surcharge that is in accordance with Visa, Mastercard, and state regulations.
This strategy allows MSPs to offset transaction costs without exceeding North Carolina’s legal limits or violating card network policies.
FlexPoint also offers a hybrid option where MSPs can share processing fees with clients.
Rather than applying the full surcharge, MSPs can absorb part of the cost while passing the rest along. This approach minimizes financial strain on the business while keeping client relationships intact, ensuring fair and transparent payment practices.
These payment processing options make FlexPoint a powerful tool for North Carolina MSPs, whether they absorb, share, or pass on processing fees.
How FlexPoint Enhances Surcharging Compliance and Transparency in North Carolina
FlexPoint simplifies surcharging for North Carolina MSPs by automating surcharge calculations and ensuring compliance with North Carolina regulations, federal laws, and card network guidelines.
The platform streamlines invoicing, reducing administrative burdens while improving client satisfaction. Every invoice includes a detailed breakdown of charges, making it easy for clients to understand surcharges and avoid disputes.
For example, consider a North Carolina MSP issuing an invoice for $6,800 with a 2.9% surcharge.
A compliant invoice might include the following details:
North Carolina MSP Client INVOICE
Company Name: Your MSP
Invoice #: 009225
Invoice Date: March 12, 2025
Due Date: April 11, 2025
Bill To:
[Client Company Name]
[Client Address]
[Client Contact Name]
[Client Email]
Description:
Managed IT Services (Monthly)
Data Security & Backup
Subtotal: $6,800.00
Surcharge (2.9%): $197.20
Total Due: $6,997.20
Payment Terms:
Payment is due within 30 days of the invoice date. The surcharge complies with federal regulations (under the 4% limit), North Carolina laws, and card network policies.
Notes:
Thank you for your business!For any questions regarding this invoice, please contact us at [Your Contact Information].
FlexPoint’s Integration with MSP Tools for Seamless Billing
FlexPoint provides North Carolina MSPs with a robust, streamlined solution by integrating with top platforms like QuickBooks Desktop, QuickBooks Online, Xero, ConnectWise, Autotask, HaloPSA, and SuperOps.
Instead of juggling multiple systems, MSPs centralize payment processing and invoicing tasks into a single, unified platform.
The true value of FlexPoint lies in its ability to automate critical payment processes, allowing MSPs to focus on their core business functions while the platform handles routine tasks.
From generating accurate invoices to applying surcharges and reconciling payments, FlexPoint takes care of the heavy lifting.
A standout feature of FlexPoint is its real-time updates across all integrated tools. When payments or surcharges are applied, MSPs immediately see the changes reflected in their financial records, ensuring their systems are always up to date.
FlexPoint also offers a branded client payment portal, which can be customized to match the MSP's business branding.
This portal provides clients with easy access to detailed invoices, surcharge breakdowns, and the ability to update their payment methods, all in one place.
Billing transparency builds trust and helps reduce the risk of misunderstandings, which can lead to payment disputes or friction.
Clients can effortlessly review surcharge calculations, change their payment details, and access the information they need without confusion, improving overall communication and satisfaction.
By integrating payment processing into FlexPoint, North Carolina MSPs enhance operational efficiency, stay on top of financial records, and improve client relationships, all while maintaining full compliance with state and federal regulations.
Offering Flexibility in Surcharging
MSPs can tailor their surcharging strategies on a client-by-client basis, choosing to absorb processing fees for select clients while applying surcharges to others.
This level of flexibility allows MSPs to maintain strong client relationships while effectively managing financial operations.
FlexPoint automates compliance by setting surcharge limits that align with North Carolina regulations, federal laws, and card network policies. This ensures MSPs don’t exceed allowable thresholds.
For example, if a client pays with Visa, FlexPoint ensures the surcharge never exceeds 3%, automatically preventing compliance issues and maintaining transparency.
Clients also benefit from FlexPoint’s branded payment portal, where they can review surcharge details before completing a transaction. Displaying this information upfront builds trust in the system and reduces the risk of disputes.
Additionally, FlexPoint allows clients to update payment details without requiring direct involvement from the MSP.
For instance, if a client normally pays with American Express but decides to switch to Visa to comply with corporate expense policies, they can update their payment method instantly, facilitating a smooth, frictionless transaction.
With automated compliance and adaptable surcharging options, FlexPoint helps North Carolina MSPs apply surcharges efficiently while maintaining a positive client experience and protecting profitability.
Conclusion: Streamlining Payments with Effective Surcharging Strategies
In North Carolina, credit card surcharging is permitted but comes with distinct compliance requirements. MSPs looking to offset transaction fees must follow state and federal guidelines while guaranteeing full client transparency.
Invoices must clearly display surcharge fees, and clients should be informed before completing a transaction. Failure to disclose surcharges correctly results in disputes, chargebacks, or compliance issues.
FlexPoint helps North Carolina MSPs comply by automating surcharge calculations, ensuring fees never exceed actual processing costs. This prevents accidental overcharges and ensures MSPs align with Visa, Mastercard, and state regulations.
Additionally, FlexPoint simplifies invoicing by clearly itemizing surcharge details, offering clients full visibility into the breakdown of their payments.
With FlexPoint’s MSP-focused platform, North Carolina managed service providers seamlessly implement surcharges, streamline invoicing, and ensure compliance with evolving regulations—without manual oversight.
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 North Carolina for MSPs
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