For Texas MSPs, adding a credit card surcharge can help offset the rising cost of processing fees, especially when clients prefer to pay with high-reward cards that carry higher interchange rates.

That said, MSPs must still comply with several requirements to adhere to card brand agreements and legal best practices. 

In Texas, credit card surcharging is technically permitted because a federal court ruling in 2018 blocked the state from enforcing its statutory ban. While the law prohibiting surcharges still exists on paper, it’s currently unenforceable. 

This creates a legal gray area. Businesses, including managed service providers (MSPs), can impose credit card surcharges. Still, they must do so in accordance with the rules of the card network (such as VISA, MasterCard, or American Express) and federal regulations to avoid potential legal or contractual issues.

Understanding how surcharge rules work in Texas, along with disclosure obligations, rate limits, and prohibited practices, is an essential step before proceeding.

This article discusses Texas credit card surcharging laws, offers guidance for MSPs ready to implement surcharges, and explains how automated payment software can make surcharge compliance much easier to manage.

Disclaimer: This information is intended for general educational purposes only. It should not be taken as legal advice. Texas MSPs should perform their own due diligence and consult with a qualified legal professional before introducing surcharges or modifying payment practices.

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What is Credit Card Surcharging for MSPs in Texas?

Credit card surcharging is one way Texas MSPs can pass the cost of credit card acceptance on to the client, rather than absorbing those fees themselves.

Credit card fees can significantly reduce profit margins for managed service providers that have recurring payments, high transaction volumes, or clients who use rewards-based cards. 

Surcharging offers a straightforward strategy to offset those costs and preserve more revenue.

In practical terms, surcharging means adding a small percentage to a client’s invoice when they choose to pay by credit card. This added fee covers all or part of your card processing expenses.

Here’s a basic example of how this could work for your MSP clients:

You invoice a client for $8,000 and apply a 2.75% credit card surcharge. The client’s total payment becomes $8,220.

If your average processing fee is 2.75%, you’d otherwise pay $220 in fees for that transaction. With the 2.75% surcharge in place, you recover the entire amount, leaving your MSP with the full $8,000 as revenue.

Over the course of a year, those recovered fees add up. A $220 monthly recovery becomes $2,640 annually. Multiply that across a handful of credit-paying clients, and you could be saving tens of thousands of dollars each year.

That said, some MSPs prefer to share the cost with clients rather than pass along the full fee. 

For example, you might apply a 1.25% surcharge while covering the remaining 1.5% yourself. That would add $100 to an $8,000 invoice, reducing your processing cost to $120. 

Over a year, you’d still recoup $1,200 per client—a meaningful savings without placing the entire burden on the client.

This shared-cost approach can help maintain strong client relationships while still bringing measurable financial benefits to your MSP. It gives you flexibility while demonstrating fairness and transparency to your clients.

Understanding Credit Card Surcharging Laws in Texas

Credit card surcharging can be particularly useful for MSPs with recurring contracts or large monthly retainers. Even modest fees add up fast when processing costs for rewards cards and business credit cards often run between 2% and 4%.

The law in Texas adds some complexity. 

Under Texas Business and Commerce Code § 604A.0021, imposing a surcharge on a buyer who uses a credit card instead of cash, check, or a similar payment method is unlawful. 

However, in Rowell v. Paxton, 336 F. Supp. 3d 724 (2018), a federal court ruled that this law violated the First Amendment because it restricted commercial speech. As a result, the State of Texas has been blocked from enforcing this statute against most businesses.

That said, a 2019 opinion letter from the Texas Attorney General clarified that while the law is unconstitutional as applied in that case, it may still be enforceable in other scenarios if an MSP imposes unreasonable or misleading fees.

So, although credit card surcharging is widely used in Texas, the statute technically still exists and operates in a legal gray area.

This kind of flexibility can help protect your margins while remaining transparent with clients. 

The key is clear disclosure, reasonable rates, and strict adherence to card network rules and federal guidelines, especially since the Texas statute still exists on paper and could potentially be enforced under certain circumstances.

Surcharging gives MSPs a straightforward way to manage processing costs, but it must be done carefully.

If you have questions about the rules governing surcharging in Texas, consult a legal professional for personalized guidance.

Implementing Credit Card Surcharging for Texas MSPs

While implementing surcharging fees can improve an MSP’s bottom line, clients must understand the reason for the surcharge. Open communication preserves trust and minimizes the risk of disputes.

At the same time, surcharges must be applied thoughtfully to avoid negative reactions. 

According to PYMNTS survey data, almost 75% of respondents said they would be less likely to use a credit card if a surcharge were applied, and 40% said they would consider switching to another provider to avoid the extra fee.

Setting the correct surcharge rate is imperative. Overcharging can alienate clients, while undercharging defeats the purpose. The balance lies in recouping processing costs without damaging the client relationship.

Here are the four best practices for successfully implementing credit card surcharging in Texas.

Step 1: Establish a Clear Surcharge Policy and Structure

Before applying surcharges, MSPs should establish a written policy that outlines when and how the fees will be charged. 

The policy should define: 

• Which transactions are subject to the surcharge
• How the amount is calculated
• What steps are taken to ensure compliance with card brand requirements

Even though Texas’s statutory ban isn’t currently enforceable, it hasn’t been repealed. That makes it essential to document that your surcharge approach is transparently disclosed and tied to actual processing costs.

MSPs typically choose between two surcharge models:

a) Fixed Percentage Surcharge

For instance, a 2.9% surcharge may be applied to all credit card transactions.

Example: A $6,200invoice would include a $179.80surcharge, bringing the total to $6,379.80.

b) Tiered Surcharge System

Surcharges vary based on invoice size. 

Example:

• 2% surcharge on amounts under $3,500
• 3% on amounts $3,500 and up

A $2,800 invoice would carry a $56 fee, while a $4,000 invoice would include $120 in surcharges.

Whatever the structure, it must be applied consistently and clearly explained to clients.

Step 2: Notify Credit Card Institutions and Clients

Before surcharging, notify your payment processor and any card networks involved. Visa and Mastercard both require 30 days' advance notice. 

Visa, for instance, provides a notification form merchants must submit through its website, explaining:

“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.”

Next, tell your clients. Surcharges should never come as a surprise. 

Add the details to:

• Service agreements
• Invoices
• Client onboarding materials

For example, if a client receives an invoice for $6,900 and sees an extra $207 for a 3% credit card fee without prior explanation, they may assume it’s an error or fraudulent charge.

If they file a dispute, you may be liable for the cost of the fee, the reversal, and a chargeback fee. 

According to Swipesum, the average chargeback costs about $190 once penalties and operational costs are included.

Avoiding these issues starts with clear and documented communication.

Step 3: Update Invoicing Systems

Although Texas law still includes a statutory prohibition on credit card surcharges under § 604A.0021, that law is currently unenforceable due to the Rowell v. Paxton ruling. 

Still, because the statute remains on the books, it's essential for Texas MSPs to follow card brand rules closely and document surcharge practices transparently.

A fundamental part of that is ensuring surcharges are listed as a separate line item on every invoice. This supports compliance with card network disclosure requirements and reduces the risk of confusion or disputes.

Example:

• Monthly Services: $6,100
• Credit Card Surcharge (2.85%): $173.85
• Total Due: $6,273.85

This format clearly shows the client how the fee was calculated and confirms that the charge is directly related to their use of a credit card, not an arbitrary markup.

Given that Texas’s surcharge law still exists—even if unenforceable—it’s crucial for MSPs to avoid misleading practices.

Adding the fee transparently and tying it directly to processing costs reduces the risk of enforcement under other Texas consumer protection laws.

FlexPoint’s automated billing and payment solutions simplify this process by accurately calculating surcharge amounts, applying them only to eligible transactions, and ensuring the fees appear properly on invoices. We’ll discuss more about this in upcoming sections.

This streamlines your workflow and helps your MSP stay aligned with Texas’s current legal climate and card brand requirements.

Step 4: Monitor and Review Compliance

Texas MSPs must approach surcharging in a way that wouldn’t raise concerns under the state’s broader consumer protection laws.

To avoid problems, MSPs should consistently follow card network rules and maintain clear records of their surcharge practices.

As of March 2025:

• Visa caps surcharges at 3%
• Mastercard caps surcharges at 4% but only allows merchants to charge up to their actual merchant discount rate.

If you’re paying 2.65% to accept Mastercard, your surcharge cannot exceed 2.65%—even if the network allows up to 4%.

From Mastercard:

"If a merchant’s merchant discount rate for Mastercard credit cards is 2.65%, the cap on the surcharge that this merchant may charge a consumer is 2.65%, not 4%."

Importantly, MSPs must also note that surcharges are only allowed on credit card payments, not on debit or prepaid card transactions.

This restriction, in part, comes from the Durbin Amendment of the Dodd-Frank Act, which bars businesses from adding fees to debit or prepaid card payments, even if those payments are processed as credit.

To stay compliant in Texas, MSPs should:

• Review processing costs regularly
• Ensure their surcharge rates match actual card acceptance costs
• Avoid surcharging debit or prepaid cards, which is still explicitly prohibited under Texas law
• Monitor any updates to § 604A.0021 or related legal interpretations
• Never apply surcharges to debit card payments

Any changes at the state or network level—like Visa’s reduction of the surcharge cap from 4% to 3%—may require quick adjustments to your billing systems. 

Because Texas has not repealed its statute, staying within card brand limits and disclosing fees clearly helps prevent legal exposure under consumer protection standards.

MSPs that take the time to align surcharge practices with actual processing costs and maintain transparency with clients are far less likely to face complaints, payment disputes, or penalties, whether from card networks or future legal updates in Texas.

The Role of FlexPoint in Streamlining Credit Card Surcharging

Texas MSPs often manage a high volume of recurring client payments, making it challenging to absorb credit card processing fees without affecting margins. With variable interchange rates and large invoice amounts, these fees can quickly add up.

FlexPoint simplifies surcharge compliance and cost recovery with automation built specifically for MSP billing environments. 

Whether you choose to absorb fees or pass them along to clients, FlexPoint offers payment solutions designed to align with your surcharging strategy.

a) Interchange+ Plan

FlexPoint’s Interchange+ plan offers a tiered pricing model that adjusts based on the type of card used. 

It’s structured for transparency, with lower fees applied to transactions involving cards with reduced interchange rates and higher fees for premium or rewards-heavy credit cards, such as American Express.

Processing fees under this plan typically range from below 2% for debit cards to around 3.5% for higher-end credit cards.

This plan fits Texas MSPs who prefer not to surcharge clients and instead cover processing costs internally. The tiered system makes transaction expenses manageable, even when different types of cards are used across your client base.

b) Customer Surcharge Plan

FlexPoint also offers a Customer Surcharge plan that enables MSPs to apply a consistent, flat-rate surcharge to all eligible credit card transactions. 

This setup is ideal for MSPs looking to shift the cost of processing fees directly to clients while maintaining compliance with card brand rules and staying mindful of Texas’s unique legal climate.

When you choose this option, FlexPoint’s system automatically adds the surcharge to client invoices. It ensures that the fee appears as a separate line item, supporting the level of transparency required under both Visa and Mastercard rules.

MSPs who prefer a more balanced approach can configure the system to split the surcharge. 

For example, you may pass along 1.5% to the client while absorbing the remaining 1.5% yourself. 

FlexPoint allows this customization, giving you the ability to protect margins while maintaining positive client relationships.

How FlexPoint Enhances Surcharging Compliance and Transparency

As of March 2025, Surcharging is permitted in Texas under current legal conditions. However, MSPs must still follow strict disclosure and compliance requirements, particularly since § 604A.0021 remains part of Texas law, despite being unenforceable.

Failure to disclose surcharges or applying a fee that exceeds card brand caps can result in chargebacks, client disputes, or action from payment processors.

FlexPoint helps MSPs reduce those risks through built-in automation, transparency, and accurate surcharge management. 

FlexPoint ensures every transaction aligns with Visa, Mastercard, and federal requirements, whether you apply a full surcharge or share the cost with clients.

Here’s how FlexPoint helps Texas MSPs stay compliant and client-friendly:

• Accurate Surcharge Calculation: FlexPoint automatically applies the correct surcharge rate based on your selected policy and the card used, never exceeding Visa’s 3% limit or your actual merchant discount rate if it’s lower.
• Clear and Precise Invoicing: Each invoice includes the surcharge as its own line item, listed separately from services and subtotals. This reduces confusion and ensures clients understand exactly what they’re paying and why.
• Full Disclosure with Every Transaction: Invoices generated through FlexPoint display all applicable charges, including services, the surcharge, and the final total. This level of clarity helps prevent billing disputes and creates a better client experience.

For example, an invoice for a Texas MSP generated with FlexPoint might look like this:

Alternative Cost-Effective Payment Method - ACH for Texas MSPs

For Texas MSPs looking to avoid the gray area surrounding credit card surcharges or simply reduce transaction costs without causing payment friction with clients, ACH payments offer a practical, low-friction alternative.

Given that § 604A.0021 is still technically part of Texas law (even if unenforceable), many MSPs are turning to ACH to sidestep legal uncertainty altogether. 

ACH payments offer a compliant and budget-friendly solution that helps MSPs manage large, recurring invoices without incurring high processing fees.

ACH (Automated Clearing House) transfers funds directly from your client’s bank account to yours. There’s no percentage-based fee tied to interchange rates or rewards programs, as is the case with credit card transactions. 

Instead, ACH typically comes with a flat cost, usually between $0.20 and $1.50 per transaction, or well under 1% of the total amount invoiced.

When compared to the ~3%–4% cost of standard credit card processing, the savings are noteworthy.

Beyond reducing costs, ACH payments offer added benefits over credit card payments:

• Fewer client objections to fees
• Less billing friction
• Improved payment security
• Reduced risk of disputes
• Streamlined recurring billing setup

With FlexPoint, Texas MSPs can automate ACH debits once clients provide authorization. This includes setting up scheduled recurring payments—perfect for monthly service contracts—and removing the delays of manual invoicing or mailed checks.

Thanks to FlexPoint’s Same-Day ACH, MSPs in Texas no longer need to wait three or five business days for funds to settle. When payments are initiated before the 4:00 PM ET cutoff, funds may clear the same day, helping MSPs maintain stronger cash flow and reduce their reliance on credit lines.

ACH payments also reduce the likelihood of chargebacks. 

Since funds are pulled directly from the client’s bank account with authorization, disputes are rare and often easier to resolve than card-related chargebacks—which, according to Swipesum, average around $190 per dispute.

Between lower transaction fees, faster fund availability, reduced chargeback exposure, and client-friendly convenience, ACH through FlexPoint offers Texas MSPs a smarter way to manage billing and payments, without the uncertainty that sometimes comes with surcharging.

FlexPoint’s Integration with MSP Tools for Seamless Billing

FlexPoint connects with the core platforms MSPs rely on every day—including QuickBooks Desktop, QuickBooks Online, Xero, ConnectWise, AutoTask, HaloPSA, and SuperOps. 

These integrations help MSPs streamline their financial workflows by bringing invoicing, billing, and reconciliation into a single centralized system.

When these tools work together, MSPs can reduce the time spent on manual processes. Tasks such as invoice generation, payment tracking, and fee reconciliation can be automated, reducing administrative hours and improving accuracy.

For example, an MSP using QuickBooks can automatically sync payments in real-time, giving teams a clearer view of incoming revenue and helping them maintain up-to-date financial records. 

FlexPoint also tracks credit card surcharges and other fees, making it easier to stay compliant and organized.

In addition to backend automation, FlexPoint offers a branded client payment portal. 

Clients can log in to view itemized invoices, manage payment methods, and clearly see any surcharges—improving transparency and reducing billing questions.

The result is a smoother payment experience on both sides—fewer manual errors, easier fee tracking, and less payment friction when surcharges are involved.

Offering Flexibility in Surcharging

With FlexPoint, MSPs can choose whether to apply credit card surcharges on a per-client basis. This level of flexibility allows providers to tailor their billing strategies based on the nature of each client relationship.

For instance, an MSP might decide to absorb processing fees for long-standing or high-value clients as part of a retention strategy while still applying surcharges to newer or lower-volume accounts to recover costs.

This client-by-client control helps MSPs balance profitability with client satisfaction. 

Whether the goal is to protect margins or maintain goodwill, FlexPoint provides MSPs with the tools to apply surcharges strategically, rather than using a one-size-fits-all approach.

Conclusion: Streamlining Payments with Effective Surcharging Strategies

For Texas MSPs, maintaining transparency and compliance is crucial when implementing credit card surcharges, especially given the state’s legal gray area surrounding § 604A.0021, as discussed in the above article in detail. 

Communication with clients and strict adherence to card network rules reduce billing disputes and protect long-term relationships.

Surcharge fees must always appear as a separate line item on invoices. Clients should also be informed about surcharges before they’re billed—surprise fees can lead to frustration, chargebacks, or damaged trust.

Federal law and card brand policies also apply. Visa, Mastercard, and other payment networks cap surcharge amounts and require MSPs to disclose fees clearly and in advance.

FlexPoint makes managing these requirements easier. 

With features built specifically for MSPs, the platform enables automated invoicing, customizable surcharge settings, and a branded payment portal that provides clients with complete visibility into their charges.

FlexPoint ensures every surcharge complies with applicable caps and rules. It also helps MSPs stay aligned with federal regulations and card brand expectations without the risk of missteps.

By automating billing, reconciliation, and surcharge tracking, FlexPoint reduces administrative load and eliminates the errors that often accompany manual processes. This frees MSPs to focus on delivering service while maintaining full transparency with clients.

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

Stay within Texas’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 Texas for MSPs

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