Most Wisconsin MSPs struggle with high credit card processing costs, particularly when managing recurring payments and large transaction volumes. Credit card surcharging offers a way to reduce these expenses.
Wisconsin permits credit card surcharges as of February 2025, allowing MSPs to pass processing fees to clients instead of absorbing them. However, surcharging must be handled carefully to comply with state and federal laws and the strict regulations imposed by Visa, Mastercard, American Express, and Discover.
Failure to follow these rules can result in significant penalties, including fines and the potential loss of payment processing capabilities.
This article explains Wisconsin’s credit card surcharging regulations, provides a step-by-step approach for compliant implementation, and explores how an automated payment platform can simplify surcharge management for MSPs.
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What is Credit Card Surcharging for MSPs in Wisconsin?
Credit card surcharging helps Wisconsin MSPs manage rising payment processing costs. Instead of absorbing these fees, MSPs can pass a portion or all of them to clients, allowing them to maintain profit margins while keeping service pricing competitive.
Processing fees for credit card transactions typically range from 2% to 4%. These fees cover expenses such as interchange fees, assessment charges, and payment network costs.
For MSPs handling high transaction volumes, these fees add up quickly and can impact long-term financial stability.
For example, a Wisconsin MSP processing $175,000 in monthly credit card transactions with an average 3% processing fee would pay $5,250 per month, totaling $63,000 annually. These costs can limit business growth, delaying or preventing investments in upgraded technology, expanded service offerings, or additional staff.
Upon introducing a 3% surcharge, the MSP could shift the entire cost of processing fees to clients, recovering $5,250 per month and freeing up funds for operational improvements.
Some MSPs take a partial surcharge approach to balance cost recovery with client satisfaction.
If the same MSP applied a 1.5% surcharge, it would recover $2,625 of the $5,250 monthly processing fees while absorbing the rest. This strategy reduces financial strain without placing the entire burden on clients.
Transparency is essential for successful surcharging. Clear communication about these fees helps clients understand their reasoning, reducing the risk of disputes or dissatisfaction.
Wisconsin MSPs considering surcharges must follow state laws, federal regulations, and card network rules to ensure compliance while maintaining strong client relationships.
Understanding Credit Card Surcharging Laws in Wisconsin
As of February 2025, Wisconsin businesses, including managed service providers, can apply surcharges to credit card transactions but must comply with specific regulations.
While federal law permits surcharges up to 4%, MSPs cannot automatically pass the full processing fee to clients.
Instead, the surcharge must be the lower of:
- The actual interchange fee charged to the MSP, or
- 4% of the total transaction amount, or 3% if paying with Visa
For example, if an MSP’s payment processor charges 3.5%, the MSP can only apply a 3% surcharge to clients if they pay with a Visa.
This restriction ensures MSPs do not charge excessive fees beyond the actual cost of accepting credit card payments.
Additionally, debit and prepaid card transactions cannot be surcharged, even if processed as credit. This restriction is enforced under the Durbin Amendment of the Dodd-Frank Act, preventing MSPs from passing processing fees onto debit card users. Attempting to apply surcharges to these transactions could lead to penalties or potential loss of payment processing privileges.
In 2013, Senate Bill 213 was proposed to prohibit credit card surcharges in consumer credit transactions. The bill aimed to prevent businesses from adding extra fees for customers who paid with credit cards rather than cash or checks.
Despite support from multiple senators and representatives, Senate Bill 213 ultimately failed. Because the bill was not enacted, Wisconsin MSPs remain permitted to apply surcharges as long as they comply with state and federal regulations.
MSPs implementing surcharges in Wisconsin must also meet transparency requirements so clients are fully informed of the extra charges before completing a transaction. Surcharges should be disclosed at multiple points to prevent confusion and disputes.
Surcharge details must be visible on the homepage and at checkout for online transactions. Clients must also be informed of the surcharge percentage before they complete a transaction, whether in person, online, or through a mobile payment system.
Receipts must also break down the surcharge amount separately. The receipt must also state that surcharges do not apply to debit card transactions and confirm the fee does not exceed the actual credit card processing costs.
Wisconsin MSPs must also provide a method for clients to dispute surcharge errors. If a client believes they were overcharged or the fee was misapplied, they must have an immediate way to challenge the charge.
For MSPs in Wisconsin, these regulations mean surcharge disclosures must be visible on both the homepage and checkout page. Invoices and receipts must list surcharges as separate line items. Additionally, the MSP must ensure surcharges do not apply to debit card payments and remain within the legal limits.
Although efforts to ban surcharging have been introduced in Wisconsin, they have not been successful. MSPs in the state must still carefully follow state laws and card network rules when implementing surcharges.
Note: We also recommend that Wisconsin MSPs consult a legal professional if they have any questions about compliance or implementation.
Implementing Credit Card Surcharging for Wisconsin MSPs
Wisconsin MSPs need a well-structured policy, the right tools, and a transparent communication strategy to help clients understand the rationale for surcharges and minimize the risk of disputes.
Proactive management of surcharges helps MSPs recover processing costs without compromising client relationships.
A PYMNTS survey found that 70% of respondents view surcharges negatively, and nearly 40% said they might switch to a provider that does not impose these fees.
This emphasizes the importance of balancing surcharge rates—MSPs must recover costs while maintaining strong client relationships.
The following step-by-step guide helps Wisconsin MSPs implement surcharges while maintaining client trust.
Step 1: Establish a Clear Surcharge Policy and Structure
A well-defined surcharge policy should outline how surcharges will be applied, the percentage or amount charged, and the process for implementation.
Including this policy in client agreements will offer transparency and prevent unexpected fees from surprising clients.
MSPs can structure surcharges differently depending on transaction size, client type, or payment method.
Here are examples of three common surcharge structures:
a) Fixed Percentage Surcharge
An MSP applies a 2.8% surcharge to all credit card transactions.
Example: A client receives an invoice for $8,500 in services. The 2.8% surcharge adds $238, bringing the total to $8,738.
b) Tiered Surcharge System
Surcharges are adjusted based on transaction amounts, such as 2.5% for invoices below $5,000 and 3% for those above $5,000.
Example: A $4,800 invoice would include a $120 surcharge (2.5%), while a $6,200 invoice would have a $186 surcharge (3%).
c) Flat Fee Surcharge
Regardless of the transaction amount, a fixed dollar amount is added to all credit card payments. This method simplifies surcharging, but MSPs must remember that the flat fee does not exceed legal limits for smaller transactions.
Example: An MSP charges a $35 flat fee for any credit card transaction. If a client’s invoice is $4,000, the final total would be $4,035, which falls within compliance limits.
However, if the same $35 fee were applied to a $500 transaction, the surcharge would equal 7%, exceeding both Wisconsin’s 4% cap under federal law and Visa’s 3% limit.
To avoid this issue, MSPs using a flat fee model should set a lower maximum charge for smaller transactions or use a tiered system to ensure compliance.
Step 2: Notify Credit Card Networks and Clients
Before applying surcharges, Wisconsin MSPs must notify Visa, Mastercard, American Express, and Discover in accordance with their policies—usually at least 30 days before implementing surcharging.
Client communication is just as critical. MSPs should explain surcharges in a clear, professional manner.
Example Client Notification:
"Due to rising credit card processing fees, a 3% surcharge will be applied to credit card payments starting [date]. This fee offsets transaction costs and allows us to continue providing high-quality services."
Failing to notify clients properly can lead to disputes or chargebacks. For example, if a client expects to pay $10,000 but notices an unexpected $300 surcharge (3%) on their invoice, they may dispute the payment with their card issuer.
According to Swipesum, the average chargeback cost is $190 per dispute—a preventable expense with proper transparency. Client communication minimizes misunderstandings and helps maintain trust.
Step 3: Update Invoicing and Billing Systems
Surcharges must be displayed on invoices as separate line items so clients understand exactly what they are being charged and why.
Example invoice for a $7,500 transaction with a 3% surcharge:
- Service Fee: $7,500
- Surcharge (3%): $225
- Total: $7,725
Automated payment platforms simplify this process by accurately calculating and integrating surcharges into invoices. These tools help eliminate errors, ensuring surcharges remain within allowed limits and reducing disputes.
Step 4: Monitor Compliance and Adjust as Needed
Wisconsin follows federal surcharge limits, meaning MSPs cannot charge more than 4%, even if their processor charges a higher fee. However, Visa lowered its surcharge cap to 3% in 2023, which applies to MSPs accepting Visa payments.
Regardless of the 4% federal cap, MSPs cannot charge more than their actual processing costs. For instance, if an MSP’s discount rate (MDR) is 2.9%, the surcharge cannot exceed 2.9%, even though Mastercard permits up to 4%.
Regularly reviewing surcharge policies helps Wisconsin MSPs comply with state and card network requirements.
Changes in card brand policies can also impact surcharging rules. Keeping up with these changes ensures continued compliance while preserving client relationships.
The Role of FlexPoint in Simplifying Credit Card Surcharging for Wisconsin MSPs
The costs associated with accepting credit cards can quickly reduce profit margins, making cost recovery a critical concern for Wisconsin MSPs.
FlexPoint provides tailored solutions for precisely this challenge, allowing MSP to implement surcharging strategies that balance cost savings, compliance, and client transparency.
Payment Processing Plans
FlexPoint offers two distinct payment processing options to fit different MSP needs:
- Interchange+ Plan
- Customer Surcharge Plan
Each plan provides flexibility depending on whether the MSP wants to absorb transaction fees or pass them to clients.
a) Interchange+ Plan
The Interchange+ Plan uses a transparent pricing model based on the specific interchange rate for each credit card type.
Rather than applying a flat surcharge, this plan allows Wisconsin MSPs to absorb processing fees while benefiting from lower costs on select transactions.
Since different cards have different interchange rates, the actual processing cost varies. Lower-cost cards, such as Discover, may have fees as low as 1.5%, while premium rewards cards and American Express transactions often reach 3.5%.
This option is ideal for MSPs who prioritize a seamless client experience and wish to avoid additional client fees. By absorbing the processing costs, MSPs enhance trust and client satisfaction while maintaining competitive pricing.
b) Customer Surcharge Plan
The Customer Surcharge Plan shifts credit card processing costs to clients by applying a flat surcharge on all credit card transactions.
If an MSP applies a 3% surcharge, it covers processing fees without affecting its bottom line.
However, MSPs must ensure the surcharge does not exceed the merchant discount rate (MDR).
For example, if the actual processing cost is 2.8%, the surcharge cannot be set higher than 2.8%, even if Wisconsin law allows up to 4% under federal regulations.
This approach benefits MSPs looking to cut costs while maintaining transparency with clients.
FlexPoint also enables a hybrid approach, where MSPs split processing costs with clients for specific transactions. This flexibility allows MSPs to customize their cost recovery strategy while preserving client relationships.
How FlexPoint Enhances Compliance and Transparency
FlexPoint simplifies surcharging compliance by automatically calculating charges according to Wisconsin regulations, federal laws, and card brand policies.
This includes:
- Ensuring surcharges do not exceed Visa’s 3% cap
- Keeping all surcharges within Wisconsin’s 4% federal limit
- Preventing surcharges on debit and prepaid card transactions
Sample Wisconsin MSP Invoice with FlexPoint
For a $12,500 invoice with a 3% surcharge, FlexPoint automatically calculates and itemizes the charges as follows:
Company Name: Your MSP
Invoice #: 009742
Invoice Date: March 15, 2025
Due Date: April 15, 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 (capped at 4%), Wisconsin law, and card brand requirements.
Notes:
- Surcharges do not apply to debit card purchases and cannot exceed actual processing costs.
- If you believe the surcharge was applied incorrectly, contact us within 30 days at (XXX) XXX-XXXX or support@example.com.
FlexPoint’s Integration with MSP Tools for Seamless Billing
FlexPoint integrates effortlessly with the financial and operational tools that Wisconsin MSPs rely on, streamlining payment processing and financial management.
FlexPoint is compatible with:
- QuickBooks Desktop
- QuickBooks Online
- Xero
- ConnectWise
- SuperOps
- HaloPSA
- Autotask
With these integrations, Wisconsin MSPs can automate invoicing, billing, and reconciliation, reducing the need for manual data entry and ensuring financial accuracy.
For example, when an MSP connects QuickBooks Online with FlexPoint, surcharge details are automatically recorded, updating financial reports in real time.
This automation prevents discrepancies, eliminates the need for double entry, and ensures all transactions are properly categorized.
By synchronizing financial data across platforms, FlexPoint:
- Reduces human error by eliminating manual input
- Keeps financial records accurate and up-to-date
- Ensures compliance-ready reports for analysis and audits
- Improves efficiency, freeing up time for MSPs to focus on growth and client service
Integrating FlexPoint with existing accounting and business management tools for Wisconsin MSPs ensures a consistent, reliable, and streamlined surcharge management and payment processing approach.
Offering Flexibility in Surcharging
FlexPoint allows Wisconsin MSPs to tailor surcharging practices based on client relationships and business needs.
Instead of a one-size-fits-all approach, MSPs can cover surcharges for valued long-term clients while passing processing fees to newer or lower-volume accounts.
With built-in automated compliance checks, FlexPoint ensures all surcharges stay within card network limits to prevent overcharging.
For example, an MSP processing a payment via Mastercard can apply a 2.75% surcharge, accurately reflecting the processing cost without exceeding Mastercard’s 4% cap.
This automated accuracy helps Wisconsin MSPs avoid compliance risks and simplifies surcharge management.
FlexPoint’s branded payment portals enhance transparency by allowing clients to review surcharge details before completing a transaction.
Beyond surcharge visibility, FlexPoint also gives clients greater control over their payment methods. Clients can easily update their payment details or switch to a more cost-effective option if a stored credit card expires.
A business that frequently uses a high-reward credit card may decide to switch to ACH payments, eliminating surcharges while saving money on transaction fees.
Wisconsin MSPs can improve client relationships while optimizing cash flow by providing this flexibility.
Clients appreciate the ability to manage their payment preferences, and MSPs benefit from fewer disputes, improved retention, and lower operational burdens.
Conclusion: Streamlining MSP Credit Card Payments with Effective Surcharging Strategies
Credit card surcharging is a practical solution for Wisconsin MSPs looking to reduce credit card processing costs.
However, successfully implementing surcharges requires a strategic approach prioritizing transparency and compliance with federal, state, and card network regulations.
Invoices must clearly display surcharge amounts, and clients should be informed upfront about surcharging policies. To prevent penalties or disputes, Wisconsin MSPs must keep surcharges within allowable limits that do not exceed actual processing costs.
FlexPoint simplifies surcharge management from start to finish.
With FlexPoint’s advanced payment automation platform, Wisconsin MSPs can seamlessly implement surcharges while complying with state laws and card brand rules.
Enhance your MSP’s bottom line and compliance with automated credit card surcharging solutions from FlexPoint.
Stay within Wisconsin’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 Wisconsin for MSPs
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