Should You Accept Credit Cards and Pass the Processing Fee to the Customer?

Should I eat the credit card fees or pass them on to the customer?

Absorb the fee on small jobs, and on big jobs either build it into your price or add a written surcharge if your state and processor allow it. The choice that hurts is absorbing it by accident, without ever deciding.

If you take cards and say nothing about fees, you're in good company: most contractors absorb 2-3% on every credit card job without thinking about it (Cinderblock). The fee also looks small until it lands on a single remodel invoice (MannyPay).

Say a remodel invoice is $20,000 and your card rate is 3%. If you absorb it, that is $600 out of your margin on one payment.

Pick a rule before your next estimate so you aren't deciding on the spot:

• Small jobs and service calls: absorb the fee, it's the cost of getting paid fast.
• Mid-size jobs: build the fee into your price.
• Large jobs: take the deposit and progress payments by ACH or check, and allow a card with a surcharge on the rest.

Is it legal to charge customers extra for paying by credit card?

Sometimes, but it depends on your state, the card network rules and how you apply the charge, so confirm before you add anything to an invoice. I can't give you a yes or no that holds everywhere.

A surcharge is an extra charge added because the customer pays by credit card (LeadHunterUSA), and it lets merchants pass processing fees on to the customers who pay that way (Square Community). That describes what it is. It doesn't tell you it's allowed where you work.

Before you add one, do these three things:

• Ask your payment processor what surcharge rules apply to your account and your state.
• Ask your accountant or your state's revenue department how the extra charge should be recorded.
• Put the surcharge in writing on the estimate, the contract and the invoice, as its own line, before work starts.

Don't bury it. A fee the customer sees at signing is a policy. A fee they find on the final invoice is a dispute.

Will a card surcharge cost me jobs or annoy customers?

It can, mostly when it shows up as a surprise or makes your bid look higher than the next guy's, so state it on the estimate and always offer a way around it.

Homeowners compare totals. If your bid has a card fee line and a competitor's doesn't, yours looks higher even when it isn't. The fix is to show the fee as optional: the price is the same if they pay by check or bank transfer, and the card option adds the fee.

You don't need a long speech. Try something like this when you send the estimate:

• "You can pay by check or bank transfer at the price shown. If you'd rather use a card, there's a card fee line, because the processing cost comes out of the job."

If the customer wants card points, it helps to know that card transactions sometimes carry hidden fees that can end up costing more than the rewards are worth (Figure). You're not telling them what to do, you're just giving them the full picture.

Is it better to add a surcharge or just build the fee into my price?

Building it into your price is easier and avoids the awkward talk, while a surcharge is fairer because only the people paying by card cover the cost. Which one wins depends on how competitive your bids are.

Here is how the three approaches compare on one big job.

A discount for paying by check or ACH does the same math from the other side. Rules on discounts and surcharges can differ, so ask your processor and accountant before you advertise either one.

If you build the fee in, do it when you price the job, not afterward. Our free job cost calculator lets you add a line for payment costs so your margin target holds.

How do I handle a customer who wants to put a big remodel on a credit card?

Say yes if you've planned for it: agree in writing who pays the fee, offer a split such as the deposit by card and the balance by ACH, and keep paperwork that backs up the job.

Work through it in this order:

1. Ask early, before the estimate goes out, how they plan to pay.
2. Show the options on the estimate: check or bank transfer at the base price, card with the fee line or a built-in price.
3. Offer a split if they want points. Say they put the deposit on the card and pay the progress payments by ACH, then the fee only hits part of the job.
4. Get the payment terms signed along with the scope.
5. Keep proof of the work: signed change orders, dated photos and receipts for materials.

That last step matters because card payments can be disputed, and the paperwork is what you'll rely on if one happens. The rules on disputes differ by card network, so ask your processor how they work for you.

In MagicBuild, the client signs the estimate on their phone, can pay a deposit by card or bank, and the receipts you take get filed to the job, so that paper trail builds as you work.

Which payment method fits which job size: card link, Zelle, check, or ACH?

Use a card link or Zelle for small jobs, checks for mid-size jobs with clients you trust, and ACH for large jobs and progress payments.

I can't give you exact costs for your shop, because rates depend on your processor and your bank, and there is no good public data on what a typical small contractor pays for each method. You can find your own number in a few minutes: take last month's processor statement, divide the total fees by the total card volume, and that is your real rate.

For invoicing, a clear invoice with a pay link makes any of these faster. Our free invoice template is a good starting point, and in MagicBuild the invoices can be paid online.

What should I do this week?

Decide your rule by job size, write it into your estimate template, and check your surcharge and discount options with your processor and accountant.

• Pull your last three processor statements and work out your real rate.
• Pick a cutoff for when you absorb, build in or surcharge.
• Add one sentence on payment options to every estimate.
• Offer check or ACH on every large job, so the customer has a choice.

If you'd like estimates, signatures, deposits, invoices and job profit in one place, you can start a free trial of MagicBuild. It's $69 a month after 14 days free, and your crew and clients don't cost a seat.