Passing Credit Card Fees to Customers: A Guide for Suppliers
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Tara Porter
A customer 60 days past due finally calls to pay, and you take their card without a second thought. Passing credit card fees to customers is the last thing on your mind. You just want the invoice closed.
Depending on your card volume, those fees can add up to hundreds of thousands of dollars a year, and for larger suppliers, millions, all out of your margin.
You can get paid sooner and stop covering the fee. Here’s how suppliers do both.
The short answer: In most U.S. states, suppliers can pass credit card fees to customers by adding a surcharge to credit card payments. Many building supply and HVAC distributors pair the surcharge with a no-fee ACH option, so customers who don’t want to pay the fee can avoid it.
Why do suppliers absorb credit card fees?
Suppliers absorb credit card fees because collecting is hard, and a card payment on a late invoice feels better than waiting longer. Many customers are waiting to get paid on their own projects, and a missing invoice or statement gives them one more reason to delay. By the time the payment comes in, the supplier is glad to have it on any terms.
Getting paid sooner gives suppliers more room to decide who covers the fee. Two changes help:
Let customers find and pay invoices on their own. When customers can look up invoices and statements online and pay from the office or the job site, a missing invoice is no longer a reason to wait. After moving to an online payment portal, Tru-Duct, a sheet metal supplier in Oceanside, California, now gets paid 5 to 20 days earlier by customers. “We get paid faster not because we’re nagging people, but because all the information is there,” says Derek Burke, Vice President of Capital Flow.
Remind customers before invoices come due. Many late payments come from customers who forgot. At Gorman Industries, many customers pay within 1 to 2 days of an automated reminder. “Many customers have said, ‘Oh, it just slipped my mind,’ when responding to reminders,” says Alicia Ontiveros, Accounting Manager. At Electric Supply, automated reminders mean the controller rarely has to chase receivables in the 45 to 90 day range.
When customers pay on time, a late card payment is no longer the best offer on the table. That leaves room to pass card fees on where allowed and offer ACH as the no-fee option.
What stops suppliers from passing on card fees?
The main thing that stops suppliers is the worry that customers will leave, and sales teams have good reason to worry. Customers can buy from other suppliers, and a new fee on the statement can feel like a price increase. Many customers pay by card for the float, or because a card is how their office pays every vendor.
The usual counteroffer is to move everyone to ACH, which costs much less to process. That creates two new problems:
Bank details for every account. Setting up ACH debits account by account means collecting and storing bank information for each customer, including small accounts that buy a few times a year. Many AR teams don’t want to manage that for their whole customer list.
Less choice for customers. Taking away the card option removes a payment method customers already use, which is the same customer experience risk sales raised in the first place.
Absorbing every fee costs margin, and forcing everyone onto ACH risks the customer relationship. Most suppliers end up looking for an option in between.
How do suppliers pass credit card fees to customers without losing them?
Suppliers pass credit card fees to customers without losing them by offering two ways to pay. Customers can pay by card and cover the processing fee as a surcharge, or pay by ACH with no fee.
Customers who want to keep using a card still can. The fee is shown before they pay, and they decide whether the card is worth it.
Customers who would rather skip the fee switch to ACH. When they pay through an online portal, they enter their own payment details, so AR doesn’t have to collect bank information account by account. At Applied Equipment Solutions, many customers moved from paper checks to ACH through the portal.
Smaller payments can stay fee-free. Some suppliers set a threshold, so customers cover the surcharge only on payments over a set amount, such as $10,000. The supplier absorbs the fee on smaller payments, where it costs less and might put off a small account.
Credit card | Debit card | ACH | |
|---|---|---|---|
Can you add a surcharge? | Yes, in most states | No | No |
Fee to the customer | The surcharge you set | None | None |
Processing cost to the supplier | Highest | Lower than credit | Lowest |
The supplier stops absorbing card fees either way, and sales can tell customers that nothing has been taken away. Each customer who switches to ACH also lowers the supplier’s processing costs.
How it works in Dill’s payment portal
Dill is an AR and payments platform built for construction supply distributors. Its Payment Portal + AR Automation lets suppliers set this up without adding work for AR:
The customer opens the portal from an emailed statement or reminder and sees their open invoices. Customers can filter by job when a purchase is tied to a project.
They choose what to pay and how. They pick the invoices and select ACH or card.
The fee follows their choice. If they pay by credit card, the surcharge you’ve set is added before they pay. Debit cards aren’t surcharged. If they pay by ACH, there’s no fee, and they enter their own bank details.
The payment reaches your books. With API access, payments post to your ERP automatically.
Winthrop Supply, a fourth-generation plumbing distributor, used to absorb the processing fee on every card sale. With Dill, it passes the fee to the customer at the point of payment. “[Dill] gave us the ability to pass those credit card fees on to customers,” says Will Steck, President of Winthrop Supply. “That saved us a lot of money in the end.”
Giving customers the choice hasn’t driven them away. Winthrop Supply processes more than 80% of all payments through Dill, and Steck says customer feedback has been great. At Seekonk Supply, the biggest customer using Dill has done more volume since the rollout. “Since using Dill, our cash position has never been better,” says Mitch Quirk, Vice President of Seekonk Supply.
The pending Visa and Mastercard settlement could give suppliers more control here. It received preliminary court approval in June 2026 and would let merchants set different surcharges by card type and decline categories of premium or commercial cards (Beancount). Commercial cards matter most for suppliers, since that is how many customers pay.
Credit card surcharging trends among suppliers
Credit card surcharging is a big topic among supply houses right now. Many suppliers hesitate because they want to stay competitive, but card fees keep eating into margin, so they keep coming back to it.
Some have tried surcharging without a system to manage it. Then it becomes something the team has to be trained on and has to apply by hand, payment by payment. The suppliers we see doing it well start small and let their payment system apply the rules. Here are the setups we’re seeing among Dill customers:
No cards during the discount period. Customers who pay early and take a prompt-pay discount pay by ACH. Card payments aren’t offered for discounted invoices, so the supplier doesn’t give a discount and pay a processing fee on the same invoice.
Card with a surcharge once an invoice is late. When an invoice goes past due, the customer can pay by card, and the surcharge covers the processing fee. The supplier gets paid without absorbing the cost of a late payment.
Surcharge only above a set amount. As covered above, some suppliers have customers cover the fee only on payments over a threshold, such as $10,000.
Surcharge on every credit card payment. The simplest setup: any customer who pays by credit card covers the fee, and ACH stays free.
Many suppliers combine these. A common pairing is ACH-only during the discount window and card with a surcharge after the due date, which rewards early payment and still gives late payers a way to pay.
How do you roll out a credit card surcharge?
Roll out a credit card surcharge in six steps, starting with your processor and your customers. The way you introduce the fee affects how customers react to it.
Check the rules and notify your processor. Confirm the requirements for each state you sell into. Visa requires merchants to notify their processor 30 days before they start surcharging.
Tell customers before the first surcharged invoice. Send a short letter or email with the start date and fee amount. Explain how to pay by ACH with no fee.
Make ACH the easy choice. If paying by ACH takes more steps than paying by card, customers will stay on cards. An online portal where they can pay by ACH in a few clicks removes that friction.
Show the fee before payment. Customers should see the surcharge before they enter card details, and again as its own line on the receipt.
Give sales a script. Reps can explain that customers can still pay by card, and that ACH has no fee.
Track payment mix each month. Watch the share of payments by ACH and by card, and how much you still spend on processing fees.
Give customers the choice with Dill
Dill helps suppliers start passing credit card fees to customers while giving them a no-fee way to pay. Dill’s Payment Portal + AR Automation gives your customers one place to see their invoices and statements and pay by ACH or card, from the office or the job site. You can pass card fees on where allowed and steer more payments to low-cost ACH, so less of each payment goes to processing.
The portal works with any ERP, and our team handles the setup. Most suppliers are live in 2 to 6 weeks. Book a demo to see how it works.
Frequently asked questions about passing credit card fees to customers
What is a credit card surcharge? A credit card surcharge is a fee a business adds when a customer pays by credit card, to cover the cost of processing the payment. It shows as its own line on the receipt.
Is it legal to pass credit card fees to customers? In most U.S. states, yes, but some states ban or limit surcharges and card networks set their own caps. Check current rules with your processor before you start.
Can I surcharge debit cards? No. Surcharges apply to credit cards only, even when a debit card carries a Visa or Mastercard logo.
How much can I surcharge? No more than what you pay to process the card, and within each card network’s cap. Some states set lower limits, so confirm the numbers with your processor before you start.
Can I surcharge only large payments? Yes. Some suppliers have customers cover the surcharge only on payments above a set amount, such as $10,000, and absorb the fee on smaller ones. Confirm the setup with your processor.
What’s the difference between a surcharge and a convenience fee? A surcharge is a percentage added when a customer pays by credit card. A convenience fee is a flat fee for paying through a channel outside your usual one, such as by phone, and it applies to every payment type in that channel. The two have different network rules, so ask your processor which one fits your setup.
Will I lose customers if I pass on card fees? The risk is lower when customers have a free option. Offering ACH with no fee lets customers avoid the surcharge, and telling them ahead of time avoids surprises on the statement.
About the author: Tara Porter is the product marketing manager at Dill, an AR and payments platform built for construction supply distributors. She regularly interviews AR and finance teams at supply houses about how they get paid, and writes about the approaches that work for them.