Short on time?
Here’s the short version.
Surcharging adds a disclosed fee to an eligible credit payment; a cash discount reduces the posted price; dual pricing shows two totals before payment. They are not interchangeable. Surcharging is not allowed in Quebec, cannot apply to debit or prepaid cards, and elsewhere is limited by actual acceptance cost and a 2.4% cap.
- Your signage, staff explanation and receipt need to agree.
- A different label doesn’t get around local or network rules.
- You can still compare lower-cost options while keeping one customer price.
In this article
If you've shopped around for processing quotes lately, you've probably heard all three terms — sometimes used interchangeably, sometimes used wrong. They're not the same. They're three distinct pricing models, with three different ways of presenting the cost to the customer, and three different rule sets in Canada.
I get asked some version of "which one should I use?" every week. The honest answer is: it depends on your industry, your average ticket, what province you're in, and how often you actually want to explain pricing to a customer. Let's go model by model.
The 30-second version
| Model | What the customer sees |
|---|---|
| Credit card surcharge | A posted price and a disclosed additional amount for an eligible credit card. |
| Cash discount | A reduction from the posted price for paying with cash. |
| Dual pricing | Two totals displayed before the customer chooses how to pay. |
What the price sign says, what staff quote and what the receipt prints all matter. A terminal menu labelled “dual pricing” cannot settle whether a particular implementation meets the rules in your province.
Model 1: Surcharging
Surcharging does not apply to debit or prepaid cards. Advance notice and clear disclosure are required; confirm the exact requirements with your processor before turning it on. A permitted surcharge cannot exceed your applicable acceptance cost or 2.4%, whichever is lower.
Where permitted, an eligible credit card surcharge adds a disclosed amount to the price when the customer uses that card. If the accepted quote says $1,000, the customer should be able to see the fee and resulting total before committing to a payment method.
The federal consumer agency summarizes the network maximum of 2.4% and the limit based on the merchant’s actual cost of accepting credit. Check the card brand’s conditions, advance notice and disclosure requirements with the processor. Québec prohibits adding a payment-card fee.
Model 2: Cash discount
With a genuine cash discount, the posted price is available to a card customer. Paying cash earns a reduction. If the shelf says $100 and the terminal charges a card customer $103, calling $100 the “cash price” after the fact does not explain the extra $3 to that customer.
For example, a shop might post a $100 regular price and offer a $2 cash discount, making the cash total $98 before any applicable tax. That is an illustration of how prices are presented. Have your processor check the proposed signage and receipt.
Model 3: Dual pricing
With dual pricing, a customer sees the prices for the available payment methods before choosing. That can work on a printed estimate or menu. It takes more coordination when the price also appears in your web store and text-message invoices.
Walk one item from shelf to terminal to receipt. If one channel only shows the lower number, fix the price display before enabling a second total at the terminal. A new label alone does not authorize fees that local rules prohibit.
Which setup fits the way you sell?
- Start with the province and where the sale happens. Ask for the applicable restrictions in writing, including for online or mobile sales.
- Check ticket size and margins. The dollars on a $6,000 install look very different from those on a $5 coffee.
- Walk through refunds, deposits, tips and printed estimates with a staff member. Check that the customer sees the right total at the right time.
- Ask for the total cost to you under each eligible model. Include debit, equipment and software as well as any portion of credit cost you would still carry.
You can also keep a single customer price
Price the same month under interchange-plus or a suitable flat-rate offer. A shop can absorb its own processing cost and still improve the economics by changing its agreement. If the difference is small, a familiar checkout may be the better trade.
Common questions
Can I use the same setup in Québec?
Québec’s consumer protection office says merchants cannot add fees for using a debit or credit card. Have the precise prices and method of displaying any proposed discount checked for the province before using it.
Can I apply the same rule to every card brand?
Check the requirements of each network and your agreement. A setup approved for one card type does not establish eligibility for another.
How can I tell whether the staff explanation is clear?
Show a first-time customer the price sign and a sample receipt. Ask what they expect to pay with each method. If the answer changes after they see the terminal, revisit the display.
What to take back to your business
- Choose the customer price display before choosing the terminal setting.
- Get the program, notice and disclosure requirements confirmed for the actual location and cards.
- Compare the cost of retaining one all-in price.
Fair questions
What is the difference between surcharging, cash discounts and dual pricing?
A credit card surcharge adds a disclosed amount to a posted price for an eligible card. A genuine cash discount reduces the posted price for cash customers. Dual pricing shows two totals before the customer chooses how to pay. The sign, staff explanation and receipt all need attention.
Can I surcharge debit or prepaid cards in Canada?
No. The article states that surcharging does not apply to debit or prepaid cards. For eligible credit cards, confirm advance notice and clear disclosure requirements with your processor before enabling it. A permitted surcharge cannot exceed the applicable acceptance cost or 2.4%, whichever is lower. Québec prohibits adding a payment-card fee.
Does calling a terminal setting dual pricing make it compliant?
No. A terminal label cannot settle whether your setup meets the rules in your province. Customers need to see the available prices before choosing a payment method. Walk an item from shelf to terminal to receipt, and fix any channel that shows only the lower number before enabling another total.
Can I reduce processing costs without adding a customer surcharge?
Yes. The article suggests pricing the same month under interchange-plus or a suitable flat-rate offer while keeping a single customer price. Compare debit, equipment, software and any credit cost you would still carry. If the difference is small, keeping a familiar checkout may be the better trade.
Sources & further reading
- FCAC · Surcharges, service fees and discounts
- Québec consumer protection office · Fees for debit and credit cards
Rates, program rules and eligibility can change. Check your current written agreement and the linked Canadian sources. This is a practical guide, not legal advice.