As of February 2025, businesses in Oregon, including managed service providers (MSPs), are permitted to apply credit card surcharges to offset payment processing fees for credit cards. This approach helps MSPs cut costs that would otherwise affect their profit margins.
While surcharging can be an effective financial strategy, it must be implemented in compliance with federal laws, state guidelines, and card network policies to avoid penalties and client disputes.
A well-thought-out approach keeps surcharges transparent, fair, and legally sound.
This article outlines Oregon’s credit card surcharging regulations, explains how MSPs can integrate surcharges into their billing practices, and highlights the benefits of using FlexPoint to automate compliance and invoicing.
Disclaimer: This content is for informational purposes only and should not be considered legal advice. Oregon MSPs should consult a qualified legal professional to ensure compliance with all applicable laws before implementing surcharging practices.
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What Is Credit Card Surcharging for MSPs in Oregon?
Credit card surcharging is a billing practice that allows managed service providers to pass along the cost of processing credit card payments to clients.
Instead of absorbing the full expense of interchange fees and network charges, MSPs apply a small fee to credit card transactions.
This strategy helps MSPs recover some of the processing costs while also providing the flexibility credit card payments allow.
These fees add up quickly for MSPs, where recurring payments and subscription-based services are standard.
Over time, they can take a significant bite out of profit margins. By introducing a surcharge for credit card payments, MSPs mitigate these losses and maintain a more predictable revenue stream.
Consider an Oregon-based MSP that invoices a client for $7,800. If they apply a 2.75% surcharge, the total amount collected becomes $8,017.50.
That extra $217.50, paid by the client, helps cover processing costs that would otherwise reduce profitability.
For MSPs handling large transaction volumes, the benefits multiply.
If a managed service provider processes $100,000 in monthly credit card payments with a 3% surcharge, they could recover $3,000 per month—or $36,000 annually—without increasing base service rates.
However, transparency is imperative—clients must know of surcharges before making payments.
Effective communication helps clients understand the rationale behind these fees, reducing disputes and maintaining trust.
MSPs in Oregon must comply with all federal, state, and card network regulations to apply surcharges legally.
Understanding Credit Card Surcharging Laws in Oregon
As of February 2025, credit card surcharging is permitted in Oregon. However, MSPs must comply with both federal regulations and card network policies.
While the state does not impose additional restrictions beyond federal guidelines, managed service providers must still follow established legal frameworks to avoid penalties.
Oregon law permits MSPs to pass credit card processing fees onto clients, provided the surcharge does not exceed 4% of the transaction total or the actual processing cost, whichever is lower.
However, Visa imposes a cap of 3%, meaning Oregon MSPs must remain within this limit for Visa transactions.
Clients also need to be informed about surcharges before a transaction is completed.
MSPs communicate surcharge fees via invoices, receipts, and online payment portals. Failure to disclose these fees could lead to chargebacks and disputes.
While no current specific Oregon statutes restrict MSP surcharging, existing laws regulate how MSPs can apply transaction fees.
According to ORS 825.502, surcharges may be added to credit card payments for certain business transactions, provided they are properly disclosed.
Additionally, Senate Bill 425 (SB 425), proposed in the Oregon Legislature for 2025, aims to introduce new transparency requirements for credit card processing fees.
If enacted, it could impact how MSPs communicate and implement surcharges in the future. MSPs should closely monitor legislative changes to remain compliant with evolving state laws.
Furthermore, MSPs must only apply surcharges to credit card transactions.
The Durbin Amendment of the Dodd-Frank Act prohibits surcharges on debit and prepaid cards, even if those cards are processed as credit transactions. Attempting to add a surcharge to a debit card payment can also result in penalties from card networks.
Compliance doesn’t end with state and federal laws; Oregon MSPs must also comply with card brand rules.
These rules include:
- Visa, Mastercard, and Discover require MSPs to submit a formal notification at least 30 days before implementing surcharges.
- Surcharge amounts cannot exceed the actual processing fee paid by the MSP.
- Surcharges must be displayed as a separate line item on invoices and receipts.
To highlight the effect of these regulations, consider this example: an MSP invoices a client for $9,200 and applies a 3% surcharge so that the total charge would be $9,476.
However, if the actual processing fee is 2.7%, the surcharge must be adjusted to that amount rather than applying the full 3% Visa allows.
If an MSP does not adhere to these guidelines, they risk fines, chargebacks, or even the loss of merchant processing privileges.
Oregon MSPs must ensure their surcharging practices align with state regulations, federal laws, and card network policies to evade compliance risks and potential disputes.
If you are uncertain about the rules surrounding surcharging in Oregon, seek advice from a qualified legal professional.
Implementing Credit Card Surcharging for Oregon MSPs
A report from PYMNTS found that 76% of consumers would reconsider using credit cards if surcharges were applied, and 40% would prefer to shop elsewhere to avoid them.
This highlights the importance of transparency and careful implementation to preserve trust while recovering costs.
The following steps provide a roadmap for Oregon MSPs looking to integrate surcharges into their billing operations while maintaining compliance and client satisfaction.
Step 1: Develop a Clear Surcharge Policy and Structure
A surcharge policy outlines how fees are applied, the percentage or amount charged, and how surcharges are disclosed to clients. This policy should be included in client agreements to prevent misunderstandings and disputes.
Oregon MSPs may need a flexible approach, adjusting surcharge structures based on transaction size, payment method, or client type.
While many opt for a fixed percentage surcharge, others may use a flat fee or a tiered surcharge system.
1. Fixed Percentage Surcharge
A set percentage is applied to all credit card transactions.
For example, if an MSP charges 3% on all invoices, a $10,000 invoice would include a $300 surcharge, bringing the total to $10,300.
This recovers costs while maintaining a consistent surcharge across all transactions.
2. Tiered Surcharge System
Surcharge rates vary based on transaction amounts.
For example, an MSP applies:
- 1.5% on invoices under $4,000
- 2.5% on invoices of $4,000 or more
Then, a $3,500 invoice would include a $52.50 surcharge, while a $5,000 invoice would include a $125 surcharge.
3. Flat Fee Surcharge
A set dollar amount is charged instead of a percentage-based fee.
For example, an MSP applies a $75 flat fee per transaction. Then, a $3,000 invoice becomes $3,075, and a $7,500 invoice becomes $7,575
While this model ensures consistency, it must comply with surcharge limits.
If a $2,000 invoice is charged a $75 fee, the surcharge exceeds the 3% legal cap, making it non-compliant. To remain within the 3% limit, the surcharge should be reduced to $60.
Step 2: Notify Credit Card Networks and Clients
MSPs must provide at least 30 days’ notice to credit card networks before implementing surcharges. Some card companies require MSPs to submit a notification form before applying surcharges.
For example, according to Visa:
“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 must also be informed before surcharges take effect. This open communication prevents misunderstandings and disputes.
A notice might read something like:
“Effective [date], a 3% surcharge will be applied to all credit card payments. This fee offsets transaction costs while keeping service rates stable. Clients may avoid surcharges by paying via ACH or check. If you have any questions, please contact [billing contact].”
Without a notice like that, clients who expect a $7,000 invoice but see an unexpected $210 surcharge, for example, may dispute the charge with their card issuer.
Since chargebacks cost businesses an average of $190 per dispute, according to Swipesum, unambiguous communication reduces financial losses and bolsters trust.
Step 3: Update Invoicing and Billing Systems
Oregon MSPs should revise their invoicing processes to include surcharge details, ensuring clients understand the fees before they are charged.
For example, an invoice for $6,500 with a 3% surcharge should list:
- Service Fee: $6,500
- Credit Card Surcharge (3%): $195
- Total Due: $6,695
Automated payment solutions like FlexPoint simplify surcharge calculations and invoicing.
Step 4: Monitor and Review Compliance
Once surcharges are in place, ongoing monitoring is paramount to ensure compliance with state laws, federal regulations, and card network policies.
Again, Visacaps surcharges at 3%, while Mastercard allows up to 4%, but Oregon MSPs cannot exceed their actual processing costs. If an MSP’s merchant discount rate (MDR) is 2.6%, they cannot charge a 3%surcharge, even if state laws allow it.
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.”
This means that Oregon law and card network policies work together to set limits on surcharges.
Shifts in legal and card network requirements can alter surcharge limitations. This emphasizes the need for Oregon MSPs to evaluate their compliance strategies on an ongoing basis.
The Role of FlexPoint in Streamlining Credit Card Surcharging
Credit card processing fees present a financial challenge for Oregon MSPs, affecting profitability and cash flow.
According to a report by USA Today, these fees have increased by 50% since 2020 and hit a record high of $172 billion in 2023.
Considering this quickly rising cost, many MSPs are eager to cut expenses where it is reasonable, and credit card surcharging presents one path forward.
FlexPoint offers MSP-specific payment automation software that facilitates straightforward surcharging while ensuring compliance with Oregon’s regulations and card network policies.
With flexible pricing models, MSPs can choose the approach that best suits their business needs.
Payment Processing Plans
FlexPoint provides two primary payment processing plans, giving MSPs control over how they manage credit card fees:
- Interchange+ Plan
- Customer Surcharge Plan
a) Interchange+ Plan
The Interchange+ Plan is designed for MSPs who prefer absorbing credit card processing fees while maintaining transparent pricing. This model determines costs based on the interchange rate of each card used.
For example:
- Transactions made with Discover cards typically come with lower interchange rates, leading to reduced processing costs.
- Premium cards, such as high-reward or corporate credit cards, carry higher interchange fees, increasing processing expenses.
With Interchange+ pricing, MSPs can see the cost structure for each transaction ahead of time, allowing them to manage expenses efficiently.
This approach also helps MSPs maintain competitive service rates without passing credit card fees directly to clients.
Although this plan requires MSPs to cover processing fees, the predictable fee structure keeps costs proportional to actual transaction amounts.
b) Customer Surcharge Plan
The Customer Surcharge Plan shifts the cost of credit card processing to the client, helping MSPs recover expenses associated with card transactions. This model applies a percentage-based surcharge to each transaction.
For example, if an Oregon MSP processes a $9,500 invoice and applies a 2.8% surcharge, the breakdown would be:
- Service Fee: $9,500
- Surcharge (2.8%): $266
- Total Due: $9,766
This predictable and transparent solution allows MSPs to recover transaction fees while complying with Oregon’s surcharge regulations.
FlexPoint also facilitates a cost-sharing approach. It allows MSPs to split processing fees with clients instead of passing them on entirely.
A hybrid model helps MSPs reduce financial strain while maintaining strong client relationships.
For example, instead of applying a 3%surcharge, an MSP may charge 1.5% while covering the remaining processing costs internally. This compromise provides a compromise for both parties.
How FlexPoint Enhances Surcharging Compliance and Transparency
Credit card surcharging requires precision, compliance, and transparency. FlexPoint automates this process for Oregon MSPs, ensuring surcharges remain within the state’s 4% cap, align with federal laws, and meet card network requirements.
By automatically applying the correct surcharge percentage and clearly itemizing fees on invoices, FlexPoint helps MSPs maintain compliance while reducing their administrative workload.
For example, an Oregon MSP processing a $9,200 invoice with a 3% surcharge would see this charge itemized separately, bringing the total to $9,476.
A FlexPoint-generated invoice might look like this:
Company Name: Your MSP
Invoice #: 007592
Invoice Date: March 10, 2025
Due Date: April 24, 2025
Bill To:
[Client Company Name]
[Client Address]
[Client Contact Name]
[Client Email]
Description:
IT Infrastructure SetupCloud Backup ServicesCybersecurity Monitoring
Subtotal: $9,200.00
Surcharge (3% of Subtotal): $276.00
Total Due: $9,476.00
Payment Terms:
Payment is due within 45 days of the invoice date. The surcharge complies with federal laws, Oregon state guidelines (4% cap), and credit card brand regulations.
Notes:
Thank you for choosing [Your Business Name]!
For invoice-related inquiries, please contact us at [Your Contact Information].
FlexPoint’s Integration with MSP Tools for Seamless Billing
Oregon MSPs looking to reduce manual invoicing and billing errors rely on FlexPoint’s seamless integrations, including the following:
- QuickBooks Desktop
- QuickBooks Online
- Xero
- ConnectWise
- SuperOps
- HaloPSA
- Autotask
These integrations automate fundamental tasks like invoicing, billing, and reconciliation, eliminating many risks associated with manual data entry.
For example, financial records are updated automatically when an MSP integrates FlexPoint with QuickBooks Online.
This includes surcharge calculations, processing fees, and payment reconciliation, ensuring all transactions are accurately recorded without requiring manual intervention.
Beyond automation, FlexPoint’s branded client payment portals and real-time financial tracking boost transparency and maintain clear communication with MSP clients.
These create better cash flow visibility and a smoother payment experience for both MSPs and clients.
Offering Flexibility in Surcharging
FlexPoint enables Oregon MSPs to apply surcharges strategically while maintaining transparency and compliance. The platform ensures fees do not exceed the state’s 4% cap or the lower card-specific limits required by Visa.
Automated invoicing presents surcharge amounts clearly, reducing the risk of disputes, misunderstandings, and payment friction.
Clients can view their billing details through a self-service payment portal and choose the most cost-effective option for their needs. If they prefer to avoid surcharges, they can switch to a lower-cost payment method, such as ACH.
Conclusion: Streamlining Payments with Effective Surcharging Strategies
Oregon MSPs can recover credit card processing costs while complying with state and card network regulations.
Surcharging can offset transaction fees but must be managed correctly to avoid client dissatisfaction or regulatory issues. Handling surcharges manually can lead to errors, disputes, and non-compliance with Oregon’s 4% cap and Visa’s 3% limit.
FlexPoint automates surcharge calculations, ensuring every transaction meets legal requirements while seamlessly integrating with QuickBooks, Xero, ConnectWise, and Autotask, among other platforms.
When invoicing and billing are automated and streamlined, MSPs can focus on providing services rather than managing payment complexities.
Take control of credit card surcharging with a system that supports your financial strategy without compromising client trust.
Enhance your MSP’s bottom line and compliance with automated credit card surcharging solutions from FlexPoint.
Stay within Oregon’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 Oregon for MSPs
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