Reviewed by Mayer Hyman, Payments Specialist | Reviewed for accuracy July 2026
Key Takeaways
- Canadian merchants outside Quebec have been able to legally surcharge credit card transactions since October 6, 2022 — this is now settled, current law, not a pending change.
- The surcharge is capped at 2.4%, or your actual effective processing cost, whichever is lower — merchants can’t simply tack on a flat 2-3% across the board.
- Quebec is excluded due to provincial consumer protection law; Quebec merchants can only surcharge other businesses, not consumers.
- B2B merchants generally have more room to surcharge without losing business than B2C merchants, who risk hurting loyalty and conversion.
Canadian merchants have had the legal right to add a credit card surcharge at checkout since October 2022, following a class action settlement between merchants and Visa and Mastercard. That surcharge — capped at 2.4% or a merchant’s actual processing cost, whichever is lower — remains in effect today in every province except Quebec, where provincial consumer protection law blocks surcharging consumers directly.
The rule hasn’t changed the payments landscape as dramatically as some early predictions suggested. Uptake has been gradual, and the real question for merchants now isn’t “will this happen” — it already has — but whether surcharging makes sense for their specific business.
The Rule, in Practice
As part of the settlement, Visa, Mastercard, and other card networks agreed to rebate merchants roughly $188 million for interchange fees charged over the prior decade, and to let merchants decide whether to add a fee for credit card use at the point of sale. Merchants who choose to surcharge must give 30 days’ notice to the card networks and their processor, and must clearly disclose the fee — at the store entrance, at checkout, and on the receipt.
Who should carry the cost of accepting credit cards has been a long-running argument in payments. Historically, merchants absorbed rising interchange fees and chargeback costs while customers were largely insulated from them directly. Surcharging shifts some of that cost back to the customer using the card — but shifting cost isn’t the same as eliminating it, and it comes with real tradeoffs.
Related: 9 Best Practices for Chargeback Management
The Case for B2B Merchants
Businesses that sell to other businesses tend to have an easier time with surcharging. Chargeback risk is generally lower to start with, and in an established B2B relationship, an added transaction fee is less likely to cause friction — there’s usually room to work it into the broader terms of the relationship. Consumers, by contrast, are more price-sensitive at the point of sale and have easy alternatives like cash or debit.
Merchants always have the alternative of building processing costs into their prices instead of surcharging directly. But that only works if competitors do the same — a merchant who raises prices while competitors don’t risks pricing themselves out of the market.
The Tradeoffs for B2C Merchants
Surcharging can help offset rising interchange costs, but the calculus is more complicated for consumer-facing merchants. Customers who bear the fee directly may become more selective about using credit versus debit or cash — which can reduce chargeback exposure — but a visible surcharge at checkout can also hurt the customer experience and conversion.
There’s also the loyalty angle. Credit card rewards programs remain a meaningful driver of customer retention: Accenture research has found the large majority of companies run some form of loyalty program, and most consumers say they’re more likely to stick with a brand that offers one. A surcharge that makes customers second-guess using their preferred rewards card can undercut the value of that loyalty relationship, even if it recovers processing costs directly.
Does Surcharging Actually Reduce What Consumers Pay?
Not necessarily. Interchange costs were already baked into retail prices before surcharging existed — consumers were paying for card acceptance indirectly, through prices, well before they saw a line-item fee at checkout. Surcharging makes the cost visible rather than eliminating it, which is part of why some merchants have been cautious about adopting it even though it’s been legal for several years.
Other jurisdictions have taken a different approach to the same underlying tension. Australia and the European Union have both placed caps on interchange fees directly, rather than shifting the cost to consumers through surcharges — a reminder that surcharging is one of several possible policy responses to the same cost pressure, not the only one.
The Bottom Line
Credit cards remain one of the more expensive payment methods for merchants to accept, but they also support the customer experience and loyalty mechanics — points, cashback, and other rewards — that many consumers now expect. Whether surcharging makes sense depends heavily on your customer base, your competitive set, and how much of your margin is currently absorbed by interchange versus other costs. It’s worth modeling both paths — surcharging versus building costs into pricing — before deciding.
Cartis Payments works with merchants to navigate exactly these kinds of decisions, keeping pricing structures transparent as regulations and card network rules evolve.
FAQ
Is credit card surcharging still legal in Canada in 2026?
Yes. It has been legal in every Canadian province except Quebec since October 6, 2022, following a class action settlement with Visa and Mastercard. The rule remains in effect and capped at 2.4% or actual processing cost, whichever is lower.
Why can’t merchants in Quebec surcharge customers?
Quebec’s provincial consumer protection laws require the advertised price to include all mandatory charges, which effectively blocks surcharging consumers directly. Quebec merchants can still surcharge other businesses in B2B transactions.
Does surcharging hurt customer loyalty?
It can, particularly for B2C merchants whose customers value credit card rewards. Because surcharging makes a previously hidden cost visible at checkout, some customers may shift to debit or cash, which can reduce the value of loyalty and rewards programs tied to credit card usage.
