North Dakota permits credit card surcharging as of February 2025, thus allowing MSPs to offset rising payment processing fees by passing these costs to clients. 

This strategy helps MSPs manage expenses, protect profit margins, and maintain financial stability without increasing service rates. However, implementing surcharges mandates careful compliance with state and federal laws. 

MSPs must also follow the specific surcharging rules established by Visa, Mastercard, and Discover, which outline how fees must be disclosed and applied.

This guide provides a thorough overview of North Dakota’s surcharging regulations, outlines steps for MSPs to introduce surcharges effectively, and explains how automation tools simplify compliance and improve payment workflows.

Disclaimer: This content is for informational purposes only and does not constitute legal advice. MSPs should conduct due diligence and consult a legal professional to ensure they fully comply with North Dakota’s surcharging laws.

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What is Credit Card Surcharging for MSPs in North Dakota?

Every time an MSP processes a credit card payment, they incur fees ranging from an average of 2% to 4% of the transaction amount. These costs come from interchange fees, network assessments, and payment processor markups. 

While the impact on individual payments may seem small, the expenses add up quickly, especially for large invoices and recurring payments.

For example, a North Dakota MSP handling $120,000 in monthly credit card payments at a 3% processing rate would pay approximately $3,600 in monthly fees. 

This amounts to $43,200 in costs in a year—substantially affecting the company’s profitability.

One way to reduce these expenses is by introducing a credit card surcharge. 

By applying a 3% surcharge to client payments, the MSP can recover the entire $43,200 in annual processing fees, freeing up funds that could be reinvested in business growth or financial stability.

However, some MSPs may choose to take a more measured approach to maintain strong client relationships. 

Instead of passing the full fee onto clients, an MSP might set a 1.5% surcharge. In this case, clients would contribute $1,800 monthly toward processing fees, while the MSP would cover the rest. 

This method still recoups $21,600annually, easing financial pressure while keeping payment terms more client-friendly.

While credit card surcharging offers financial benefits, compliance is critical. 

North Dakota’s regulations, along with guidelines from Visa and Mastercard, require clear disclosure of surcharge fees and ensure they do not exceed the actual cost of processing.

The following sections will explain North Dakota’s surcharging laws and provide a step-by-step guide for MSPs who want to implement a compliant surcharging strategy.

Understanding Credit Card Surcharging Laws in North Dakota

As of February 2025, North Dakota does not have any state laws prohibiting credit card surcharges. This means MSPs can pass processing fees to clients, helping to offset transaction costs. 

However, surcharging must be done correctly to remain compliant with both federal laws and card network regulations.

One of the most important restrictions is that debit and prepaid cards cannot be surcharged, even if processed as credit transactions. This rule is mandated by the Durbin Amendment of the Dodd-Frank Act, which applies nationwide, including in North Dakota.

Transparency is a foundational compliance requirement. North Dakota MSPs imposing surcharges must disclose these fees to clients before charging a credit card.

This includes ensuring that invoices, receipts, and online payment portals display surcharge amounts in a visible and coherent manner.

For example, if an MSP applies surcharges to online payments, the fee must be disclosed on the webpage where credit card payment options are first introduced. 

Additionally, the surcharge amount or percentage must be itemized separately on all invoices and receipts so clients can see exactly how it affects their total payment.

MSPs should review the State Credit Card Administration guidelines outlined in North Dakota Administrative Code 12.5-03-01 to confirm compliance with North Dakota's regulations. 

By maintaining clear communication and following proper billing procedures, MSPs can recover processing fees while strengthening client relationships.

Consulting a legal professional is recommended for those unsure about North Dakota’s surcharging regulations or how to implement them effectively. A lawyer will provide guidance on structuring surcharge policies to assure compliance and avoid potential regulatory issues.

Implementing Credit Card Surcharging for North Dakota MSPs

Consumer reactions to surcharges can vary, so MSPs must proceed carefully when implementing surcharging. 

A survey from PYMNTS found that more than 75% of customers are less likely to use a credit card if a surcharge is applied, and 40% would consider switching to another service provider.

For North Dakota MSPs, this means balancing financial strategy with client expectations. 

Below is a step-by-step guide to implementing credit card surcharging in a way that supports profitability while maintaining strong client relationships.

Step 1: Establish a Clear Surcharge Policy and Structure

A well-defined surcharging policy ensures consistency and transparency. MSPs should determine their surcharge percentage, when it will be applied, and how it will be communicated to clients. 

MSPs should detail their surcharge policy in service agreements and display it on invoices to avoid misunderstandings.

MSPs can structure surcharges in different ways, such as a fixed percentage, a tiered system, or a flat fee.

Examples of Surcharge Structures

1. Fixed Percentage Surcharge

A fixed percentage (e.g., 2.75%) is applied to all credit card transactions, ensuring consistency.

Example: A $15,000 invoice with a 2.75% surcharge adds $412.50, bringing the total to $15,412.50.

2. Tiered Surcharge System

The surcharge rate varies depending on the invoice amount.

Example:

• A 2% surcharge for invoices under $7,500 results in a $120 fee on a $6,000 invoice (total: $6,120).
• A 3% surcharge for invoices over $7,500 results in a $300 fee on a $10,000 invoice (total: $10,300).

1. Flat Fee Surcharge

A fixed dollar amount is applied to all credit card transactions.

Example: A $45 flat fee is added to a $9,000 invoice, totaling $9,045.

Regardless of the surcharge structure, MSPs cannot charge more than their actual processing costs. 

If an MSP’s payment processor charges 2.5% on a $1,200 transaction, the fee is $30. 

In this scenario, charging a $45 flat fee would exceed the allowable limit under Visa and Mastercard rules, making the surcharge non-compliant.

Step 2: Notify Credit Card Institutions and Clients

Another paramount compliance aspect involves properly notifying payment networks and clients about surcharges.

MSPs must provide advance notice to Visa and Mastercard at least 30 days before implementing surcharges.

According to Mastercard:

"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."

Further, clients must be notified before a surcharge is applied. 

A comprehensive policy helps build trust and ensures clients understand the surcharge is simply a way to recover processing costs—not an extra charge for profit.

Communication also reduces chargebacks, which can be costly. 

Swipesum reports that the average chargeback costs a business $190 per dispute, factoring in fees, lost revenue, and administrative expenses.

For example, if an MSP issues a $9,000 invoice with a 3% surcharge but does not itemize the $270 fee, the client may contest the charge, believing it was an error. 

A chargeback could result in the MSP losing the payment and facing additional penalties.

To minimize the likelihood of payment disputes, North Dakota MSPs can focus on:

• Sending advance email notifications about the surcharge policy.
• Including surcharge explanations on all invoices.
• Updating service agreements to reflect surcharge terms.

Step 3: Update Invoicing & Billing Systems

Once a surcharge policy is in place, MSPs must ensure their invoicing and billing systems properly apply and disclose surcharges.

Since Visa caps surcharges at 3% and Mastercard at 4%, MSPs must configure their invoicing systems to calculate surcharges accurately and list them as separate line items.

Example Invoice:

• Service Fee: $12,000
• Credit Card Surcharge (3%): $360
• Total Due: $12,360

Displaying surcharges separately improves transparency and reduces client confusion.

Automated solutions like FlexPoint simplify compliance by correctly calculating and displaying surcharges. 

FlexPoint automatically integrates surcharge limits set by Visa and Mastercard, preventing non-compliant charges.

For example, if an MSP processes a $10,000 transaction with a 2.5% processing fee, FlexPoint will automatically apply a $250 surcharge and display it as a separate line item.

Essential compliance practices include:

• Using payment processing software with automated surcharge calculation features.
• Testing invoices to confirm surcharges are appropriately itemized.
• Training staff on surcharge policies so they can address client questions.

With the proper invoicing setup, MSPs can maintain full transparency while ensuring compliance with payment network rules.

Step 4: Monitor and Review Compliance

Surcharging rules are not static. Visa, Mastercard, and federal regulators frequently update their policies, and North Dakota could introduce additional regulations in the future.

After Visa reduced its surcharge maximum to 3% in 2023, non-compliant MSPs encountered penalties and potential backlash from clients.

Regularly reviewing surcharging policies protects MSPs from compliance risks and helps maintain client trust.

Critical points to follow for regulatory compliance:

• Surcharge Caps: MSPs cannot charge more than their actual processing costs, even if below network limits (3% for Visa, 4% for Mastercard).
• Policy Documentation: If payment networks update their surcharging rules, MSPs must revise service agreements and notify clients.

Client Feedback: Monitor client reactions to surcharges. Consistent concerns may indicate a need for more transparent communication.

The Role of FlexPoint in Streamlining Credit Card Surcharging

Without a clear strategy for managing credit card processing fees, MSPs can end up paying thousands of dollars each year. A sustainable approach to handling these costs is critical for maintaining healthy profit margins.

FlexPoint offers automation tools designed specifically for MSPs, helping them streamline payment processing and manage fees efficiently.

Payment Processing Plans

Every MSP understands its client base best, so FlexPoint provides multiple payment processing options:

• Interchange+ Plan
• Customer Surcharge Plan

Whether an MSP chooses to absorb, split, or pass on processing fees, these flexible plans allow them to balance cost management with client satisfaction.

1. Interchange+ Plan

The Interchange+ Plan provides a transparent pricing structure based on the actual interchange rate of each credit card type. 

Since Visa, Mastercard, and Discover all have different interchange fees, processing costs can fluctuate depending on the card used for payment.

For example, Discover cards often have lower interchange rates, meaning MSPs pay less processing fees when clients use them.

Conversely, high-reward or American Express cards typically come with higher interchange fees, increasing processing costs.

This plan is ideal for MSPs who prefer to absorb processing fees rather than pass them on to clients. While this approach helps maintain strong client relationships, it may not be financially sustainable for MSPs processing large transaction volumes.

2. Customer Surcharge Plan

The Customer Surcharge Plan shifts credit card processing fees to clients by applying a fixed percentage surcharge to each transaction. 

This structure eliminates the MSP’s out-of-pocket processing costs, preserving cash flow and protecting profit margins. It offers simplicity and predictability, as the surcharge percentage remains consistent across all credit card payments. 

This plan can be an effective way for MSPs to ensure profitability while maintaining a transparent pricing model for clients.

Example:

A North Dakota MSP issues an invoice for $8,000 in services.

• With a 3% surcharge, an additional $240 is added to the total, making the final invoice amount $8,240.

FlexPoint offers a split-fee model for MSPs striving to balance cost recovery with client satisfaction. This system allows MSPs to absorb some of the processing fees but pass some of the costs onto clients.

This hybrid approach reduces financial strain for MSPs while maintaining client relationships. It’s a reasonable compromise for those who want to maintain transparency without imposing the entire burden of processing fees on clients.

How FlexPoint Enhances Surcharging Compliance and Transparency

Miscalculating or failing to adequately disclose surcharges leads to disputes, chargebacks, and penalties from card networks. 

To prevent these issues, MSPs need a reliable system ensuring compliance with federal regulations and card network policies.

FlexPoint automates surcharge calculations, keeping North Dakota MSPs aligned with Visa, Mastercard, and regulatory guidelines.

How FlexPoint Supports Compliance and Transparency

• Accurate Surcharge Calculation: Ensures surcharges never exceed legal limits, such as Visa’s 3% cap.
• Clear and Precise Invoicing: Automatically itemizes surcharges on client invoices, listing them as separate line items with exact amounts.‍
• Full Disclosure: Clients receive detailed invoices outlining service charges, surcharges, and the due amount.

North Dakota MSP Client INVOICE

Company Name: Your MSP
Invoice #: 012582
Invoice Date: March 10, 2025
Due Date: April 9, 2025

Bill To:

[Client Company Name]
[Client Address]
[Client Contact Name]
[Client Email]

Payment Terms: Payment is due within 30 days of the invoice date. The surcharge complies with federal regulations, North Dakota guidelines, and Visa and Mastercard policies.

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

FlexPoint’s Integration with MSP Tools for Seamless Billing

FlexPoint simplifies payment processing for North Dakota MSPs by integrating with popular financial and business tools used in the industry, including:

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

With these integrations, MSPs can streamline three core financial processes:

• Invoicing: Automatically generate and send invoices with surcharges itemized.
• Billing: Automate payment collection and ensure accurate charges based on service fees, surcharges, and applicable taxes.
• Reconciliation: Sync payments in real time to keep financial records current and reduce the risk of accounting discrepancies.

For example, a North Dakota MSP using FlexPoint alongside QuickBooks Online can efficiently process client payments.

This efficiency comes from automated payment workflows that eliminate manual data entry and ensure accuracy at every step. 

FlexPoint instantly calculates and applies the surcharge when a client makes a payment, itemizing it as a separate line item on the invoice. QuickBooks Online immediately records the transaction, keeping financial records current without additional effort from the MSP.

With these processes automated, North Dakota MSPs reduce payment errors, improve cash flow visibility, and spend more time focusing on their core services instead of manual financial management.

Beyond automation, FlexPoint provides branded client payment portals that improve the payment experience. These portals give MSPs complete visibility into their cash flow while offering clients an easy and professional way to make payments.

Offering Flexibility in Surcharging

Managing surcharges effectively demands both precision and flexibility. 

FlexPoint helps North Dakota MSPs take a strategic approach by allowing them to customize surcharging rules for different client relationships.

For example, an MSP may waive surcharges for long-term clients as a loyalty incentive while applying standard surcharges to new or one-time clients. 

This customized strategy allows MSPs to manage costs effectively without compromising client trust.

With FlexPoint, MSPs can set automatic surcharge rules based on payment type and transaction details. These rules align charges with card brand regulations, reducing the risk of errors or compliance violations.

In practice, this might look like:

• If a client pays with Visa, FlexPoint automatically caps the surcharge at 3% to comply with Visa’s regulations.
• If a payment is processed through Mastercard, the system applies the correct limit based on the transaction specifics.

FlexPoint also offers customized client payment portals. These portals give clients more control over their payment experience, as they can update their payment methods at any time.

For example, a client who typically pays with a Mastercard might switch to Visa to take advantage of lower surcharge fees. 

Instead of contacting the MSP, the client can update their payment details directly within the portal, avoiding delays and reducing the MSP's administrative work.

This added flexibility improves cash flow, reduces disputes, and creates a smoother payment experience for both MSPs and their clients.

Conclusion: Streamlining Payments with Effective Surcharging Strategies

For North Dakota MSPs, properly handling surcharges means prioritizing compliance, transparency, and effective client communication. 

Surcharge fees must be listed as a separate line item on invoices, and clients should be notified in advance to avoid billing surprises. Federal and state regulations, as well as Visa and Mastercard card network policies, dictate surcharge limits. 

FlexPoint helps MSPs navigate these complexities with automated invoicing, customizable surcharge rules, and branded client payment portals. 

With FlexPoint, MSPs streamline financial operations while reinforcing client trust and minimizing billing complications.

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

Stay within North Dakota’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 North Dakota for MSPs

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