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Bectran Product Team
I
February 27, 2026
6 minutes to read
Payment processing costs are often the second or third largest budget line item for finance organizations — right behind payroll and rent. Credit card interchange fees ranging from 2% to 3.5% erode margins significantly in high-volume B2B distribution, where net margins may already be in the single digits.
Surcharging programs make sense in principle: if a customer chooses to pay by credit card rather than ACH or check, they bear the cost of that convenience. The problem is execution. Finance teams frequently implement fee recovery programs without the technical controls to distinguish a credit card from a debit card — and that distinction is not just technical. It is a hard legal boundary.
Surcharging credit cards is generally permissible with proper disclosure and within state-level restrictions. Surcharging debit cards is almost universally prohibited under card network rules and federal statute. When systems cannot tell the difference, every debit card transaction with a fee applied is a compliance violation.
Most finance leaders assume that if a payment processor allows a fee to be added, it must be compliant. Many ERPs and legacy payment portals allow users to manually add a fee line item or apply a blanket percentage to every card transaction — regardless of card type. The result is a workflow that is technically operational but legally broken.
The gap is usually not malicious. AR teams know credit card surcharges are legitimate. But when systems cannot validate card type programmatically, the surcharge gets applied to everything. Business debit cards look identical to business credit cards at the point of entry. Without automated BIN detection, there is no reliable way to catch the error before it becomes a violation.
Every payment card contains a Bank Identification Number (BIN) — the first four to six digits — that identifies the issuing bank and card type: credit, debit, prepaid, corporate, and so on. Older ERP systems and basic payment gateways treat all 16-digit card numbers the same. They do not perform a real-time BIN lookup, so the system applies the surcharge rule to every transaction. Without that technical filter, compliance is impossible to maintain at scale.
When systems cannot automate fee logic, AR teams calculate fees manually. A credit manager looking at a $10,000 invoice calculates a 3% fee ($300) and adds it as a miscellaneous line item before running the card. If a customer reads a card number over the phone, the AR representative may have no way of knowing it is a debit card. The transaction processes, the fee records, and the violation is baked into the books.
There is a meaningful legal distinction between surcharging and convenience fees that many finance teams conflate.
A surcharge is a fee applied to credit card transactions to recover processing costs. It is strictly prohibited on debit cards under card network rules.
A convenience fee is a flat fee — not a percentage — charged for using a non-standard payment channel. Convenience fees are permitted on debit cards in certain contexts, but they must be flat-rate, not percentage-based.
Companies that charge a percentage-based "convenience fee" on debit transactions are applying a surcharge by another name, which violates card brand rules regardless of what the line item is labeled.
Compliance begins before authorization. Your payment acceptance workflow must identify card type in real time — as the card number is entered — using a BIN lookup that detects debit cards and automatically disables or zeros out the surcharge field. Relying on staff to ask customers whether their card is debit is not a scalable control. It is a gap with a predictable failure rate.
Review how fees are calculated across every payment channel your AR team uses. Credit card surcharges typically cannot exceed your actual cost of acceptance or 3%, whichever is lower, depending on card brand rules. Debit cards allow no percentage-based surcharge at all. If your current process applies a flat 3% to every card transaction, you are likely out of compliance on every debit card transaction you process.
Card network rules are the floor, not the ceiling. State laws add further restrictions. Connecticut and Massachusetts maintain specific surcharging limits, and while recent court rulings have shifted some of this landscape, state-level logic must still be applied based on the cardholder's billing address. A robust system accounts for this automatically — it does not rely on AR staff to know the surcharging rules of every state they bill into.
Visa and Mastercard actively audit merchants for surcharging violations. Fines for non-compliance are significant, and repeated violations can result in merchant account termination. For a B2B distributor, losing the ability to accept credit cards overnight would be a severe operational disruption — one that far outweighs any fee income the improper surcharges generated.
Sophisticated B2B buyers understand payment rules. A procurement manager who spots a 3% surcharge on a debit transaction knows the vendor overcharged them in violation of regulations. That error becomes a dispute, a short-payment, or a damaged relationship. The fee that was meant to recover costs instead creates collection work.
Compliant surcharging often reduces overall processing costs even without charging debit users. When customers learn that credit card payments carry a surcharge, many switch to ACH or EFT — which carry no interchange cost. That behavior shift reduces the company's total processing expense, with no legal exposure attached.
Applying fees to debit cards by mistake? Running manual surcharge calculations that AR staff can't validate in real time? Bectran's invoicing and payments platform includes real-time BIN detection that identifies card type before authorization and automatically suppresses surcharges on debit transactions, fee rule enforcement that distinguishes between credit surcharges and flat-rate convenience fees by channel, state-level surcharge logic applied based on cardholder billing address, audit trails that log card type and fee applied on every transaction for compliance review, and payment portal configurations that enforce disclosure language before customers can complete a card payment — ensuring fee recovery programs generate margin without generating liability. See how payment automation works.
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