As of January 2025, Credit card surcharging is permitted in South Carolina, thus providing MSPs with a way to offset the costs of processing credit card payments.
Surcharging can be a strategic tool for South Carolina managed service providers (MSPs) to recover credit card transaction fees.
However, MSPs must ensure compliance with legal requirements, including clearly disclosing surcharge amounts and adhering to card network policies.
This guide explains South Carolina’s surcharging rules, outlines steps for MSPs to implement surcharges properly, and explores how automation tools like FlexPoint can streamline compliance and invoicing.
Disclaimer: This material is for informational purposes only and should not be considered legal advice. MSPs should consult with a qualified attorney to ensure compliance with all applicable laws.
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What is Credit Card Surcharging for MSPs in South Carolina?
Credit card fees are an unavoidable part of doing business for South Carolina MSPs, but credit card surcharging can mitigate these costs.
Instead of absorbing all processing fees, MSPs can pass some of these expenses onto clients who pay by credit card.
The MSP business model often involves recurring payment structures, making credit card fees a recurring expense that adds up over time. Surcharging offers a way to offset these costs while maintaining profitability.
Let’s say an MSP issues an invoice for $5,000 and applies a 2.5% surcharge.
The client would pay $5,125, allowing the MSP to recover $125 in processing costs that would otherwise come out of pocket.
Over time, this approach can lead to marked savings.
The benefits compound for MSPs handling large transaction volumes.
An MSP processing $80,000 in credit card payments per month with a 3% surcharge could recover $2,400 monthly, totaling $28,800 annually.
Even if the MSP applied only a 1.5% surcharge, it would still reduce credit card processing expenses by $14,400 per year.
Surcharging should consistently be implemented carefully.
Clients may prefer predictable pricing, so some MSPs choose to absorb a portion of fees to maintain strong relationships.
Open communication is also necessary—informing clients about surcharges upfront prevents misunderstandings and ensures compliance with industry regulations.
For example, clients must recognize that credit card surcharging is a cost-cutting mechanism, not profit-generating.
Strategic surcharging allows MSPs in South Carolina to manage costs effectively while continuing to offer clients a convenient option for credit card payments.
Understanding Credit Card Surcharging Laws in South Carolina
As of January 2025, South Carolina does not prohibit MSPs from applying surcharges to credit card transactions.
However, MSPs must comply with federal regulations and card network policies to ensure legal and transparent implementation.
Surcharges apply only to credit card payments—debit and prepaid card transactions cannot be surcharged under the Durbin Amendment of the Dodd-Frank Act. Even if a debit card is processed as a credit transaction, it remains ineligible for surcharges.
South Carolina MSPs implementing surcharges must also meet disclosure requirements.
Clients must be informed about any additional fees before completing a transaction. This means surcharges should be clearly outlined on invoices and receipts.
For example, if an MSP charges a 3% surcharge on a $10,000 transaction, the invoice should display:
- Service Total: $10,000
- Credit Card Surcharge (3%): $300
- Total Due: $10,300
Clear disclosure ensures compliance while preserving strong client relationships. To prevent payment disputes, MSPs should also consider providing advance notice in contracts or billing agreements.
Learn more about credit card surcharging by reading South Carolina Bill H3477.
Before implementing surcharges, South Carolina MSPs should consult a legal professional to confirm compliance with all applicable regulations.
Implementing Credit Card Surcharging for South Carolina MSPs
Applying a credit card surcharge isn’t as simple as listing an extra fee on an invoice. It requires a structured approach, the right tools, and transparent client communication.
South Carolina MSPs must take a structured approach to ensuring clients understand why these fees are applied and how they impact service costs.
Consumer perception plays a significant role in surcharging success.
Research from PYMNTS indicates that most customers reconsider credit card payments when faced with a surcharge, and 40% may opt for a provider that doesn’t impose one.
Striking the right balance between cost recovery and client retention is indispensable.
An effective surcharging plan includes clear policies, upfront communication, and transparent invoicing that itemizes the fee.
The following step-by-step guide outlines vital considerations for South Carolina MSPs looking to integrate surcharging into their payment processes while maintaining positive client relationships.
Step 1: Establish a Clear Surcharge Policy and Structure
A structured surcharge policy helps South Carolina MSPs manage credit card fees effectively while maintaining transparency.
This policy should define when and how surcharges apply, how they are calculated, and how they appear on invoices.
Most MSPs opt for a fixed percentage surcharge, but a tiered or flat fee structure may also be suitable.
Each model has its own advantages, depending on the MSP’s billing setup and client preferences.
• Fixed Percentage Surcharge:
A consistent surcharge percentage is applied to all credit card transactions.
Example: A 3% surcharge on an $8,500 invoice results in a $255 fee, making the total $8,755.
• Tiered Surcharge System:
The surcharge rate varies based on the transaction amount.
Example: An MSP charges 2% for transactions under $3,500 and 3% for transactions above that amount.
- A $3,200 invoice includes a $64 surcharge.
- A $5,800 invoice includes a $174 surcharge.
• Flat Fee Surcharge:
A set dollar amount is charged on all credit card transactions.
Example: An MSP applies a $50 surcharge to every invoice, regardless of the total.
- A $2,000 invoice would be $2,050.
- A $7,000 invoice would be $7,050.
Regardless of the structure, South Carolina MSPs must ensure surcharges do not exceed 4% of the actual processing cost, whichever is lower.
A well-structured policy allows MSPs to recover processing costs without surprising clients with unexpected fees.
Step 2: Notify Clients and Credit Card Networks
South Carolina MSPs must clearly notify clients and notify credit card networks before implementing surcharges. Visa and Mastercard require at least 30 days' notice before surcharges take effect.
Visa specifies: “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.”
Explaining surcharges to clients in advance prevents payment disputes and chargebacks.
If a client receives a $9,000 invoice and notices an unexpected $270 surcharge, they may question the charge or file a dispute.
Chargebacks can be costly. According to Swipesum, businesses lose an average of $190 per dispute. Proper communication helps avoid these unnecessary expenses.
Step 3: Update Invoicing and Billing Systems
To ensure compliance and transparency, MSPs in South Carolina must update their invoicing and billing systems to itemize surcharges.
Invoices should display the surcharge as a separate line item, ensuring clients understand exactly how much they pay and why. This prevents misunderstandings, helps avoid chargebacks, and breeds trust between MSPs and their clients.
Automating surcharges with FlexPoint's automated billing and payment system makes this process seamless.
FlexPoint calculates surcharges automatically and applies them correctly on invoices, preventing manual errors that could result in overcharging or noncompliance.
For example, if an MSP invoices $10,000 and applies a 3% surcharge, FlexPoint will calculate the fee as $300, ensuring the total amount due is accurately reflected as $10,300.
A well-structured invoicing process ensures surcharge implementation remains straightforward, compliant, and easy to manage for the MSP and its clients.
Step 4: Monitor and Review Compliance
South Carolina MSPs should regularly assess their surcharging policies to ensure ongoing compliance with Visa, Mastercard, and state regulations.
- Visa allows a maximum surcharge of 3%.
- Mastercard permits up to 4%, but MSPs cannot charge more than their actual processing fee.
For example, if an MSP’s Mastercard processing fee is 2.8%, their surcharge cannot exceed 2.8%, even though Mastercard allows a higher cap.
According to Mastercard:
“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 underscores the importance of regularly reviewing processing costs and surcharge rates. If an MSP overcharges clients, they risk fines, penalties, or being required to refund overcharged amounts.
When Visa lowered its surcharge cap to 3%, many MSPs had to adjust their billing processes to comply.
Mastercard’s rules also necessitate careful tracking of processing costs to ensure surcharges do not exceed permitted limits.
By staying informed about regulatory updates and reviewing surcharge policies quarterly, South Carolina MSPs remain compliant while effectively managing payment processing costs.
The Role of FlexPoint in Streamlining Credit Card Surcharging
MSPs in South Carolina have the flexibility to apply credit card surcharges to offset payment processing costs.
Since no state-imposed caps exist, MSPs can apply surcharges up to 4%, provided they do not exceed actual processing costs or card network rules.
To simplify this process, FlexPoint offers a comprehensive payment automation platform that ensures compliance while allowing MSPs to effortlessly manage surcharges.
Payment Processing Plans
FlexPoint offers two customizable plans that allow South Carolina MSPs to manage credit card surcharges based on their preferred payment structure:
- Interchange+ Plan
- Customer Surcharge Plan
• Interchange+ Plan
The Interchange+ Plan benefits MSPs that prefer to cover transaction fees rather than pass them on to clients.
Credit card processing costs vary based on the type of card used.
For instance, transactions made with Discover may have lower interchange rates, whereas high-reward cards from American Express often come with higher processing costs.
With FlexPoint’sInterchange+ Plan, MSPs gain clarity into these costs and can optimize pricing strategies accordingly.
• Customer Surcharge Plan
For MSPs looking to offset processing fees, the Customer Surcharge Plan allows surcharges of up to 4%, following Visa, Mastercard, and federal regulations.
For example, an invoice of $6,500 with a 3% surcharge would include a $195 fee, for a total of $6,695.
With FlexPoint, MSPs can also opt to share processing costs by covering part of the surcharge while still passing a portion onto clients.
How FlexPoint Enhances Surcharging Compliance and Transparency in South Carolina
Surcharging must be managed carefully to avoid disputes and ensure compliance.
FlexPoint automates this process by correctly applying surcharges, itemizing them on invoices, and ensuring they align with federal and card brand policies.
Unlike some states that impose additional surcharge limits, South Carolina allows flexibility—up to 4%—but MSPs must ensure they do not charge more than their actual processing costs.
Here’s an example of how FlexPoint structures an invoice for a South Carolina MSP:
FlexPoint helps South Carolina MSPs seamlessly manage credit card surcharges, ensuring accuracy, compliance, and a transparent billing experience for clients.
FlexPoint’s Integration with MSP Tools for Seamless Billing
South Carolina MSPs rely on efficient billing and payment management to keep operations running smoothly.
FlexPoint integrates with widely used financial tools like QuickBooks Desktop, QuickBooks Online, Xero, ConnectWise, Autotask, HaloPSA, and SuperOps. Thus, MSPs can maintain their preferred workflows without disruption.
By automating financial processes, MSPs reduce the time spent on manual data entry and reconciliation.
FlexPoint enhances efficiency by automating three pivotal financial tasks:
- Invoicing: Automatically generates invoices with clearly itemized charges, including surcharges.
- Billing: Ensures transactions are processed accurately and comply with South Carolina’s surcharging guidelines.
- Reconciliation: Matches payments to invoices, reducing errors and improving financial oversight.
For example, South Carolina MSPs using QuickBooks Online can sync their payments with FlexPoint, so their financial records update instantly.
This real-time integration means invoices reflect accurate surcharge amounts, removing the need for manual adjustments.
Instead of manually tracking and entering credit card processing fees, FlexPoint automates these calculations and records them correctly in financial reports.
This reduces human error and guarantees all surcharge-related data is reflected in financial statements.
Additional tools such as real-time reporting and branded client payment portals enhance financial transparency, allowing MSPs to monitor cash flow and focus on business expansion.
Offering Flexibility in Surcharging
MSPs in South Carolina need a solution that allows them to manage credit card processing fees in a way that aligns with their business needs while maintaining transparency with clients.
FlexPoint makes this possible by automating surcharge applications based on client preferences and transaction details.
Rather than applying surcharges uniformly, South Carolina MSPs can tailor them for each client.
For instance, they may choose to absorb processing fees for long-standing clients while passing those costs on to newer ones. This level of flexibility helps sustain strong relationships while ensuring financial sustainability.
With FlexPoint, MSPs create customized payment rules to comply with Visa, Mastercard, and other card brand policies.
These rules ensure no client is overcharged and that surcharges are applied accurately based on the card used.
For example, if a client pays with a Visa, the system ensures they aren’t charged more than 3%, per Visa’s surcharging rules.
This automated compliance prevents errors, reduces chargeback risks, and helps MSPs avoid penalties.
Transparency is a fundamental part of surcharging, and FlexPoint’s personalized client portals make it easy for MSPs to keep clients informed.
Before making a payment, clients see any applicable surcharge, minimizing confusion and potential disputes.
Additionally, these portals allow clients to update their payment information independently, eliminating the need for MSPs to process payment method changes manually.
Suppose a client regularly pays with Mastercard but switches to Visa to lower their surcharge.
In that case, they can do so instantly—reducing payment friction, making the payment process more efficient, and boosting client satisfaction.
By giving MSPs complete control over surcharges while prioritizing transparency, FlexPoint helps South Carolina MSPs protect their bottom line without compromising client trust.
Conclusion: Streamlining Payments with Effective Surcharging Strategies
Credit card surcharging can offset processing costs for South Carolina MSPs. However, it must be applied carefully to comply with regulations and support positive client relationships.
Transparency and adherence to Visa, Mastercard, and federal guidelines are pivotal to avoiding disputes.
Surcharges must be itemized on invoices, and clients must be informed of these fees before payment is processed. Without communication, MSPs risk chargebacks or client dissatisfaction.
FlexPoint simplifies surcharging for MSPs by automating compliance and integrating surcharge management into the billing process.
Instead of manually calculating and applying surcharges, South Carolina MSPs can use FlexPoint to ensure fees are correctly displayed and kept within the appropriate limits.
With FlexPoint’s MSP-focused platform, MSPs can confidently implement surcharging while ensuring their business remains compliant and their clients stay informed.
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 South Carolina for MSPs
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