Updated August 9, 2023

No-Fee Credit Card Processing

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Is anything really free these days? If that's a no, the same goes for free credit card processing. Read on to learn what "no fee" really means.

Credit card processing fees take a toll on your budget, we feel you. Sometimes, you might even question if it's worth it.

Then you come across the idea of free credit card processing (cue sigh of relief).

BUT the truth is, you'll want to pause before you apply for anything. There's a catch with these no-fee processors.

So let's take a step back and talk about how it actually works. And if you still want to explore this option, we'll recommend legit companies you can trust. Read on.

Free Credit Card Processing Companies
These companies offer a no-fee processing option:
  1. PaymentCloud
  2. Stax
  3. CardX
  4. Nada Payments
  5. Shift Processing
  6. Helcim

What is Free Credit Card Processing?

Free credit card processing is a solution that passes the processing fees to your customers through surcharges. That way, you're not paying for the processing fees out of your pocket. Instead, customers will pay more for their purchases.

But it doesn't mean it's all free. Surcharges are only allowed for credit cards, so you'll still pay processing fees for debit card payments. Plus, your processor might have other fees like monthly fees, PCI compliance fees, chargeback fees, etc.

That said, you can still gain significant savings from credit card processing fees since these are usually the biggest cost.

Note that there are many rules to legally do "free credit card processing". Like you must have clear signage and inform the card brands. We'll go over the rules in a bit.

It all started with the 2005 lawsuit.
Surcharging was made possible because a group of retailers first sued Visa and Mastercard back in 2005 over interchange fees. Merchants have argued that they really don't have much power to negotiate the amount of fees which costs up to $30 billion annually.

It was in July 2012 that attorneys representing the merchants reached a settlement of $5.7 billion. This settlement, which includes cash payments to merchants, also let merchants surcharge Mastercard and Visa credit cards.[1]


  • You keep more profits
  • Lower or no payments for processing fees
  • Encourage opportunities for smaller businesses


  • Can drive away customers
  • Competitors without surcharges gain an edge
  • Need to meet legal requirements

What is a surcharge?
A surcharge is an additional fee your customers pay if they use a credit card to make the purchase. It's legal in most states. But there are rules to follow if you plan to surcharge.

Okay, now that you know the "what," let's get on with the "how."

How Does Free Credit Card Processing Work?

Let's say a customer makes a purchase of $100 through a credit card. And the processing fee for this specific transaction is 3%, which costs $3.

This amount will be shouldered by your customer as a surcharge.

If, however, a customer makes a purchase of $100 through a debit card, and the processing fee is 1.50% + $0.25 (which costs $1.75), this amount will be shouldered by you— the merchant.

It's because surcharges can only be applied to credit card payments.

Set Up Your Business for Surcharging:
Free credit card processing companies will handle most of the requirements for surcharges. Typically, the credit card terminals from these processors are already surcharge-compliant.

This is unlike working with traditional credit card processors, where terminals still need to be reprogrammed to allow surcharging.

Free credit card processors also notify card brands of the surcharges, so you won't need to inform Visa and Mastercard yourself.

But you're still responsible for displaying surcharge signages or posting them on your eCommerce store. Some companies print out these signs for you.

Surcharge vs. Zero Credit Card Processing
There's really no such thing as zero-fee processing. Zero credit card processors simply let you pass these fees to your customers. These fees, now "surcharges," are paid by your customers whenever they pay with credit cards.

Now let's go over the rules in detail:

Rules for Free Credit Card Processing

To correctly set up free credit card processing, there are rules you must follow in order to comply:

Surcharge Rules Checklist

  • Clearly display and communicate surcharge to customers.
  • Set the surcharge to a maximum of 4% of the transaction or the cost of the processing fee (whichever is lower).
  • Exclude debit card transactions from surcharges.
  • Show surcharges on the receipts as a separate line item.
  • Notify card brands that you plan to surcharge.

Surcharges must be clearly communicated
Surcharges must be clearly displayed at checkout (whether online or in-store) and communicated to the customer. Card brands have their requirements on where to place the disclosure.

  • Mastercard: It should be displayed at your point of store entry. For eCommerce stores, it should be on the first page referencing credit card brands.[2]
  • Visa: It should be displayed at the POS in person and online. It should also be found on all receipts.[3]

Surcharges should be clearly shown on the receipt as a separate line item.

Surcharge can't go over limit
Surcharges cannot exceed 4% of the transaction amount (depending on your state) or the cost of the processing fee, whichever is lower.[4] It's meant to only cover processing costs, nothing more.

Debit cards can't be surcharged
Surcharges can only be allowed for credit cards. Debit and prepaid debit card transactions cannot have surcharges.

Notify card brands
You need to tell the card brands that you intend to surcharge. Each card brand has its own due date. Visa and Mastercard require you to inform them at least 30 days before imposing surcharges.

Not all states allow for surcharges
Surcharges were legalized on January 27, 2013 [5]. But there are still states that prohibit them. Make sure you know your state's specific rules.

Surcharging is legal in all states EXCEPT for: Connecticut, Massachusetts, and Puerto Rico.[6][7]

However, some states have more limitations regarding surcharging. These are: California, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Utah.

Does your business operate within a State that prohibits surcharges?

Choose product-level or brand-level surcharge
Decide at what level you will surcharge. You can't have both.

A product-level surcharge applies to a specific type of credit card (for example, World Elite Mastercard). A brand-level surcharge, would apply to all the credit cards of a particular card brand (e.g., all Mastercard credit cards).

It gets tricky, though. Card brands also prohibit surcharges that would make the consumer choose one brand over the other. AMEX, for example, disallows fees when it's not equally imposed on other products.[8]

Are all these rules worth it? Let's see if it could be worth it for your business.

Do You Need Zero-Fee Processing?

It may be tempting to get credit card processing fees covered. But customers view surcharges as penalties for using cards to pay. So it could actually hurt you. Do you really need it?

Small independent businesses could benefit from free credit card processing because you'll keep more profits. You can use the money you'll save to expand. Customers can also be more forgiving with surcharges if you offer something unique.

But if you're already a large business, you probably don't need it. Some payment processors offer lower rates if you have high volume, so you can save that way. You don't need to risk losing customers from surcharges.

It's also important to see if your competitors are surcharging. If not, you could lose customers to them. Below are some stats to be mindful of.

How Does Surcharging Affect Customer Behavior[9]
11%Customers that switched payment methods to avoid surcharges
77%Customers that prefer cash as an alternative to avoid surcharges
44%Customers that are extremely likely to switch merchants if surcharges are applied
67%Customers who view merchants negatively for applying a surcharge
12%Customers willing to pay a surcharge fee if asked
88%Customers who are aware of and have paid surcharges

Processing costs are part of your business expenses because it's an essential cost of doing business. That means they're tax-deductible.[10]

That said, there are some types of businesses that it could work for. Let's go over them next.

What Type of Business Makes Sense for Free Credit Card Processing?

Customers generally don't like surcharges, but here are some examples of businesses that might get away with it:

  • Common cash-only businesses
    Let's say most of the taco vendors in your area are cash-only. If you allow for credit cards, customers may be willing to pay a surcharge for convenience.

  • Niche businesses
    If you're a general merchandise store, there may be tons more that customers can go to. But if you offer unique niche services or products, then customers may be willing to pay a surcharge, since they don't have many other options.

  • Small local businesses with loyal customers
    Let's say you're a dog groomer and customers love you (yay!). If you decide to surcharge, they may understand that you're just trying to survive. Plus, they already love you and are less likely to switch.

  • Professional services
    A lot of professional services (like legal or financial) traditionally use bank transfers to accept payment. Customers may be willing to pay a surcharge to be able to charge on their card instead.

Tip: If you surcharge, can you make it up to customers in another way? A reward program (like 1 free scoop after X purchases) won't cost you much and gives customers an incentive to shop with you, even if they're charged a little more.

Another point: customers often use credit cards for rewards. For example, they could earn points for dining in restaurants. Then paying a surcharge can be worth it for them because they'll get more rewards.

Now, if it sounds like it could make sense for your business, the next step is choosing the best processing company to work with.

What to Consider When Choosing Free Credit Card Processing?

Here are some criteria you can use when shopping around for a processor:

  • Contract
    Many payment processors offer month-to-month contracts. There's no reason to tie yourself to a long-term contract unless it helps you save money. The downside is that you might end up not liking their service. Long-term contracts often have early termination fees.

  • Number of credit card transactions
    Some payment processors require a minimum volume of transactions. Make sure that your current number of credit card sales can fit that requirement.

  • Debit card processing fees
    Unfortunately, you're not off the hook with all processing costs. Debit card purchases will still cost your business. Be sure to check how much debit card processing fees are and if your business can work with them.

  • Additional fees
    Is there a monthly fee? What about batch fees? Incidental fees? There are many other fees your processor might have. Avoid hidden fees and choose a processor that offers transparent pricing.

  • Exceptional customer service
    You can test a company's customer service by inquiring about what they offer before applying. Unfortunately, even if a company's well-known, it can still have its shortcomings.

Merchant Services Provider vs. Payment Service Provider
Both companies help you accept credit cards as payment. The difference is, with a merchant services provider, you get your own merchant account. PSPs combine different merchants (you) under one umbrella account.

If you're not sure whether you should pass fees to your customers, here are some alternatives.

Free Credit Card Processing Alternatives

Your customers won't be a fan of surcharges. Some of them might even stop shopping with you.

And to avoid that last bit, here's what you can do instead:

Lower credit card processing fees
Many credit card processors are willing to negotiate processing rates. That's as long as your business can still help them profit. So the higher your sales volume, the more you can negotiate.

There are different steps to do this. First, learn the types of fees to know what you can negotiate. Basically anything charged by the processor company is fair game - transaction markups, monthly fee, etc.

Next, know your effective rate. It's the true percentage of how much you pay per credit card transaction. It'll help you figure out if you're paying too much and how much room you have for negotiation.

Here's a calculator to help you out.

Effective Credit Card Processing Rate Calculator

Read our article on how to negotiate lower credit card processing fees to learn more.

If you can't negotiate, a different pricing model can often help you cut down costs. For example, if you have over $10,000 a month in card sales, switching to a subscription pricing plan can be big savings.

Implement cash discount programs
This is kind of the opposite of surcharging. Your posted prices should be the price for using credit cards (you can budget the processing fee into that). And customers get a discount if they pay in cash instead.

Structuring your pricing this way reframes the fee to your customers' minds. They'll see it as saving money if they use cash. With surcharges, they'll view themselves as being "punished" for using cards.

Set up a convenience fee
A convenience fee seems similar to a surcharge but they're not exactly the same. You charge a convenience fee if a customer pays with a method you don't typically accept with your business.

For example, say you're a local theater that usually sells tickets at the box office. You could charge a convenience fee for letting customers buy tickets online instead.

Unlike surcharges, convenience fees are legal in all states. But you'll still need to communicate these fees at your POS. And it's only allowed if there's another form of payment available (what you typically accept in your business).

Convenience fees are typically 1% to 3%, and are used to cover the cost of processing fees. Credit card networks will also have their rules regarding these fees.

Maybe you don't even need a free credit card processor. You can look for cheaper options instead.

Okay, say you're convinced that you need zero-fee processing. Be sure to select a reputable and trusted company. Read on.

Best Free Credit Card Processing Companies

There are pros and cons to these free credit card processing companies. Let's discuss some of your options.

1. PaymentCloud

PaymentCloud works with many types of businesses. There are no hard requirements for processing history or business size.

They also work with high-risk merchants. However, just note that not all types of high-risk businesses can be accepted.

What's great about PaymentCloud, however, is that contracts are month-to-month. It's easy to start and the setup is smooth. Terminals are also surcharge compliant.

Watch out for hidden fees. Be sure to read your contract thoroughly and ask questions before signing up. Sometimes, PaymentCloud limits how many payments you can take.

2. Stax

Like PaymentCloud, Stax provides terminals that are already surcharge-compliant. They also offer more payment methods, such as digital invoicing, gift cards, and keyed-in payments.

They'll help you with the signage to make it easier for you. There's also a mobile app (for Android and iOS) you can use to take payments. It's handy for doing business on the floor.

Unfortunately, Stax has other fees (e.g., chargeback fees). And they don't have the best customer service.

3. CardX

Speaking of Stax, it acquired CardX last 2021. CardX is an automated surcharging platform that can help you surcharge and not worry about compliance. They have great customer service, so you know you can rely on your processor when you need to.

They charge your customers 3% for credit card payments. And they provide signage you can use to keep them informed of surcharges.

Debit card payments can cost you 2.91% per transaction (depending on your agreement) and 3.38% on commercial debit card transactions. Keyed-in debit transactions do not qualify for the 2.91% rate.[11]

The custom terminal already has CardX installed. Unfortunately, you can only lease it for $35/mo. The virtual terminal starts at $29/mo and comes with a Lightbox for your website.

Use Lightbox to take credit card payments from your website. Customers can pay without having to get redirected to a different platform.

4. Nada Payments

With Nada Payments, you also get surcharge-compliant terminals and help with signage. Add to that the benefits of 24/7 support, no setup costs, and no early termination fees.

They'll charge your customers 3.00% for credit card payments. Debit cards will cost you 1.50% + $0.25 per transaction.[12] Just like with Stax, there's also a mobile app you can use.

The major downside is that you only get to lease terminals. The smart terminal costs $35/mo while the virtual terminal costs $29/mo. This can get expensive compared to if you can purchase your own equipment.

Nada Payments only offers free credit card processing. PaymentCloud and Stax still offer traditional payment processing.

5. Shift Processing

Shift Processing is a free credit card processor that works with any type of business. You could be in retail, technology, marketing, etc. You could even be a high-risk business.

They have month-to-month contracts with no monthly fees. They also provide free terminals. You can even qualify for a free POS system.

The downside is that there are minimum volume requirements. So it could be harder to get approved if you're a small business just starting out.

Beware of the Scam
You'll want to read the fine print before signing any contract. Ensure that the equipment only applies surcharges to credit cards and not all types of card payments. You wouldn't want to violate any law or processing agreement.

Also, be wary of those who promise to remove 100% of the fees. Take it with a grain of salt. There are other fees you could end up paying. It's always best to work with reputable and trusted companies.

6. Helcim

Helcim is a merchant account provider that offers interchange-plus pricing. But it also offers the Helcim Free Saver payment solution, which lets you pass credit card fees to your customers.

When sending a Helcim invoice, just toggle the "Helcim Fee Saver" on. You can also integrate HelcimPay.js (checkout functionality) on your website to surcharge.

That said, Helcim's card reader and smart terminal may not be programmed for surcharging, unlike the other options on this list.

The Bottom Line

Free credit card processing isn't really free. If it's not you, somebody else has to pay. And this time, it's your customers.

There are pros and cons to this. Of course it'll help you keep more profits, which can make a big difference for small businesses.

However, customers wouldn't be so stoked with surcharges or extra fees. You'll have to carefully think about if it makes sense for your business.


  1. ^ The Washington Post. Judge approves Visa, MasterCard $5.7 billion settlement with retailers, Retrieved 09/23/23
  2. ^ Mastercard. Merchant Surcharge FAQ, Retrieved 4/16/2023
  3. ^ Visa. Merchant Surcharging Considerations and Requirements, Retrieved 4/16/2023
  4. ^ National Merchants Association. Surcharging FAQs, Retrieved 4/16/2023
  5. ^ Visa. Surcharging Credit Cards, Retrieved 03/04/2023
  6. ^ Connecticut State Department of Consumer Protection. Credit Card Surcharges, Retrieved 4/16/2023
  7. ^ The General Court of the Commonwealth of Massachusetts. General Law - Part I, Title XX, Chapter 140D, Section 28A, Retrieved 4/16/2023
  8. ^ AMEX. Merchant Reference Guide, Retrieved 03/04/2023
  9. ^ PYMNTS. Credit Card Surcharges: Consumer Experience and Choice, Retrieved 04/16/24
  10. ^ IRS. Publication 535 (2022), Business Expenses, Retrieved 03/04/2023
  11. ^ CardX. Pricing, Retrieved 4/16/2023
  12. ^ Nada Payments. Pricing, Retrieved 4/16/2023

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