By washingtonmerchantservices November 16, 2025
Credit card fees for Washington small businesses can feel like death by a thousand cuts. A few percentage points here, a few cents per transaction there, and suddenly thousands of dollars a year are quietly leaving your bank account.
At the same time, most customers in Washington expect to be able to tap, dip, or pay online with a card, so refusing credit cards usually isn’t realistic. That means the real opportunity is understanding what you’re paying and how to bring those costs down without scaring away customers or breaking state rules.
In 2025, typical credit card processing fees for U.S. businesses run about 1.5% – 3.5% of every transaction, depending on card type, how the sale is processed, and your pricing plan with your payment processor.
For Washington small businesses that operate on tight margins, those credit card fees can be the difference between a healthy profit and a frustrating year.
On top of that, Washington has its own tax and regulatory rules about surcharges, cost reimbursements, and how gross receipts are defined, which means you can’t just copy what a business does in another state and assume you’re compliant.
This guide walks through the nuts and bolts of credit card fees for Washington small businesses, from interchange and assessments to markups, surcharges, and tax implications. You’ll see what’s normal in 2025, what’s specific to Washington law, and practical ways to reduce what you pay.
By the end, you should be able to read your processing statement, spot junk fees, and decide whether tools like surcharging, cash discounts, or switching processors are right for your Washington small business.
Why Credit Card Fees Matter for Washington Small Businesses
Credit card fees for Washington small businesses are not just an accounting line item; they are a real cost driver that touches almost every sale. When a customer pays $100 with a credit card, you might only receive $97–$98 after fees.
Across thousands of transactions a year, that can turn into tens of thousands of dollars that never hit your bottom line. With rent, wages, inventory, and Washington’s Business & Occupation (B&O) tax to worry about, ignoring card fees can quietly erode already thin margins.
Customer behavior also makes credit card fees unavoidable for most Washington small businesses. Consumers increasingly prefer cards, contactless payments, and online checkouts, especially in cities like Seattle, Tacoma, and Spokane.
Even at farmers’ markets or pop-up events, customers expect the convenience of tapping a card on a mobile reader. If you refuse cards to avoid fees, you may lose sales to competitors who welcome them.
That’s why the smarter approach is to understand how credit card fees work and manage them strategically rather than trying to escape them altogether.
There’s also a competitive angle. If you understand credit card fees for Washington small businesses better than your peers, you can negotiate lower rates, design smarter pricing, and decide when to offer incentives for cash or debit.
You can also avoid risky tactics, like adding improper surcharges, that could trigger complaints to the Washington Attorney General or violations of card-brand rules.
Finally, card fees intersect with tax and compliance. In Washington, many “cost reimbursements,” including extra fees you add to cover card costs, are treated as part of your gross income for tax purposes.
That means mishandling them can lead to under-reported revenue and tax problems. Treating credit card fees as a strategic, managed cost — instead of a mysterious black box — is one of the most impactful financial moves a Washington small business owner can make.
The Building Blocks of Credit Card Fees
Interchange Fees: The “Wholesale” Cost You Can’t Directly Control
Interchange is often the biggest component of credit card fees for Washington small businesses. Interchange fees are set by card networks like Visa and Mastercard and paid to the card-issuing bank each time a transaction runs.
They’re usually expressed as a percentage plus a fixed amount, such as 1.65% + $0.10, and vary based on card type and how the transaction is processed.
In practical terms, interchange is the “wholesale” cost of accepting a given card. Your processor passes this cost through and then adds its own markup. Different categories exist for consumer cards, rewards cards, business cards, and corporate or purchasing cards.
Online or manually keyed transactions usually fall into more expensive categories because they carry higher fraud risk. For Washington small businesses, this means that shifting more volume to in-person, chip-or-tap transactions can lower overall interchange costs even if your markup stays the same.
The frustrating part is that you cannot directly negotiate an interchange with Visa or Mastercard. However, you can influence which interchange category your transactions qualify for by following best practices.
These include using modern EMV terminals, settling batches promptly, sending complete transaction data, and avoiding key-entered transactions wherever possible. Your choice of processor pricing model also affects how clearly you see interchange.
With interchange-plus pricing, you see the interchange component and the markup separately. With flat-rate or tiered pricing, everything is blended, making it harder to see how much of your credit card fees for Washington small businesses is true interchange and how much is markup.
Recent legal settlements and industry changes are also affecting interchange. Mastercard has committed to reducing some U.S. interchange for at least five years as part of a settlement with merchants.
Visa and Mastercard have also been involved in negotiations that could slightly reduce interchange and allow merchants more flexibility in rejecting certain high-fee card types. While these changes may not dramatically slash costs for Washington small businesses overnight, they highlight that interchange is not static — and staying informed matters.
Assessment Fees and Network Costs
Assessment fees are separate from interchange but still part of the core cost of accepting cards. These are the fees that the card networks themselves (Visa, Mastercard, Amex, Discover) charge, usually as a small percentage of each transaction, often a few basis points (e.g., 0.13%).
While small individually, they add up across volume, contributing to overall credit card fees for Washington small businesses.
Card networks may also charge additional network fees — such as network access and brand usage fees, cross-border fees, or fixed monthly fees for access to certain programs. These often appear on your merchant statement under cryptic names, which makes it easy to overlook them.
Some processors pass these assessment fees through at cost, while others mark them up. For Washington small businesses, knowing which network fees are legitimate and which are inflated is key to effective negotiation.
Because assessment fees are set by the networks, you can’t negotiate them directly any more than you can negotiate interchange. However, you can control how often you trigger specific network fee categories.
For example, avoiding unnecessary cross-border transactions, or using the right MCC (merchant category code) so your business qualifies for appropriate, sometimes cheaper, categories.
Credit card fees for Washington small businesses are often inflated by mis-coding, sloppy setup, or outdated account configurations that no one has reviewed in years.
When you review your statement, try to separate three buckets: interchange, assessments, and processor markup. Interchange plus assessments represent the underlying network and bank costs, while markup is where most negotiation happens.
Understanding these components transforms credit card fees for Washington small businesses from a confusing lump sum into a cost structure you can actively manage.
Processor Markup and Pricing Models
Processor markup is the portion of credit card fees for Washington small businesses that goes to your payment processor or merchant service provider (MSP). While interchange and assessment fees are largely fixed across processors, markup is highly negotiable.
It’s also where many “junk fees” hide — things like statement fees, PCI non-compliance fees, batch fees, and early termination penalties.
Common pricing models include:
- Interchange-plus (pass-through) pricing: You pay actual interchange and assessments plus a fixed markup (e.g., 0.30% + $0.10 per transaction). This is usually the most transparent model and good for Washington small businesses that want to understand their true cost.
- Flat-rate pricing: You pay a simple flat percentage plus a per-transaction fee (e.g., 2.9% + $0.30). Providers like Stripe and PayPal often use this model. It’s simple but may be more expensive for some businesses because it assumes a fixed cost regardless of interchange category.
- Tiered pricing: Transactions are grouped into “qualified,” “mid-qualified,” and “non-qualified” tiers, each with different rates. This model can obscure how much you’re paying over interchange and often leads to higher effective rates, especially for rewards or business cards.
When you negotiate, focus on the markup: the percentage over interchange, the per-transaction fee, and monthly account fees. Ask for interchange-plus pricing if you process a reasonable volume and want transparency.
For many Washington small businesses, moving from a tiered or expensive flat-rate plan to a fair interchange-plus plan can save 0.25% – 0.75% of volume, which adds up over a year.
The key takeaway is that processor markup is the part of credit card fees for Washington small businesses where you have the most leverage. If you understand it, you can push back, compare quotes, and keep more revenue in your business.
Typical Credit Card Fee Ranges in 2025
In-Person vs Online Transactions
How you accept cards has a big impact on credit card fees for Washington small businesses. Card-present transactions — where a customer taps, inserts, or swipes a physical card — are considered lower risk by card networks, which means lower interchange categories and typically lower overall fees.
In contrast, card-not-present transactions (online, phone, or manually keyed) carry higher fraud risk and usually fall into more expensive categories.
For in-person consumer credit card transactions in 2025, many businesses see effective processing rates around 1.7% – 2.5% once interchange, assessments, and markup are combined.
Online or keyed-in transactions might run closer to 2.3%–3.5%, depending on card mix and pricing model. These typical ranges are a useful benchmark when evaluating whether credit card fees for Washington small businesses are “normal” or inflated.
If your average effective rate is significantly higher than these ranges, it’s a red flag that further analysis and negotiation may be needed. In Washington, the same pattern holds whether you’re a Seattle coffee shop, a Spokane consulting firm, or a Tacoma e-commerce startup.
Businesses that run most transactions via chip readers or contactless terminals usually pay less per transaction than those who rely heavily on manually keyed payments or online invoices with stored cards.
For example, if you often key in card data for phone orders, switching to a secure online payment link or customer-facing checkout page can shift transactions into a cheaper e-commerce category and reduce your overall credit card fees for Washington small businesses.
It’s also worth considering hybrid models. Many Washington small businesses use mobile card readers at farmers’ markets or events while also running an online store. Each channel may have its own pricing.
Reviewing channel-specific costs helps you decide whether, for example, it’s worth steering more customers to in-person payments or offering small incentives for debit or ACH on larger invoices. Over time, these decisions can meaningfully lower the blended effective rate your business pays.
Different Card Types: Debit, Credit, Rewards, and Business Cards
The mix of card types your customers use is another crucial driver of credit card fees for Washington small businesses. In general, regulated debit cards (issued by large banks subject to the Durbin Amendment) carry lower interchange fees than credit cards.
Non-regulated debit, which comes from smaller banks, can be more expensive but often still cheaper than many rewards credit cards.
Standard consumer credit cards usually fall in the middle range for fees. Premium rewards cards — think airline miles, cash back, or “world elite” cards — are often the most expensive for merchants, because the richer the rewards to the cardholder, the higher the interchange charged to the business.
Commercial or business credit cards can also be pricier, especially when they include purchasing controls, reporting tools, or generous rewards. For Washington small businesses that sell heavily to other businesses (B2B), a card mix skewed toward business cards may drive higher average processing costs.
Recent legal settlements have highlighted this issue. Proposed deals in the long-running U.S. merchant litigation against Visa and Mastercard would slightly reduce some interchange and may eventually give merchants more flexibility to reject certain high-fee premium rewards cards.
While not yet a cure-all, these developments signal that card type mix is under scrutiny — and Washington small businesses should pay attention.
Practically, you can’t control which card a customer pulls out of their wallet. But you can design pricing and messaging that gently nudges behavior.
For example, offering a small discount for debit or cash on large invoices, or clearly posting that “debit is preferred” without refusing credit.
You can also track card type mix on your statements. If you discover that a high proportion of your volume is on premium rewards cards, that explains why credit card fees for Washington small businesses like yours might sit at the upper end of typical ranges — and underscores the importance of negotiating processor markup as aggressively as possible.
Washington-Specific Rules: Surcharges, Taxes, and Compliance
Are Surcharges Legal in Washington?
One of the most common questions about credit card fees for Washington small businesses is whether you can add a surcharge when customers pay with a credit card.
As of 2025, the answer is yes: credit card surcharges are legal in Washington State. There is no state-level law banning surcharges, so businesses generally follow federal rules and card-brand requirements.
Under current guidance, the maximum surcharge allowed on credit card transactions is 4% of the transaction total, but card networks often impose a lower cap, commonly around 3%.
Surcharges can only be applied to credit cards — never to debit cards, even if the transaction is processed “as credit.” This prohibition on debit surcharging stems from federal law (Durbin Amendment) and applies in all 50 states, including Washington.
If you decide to add surcharges to help offset credit card fees for Washington small businesses, you must also follow important disclosure and operational rules:
- Clearly post surge information at the entrance and the point of sale (and online checkout if applicable).
- Show the surcharge as a separate line item on the receipt, after subtotal but before the final amount.
- Notify your acquiring bank and card networks at least 30 days before starting a surcharge program.
- Apply surcharges consistently to all credit card brands you accept, not just one brand like Visa or Mastercard.
Consumers who believe a business is surcharging improperly — for example, exceeding 4%, applying it to debit, or failing to disclose it — can complain to the Washington State Attorney General’s Office.
So while surcharging is a legal tool to manage credit card fees for Washington small businesses, misuse can quickly become a legal and reputational headache.
How Washington Treats Surcharges and Fees for Tax Purposes
Even when surcharges are legal, Washington’s tax rules add another layer of complexity. The Washington Department of Revenue (DOR) generally treats cost reimbursements — additional amounts billed to customers to cover business expenses — as part of your gross income.
That means they’re subject to the same B&O tax and, when applicable, retail sales tax as the underlying sale.
In other words, if you add a 3% surcharge to help cover your credit card fees for Washington small businesses, that surcharge is usually taxable. It can’t be carved out as a deductible cost reimbursement just because you list it separately on the invoice or receipt.
DOR’s guidance explains that the gross amount billed, including cost reimbursements, forms the tax base, and deductions are not allowed even when those costs are shown separately.
Washington’s administrative rule WAC 458-20-108 also clarifies that credit card service fees paid by a seller to a card issuer are part of the seller’s cost of doing business and not subject to separate sales tax collection.
However, when you pass those costs on as a surcharge or similar fee to your customer, that extra amount becomes part of the selling price and is taxable. Several surcharge guides summarizing Washington’s position confirm that surcharges count as part of the taxable sales price.
The practical impact for credit card fees for Washington small businesses is two-fold. First, surcharging recoups some of your card costs but also slightly increases your B&O and sales tax liability. Second, you must configure your POS or invoicing system correctly so that surcharges are taxed consistently with the underlying sale.
Getting this wrong can create under-reported tax issues or overcharging customers. When in doubt, consult your accountant or tax advisor, especially if you are layering surcharges on top of taxable retail sales.
Local Guidance for Governments That Also Informs Private Merchants
While much of the detailed written guidance in Washington focuses on local governments, it indirectly informs best practices for private businesses too. The Municipal Research and Services Center (MRSC) publishes a widely referenced guide on credit card acceptance for Washington local governments.
It notes that Washington is not one of the states that prohibits merchants from adding fees to credit card transactions and explains how counties and municipalities can pass along transaction processing costs, subject to certain limits and disclosure requirements.
MRSC discusses concepts like:
- Average discount rate (merchant discount rate): the blended percentage a merchant pays for card acceptance.
- Convenience fees vs surcharges: convenience fees are typically charged for alternative payment channels (like online or phone) and are heavily constrained by card-brand rules, while surcharges are “checkout fees” added specifically for credit card use.
- Service fees: special programs that allow certain government and higher-education entities to charge fees on specific payments.
Although this guidance is targeted at governments, it reinforces principles that apply broadly to credit card fees for Washington small businesses.
You should distinguish clearly between a surcharge, a convenience fee, and a generic “service fee,” because card networks treat each differently. You should also work closely with your acquirer or processor to ensure any extra fees you add are compliant with both state law and card-brand rules.
For private Washington small businesses, adopting the same level of clarity and policy discipline that MRSC suggests for governments is a great way to stay out of trouble.
Clearly labeled fees, transparent disclosure, and written internal policies about when and how to apply surcharges or convenience fees can make your approach to credit card fees for Washington small businesses more defensible and customer-friendly.
How Washington’s Tax and Regulatory Environment Affects Your Fees
Business & Occupation (B&O) Tax and Gross Receipts
Washington is a gross-receipts-tax state, which means the B&O tax applies to your gross revenue rather than net profit. For credit card fees for Washington small businesses, this has an important implication: you typically can’t deduct card processing costs from your gross receipts for B&O tax purposes.
The DOR’s cost reimbursement guidance makes clear that amounts you bill customers — including reimbursements for expenses or surcharges — are part of your gross income.
So if you sell a product for $100 and add a 3% credit card surcharge, your gross income is generally $103, not $100. You’ll compute B&O tax on that full amount, and if the sale is taxable retail, sales tax is also calculated on the full selling price, including the surcharge.
At the same time, the card processing fees you pay to your processor are an ordinary business expense for federal income tax purposes, but that does not change how Washington’s B&O tax works.
For Washington small businesses, this means you need to manage credit card fees both as an operational cost and in your tax planning. High processing costs effectively increase your B&O tax burden because more of your gross receipts are eaten up by fees that you can’t deduct from the B&O tax base.
Recent legislative changes are also reshaping how payment processors themselves are treated under B&O. New classifications and deductions distinguish payment card processors and allow certain fees, such as interchange and network fees retained by other processors, to be deducted from the processor’s own gross receipts.
While this doesn’t directly lower credit card fees for Washington small businesses yet, it signals that lawmakers recognize the “unique nature of payment system arrangements.” Over time, tax treatment may influence how processors structure pricing in Washington.
For now, the key takeaway is that B&O tax makes gross revenue management more important. The more you can reduce the effective rate of credit card fees for Washington small businesses — through better pricing, negotiation, and operational practices — the more of your gross receipts remain available to cover B&O, other taxes, and profit.
Recent Legislative Changes and What They Mean for Processors and Merchants
In 2025, Washington passed major tax legislation (such as HB 2081 and related bills) that significantly changes B&O tax rates and classifications, including how certain service and financial businesses are taxed.
One portion of these changes creates a specific classification for payment card processors and allows them to deduct certain pass-through amounts like interchange and network fees from their taxable gross receipts.
For Washington small businesses, the direct impact on day-to-day credit card fees is still evolving. Processors may or may not pass any tax savings through to merchants.
However, these legislative changes may encourage more competition among processors that specialize in Washington accounts, potentially creating opportunities to negotiate better deals. When you talk with processors, it’s reasonable to ask whether new state tax rules reduce their cost to serve you and whether that can be reflected in lower markup or fees.
On a national level, ongoing litigation and proposed settlements with Visa and Mastercard continue to influence interchange and merchant rules, including potential caps on some fees and changes to “honor-all-cards” requirements.
While these developments don’t target Washington specifically, any national reduction in interchange or increased flexibility in accepting high-fee cards can indirectly reduce credit card fees for Washington small businesses.
Because these regulatory and legal shifts are complex, Washington small businesses should treat them as one more reason to review processing agreements regularly. Whenever big industry changes hit the news, it’s a good prompt to ask your processor what’s changing in your fees and whether you qualify for better pricing.
Proactively monitoring these changes helps you stay ahead of the curve instead of quietly absorbing higher credit card fees for Washington small businesses year after year.
Strategies to Reduce Credit Card Fees for Washington Small Businesses
Optimizing How You Accept Cards
One of the most effective ways to reduce credit card fees for Washington small businesses is to optimize how you accept cards. Since in-person EMV or contactless transactions usually qualify for cheaper interchange than keyed-in or online card-not-present transactions, lean into secure, card-present channels whenever possible.
If your staff frequently keys in card numbers over the phone, consider transitioning to secure payment links or customer-facing online checkout pages. This reduces manual keying errors, lowers fraud risk, and often moves transactions into lower-cost categories.
For mobile businesses — like food trucks, home services, or event vendors — using EMV-capable mobile readers rather than manual entry or old magstripe readers can similarly reduce the effective rate of credit card fees for Washington small businesses.
You should also pay attention to batching and settlement timing. Many interchange programs require that transactions be settled within a certain window (often 24 hours) to qualify for the best rates.
Delayed settlement can push transactions into higher-cost categories. Work with your processor or POS provider to ensure auto-batching is configured correctly.
Finally, train staff on best practices: always insert or tap rather than swiping when EMV is available, avoid splitting transactions unnecessarily, and verify card details carefully.
Good workflows reduce chargebacks and fraud, which in turn can prevent expensive non-compliance fees or account reviews that indirectly raise credit card fees for Washington small businesses.
Negotiating with Processors and Choosing Pricing Models
Negotiation is where many Washington small businesses leave money on the table. Processors expect savvy merchants to push back, and the initial quote often has room for reduction. Start by calculating your effective rate: total monthly fees divided by total card volume.
Compare that to typical ranges (1.5%–3.5% overall, depending on your mix). If your effective rate is high, you have a concrete basis to challenge your provider.
Ask your processor to quote you on interchange-plus pricing if you’re not already on it. Interchange-plus separates the non-negotiable network costs from the markup. Aim to minimize that markup — both the percentage over interchange and the per-transaction fee. Watch out for:
- Long-term contracts with steep early-termination penalties
- “PCI non-compliance” fees; you may be able to eliminate these by completing compliance requirements
- Statement fees, “regulatory” fees, or vaguely named monthly charges
Obtain at least two or three competing quotes using a recent processing statement so they can estimate your specific card mix. Even if you don’t intend to switch, competing offers can be powerful leverage to lower credit card fees for Washington small businesses.
Remember, price isn’t everything — uptime, support quality, and integration with your POS or accounting system also matter. But if one provider can deliver similar reliability and features at a meaningfully lower markup, that’s real money saved every month.
Over a year or two, a modest reduction in your effective rate can add up to thousands of dollars reclaimed from unnecessary credit card fees for Washington small businesses.
Using Surcharging and Cash Discount Programs Carefully
Surcharging and cash discount programs are increasingly marketed as ways to “eliminate” credit card fees for Washington small businesses. In reality, they shift some costs to customers and must be handled carefully to remain legal and customer-friendly.
If you implement a surcharge program:
- Limit surcharges to credit card transactions only; never apply them to debit cards.
- Keep the surcharge at or below the lesser of your actual cost or 3%–4%, depending on card-brand and federal caps.
- Provide clear, upfront disclosure and itemize the surcharge on receipts.
- Configure your POS so that surcharges are taxed appropriately as part of the selling price in Washington.
Cash discount programs work differently: instead of adding a fee for credit, you post a higher “standard” price and offer a discount for cash or debit.
When structured correctly and consistently, this can help manage credit card fees for Washington small businesses while avoiding some of the stricter surcharge rules. However, card networks have guidance on “cash discount” vs disguised surcharges, so work with a provider that understands these distinctions.
From a customer-experience perspective, ask whether the potential savings outweigh the risk of frustrating loyal customers. In some competitive markets, even small surcharges can drive price-sensitive shoppers elsewhere.
For many Washington small businesses, the best strategy is a blended one: negotiate aggressively, optimize acceptance practices, and use surcharges or discounts selectively — for example, only on very large tickets — rather than across every transaction.
Compliance, Security, and Risk Management
PCI DSS Basics for Washington Small Businesses
Credit card fees for Washington small businesses are also influenced by security and compliance. The Payment Card Industry Data Security Standard (PCI DSS) sets requirements for how businesses handle card data. Non-compliance can lead to fines, higher fees, and in severe cases, loss of the ability to accept cards.
For most small merchants using modern POS systems or hosted payment pages, PCI compliance is manageable. Typical requirements include:
- Maintaining secure networks and firewalls for systems that handle card data
- Using strong passwords and access controls
- Encrypting card data in transit (e.g., HTTPS for web checkouts)
- Limiting who can access cardholder data
- Regularly updating software and applying security patches
- Completing annual self-assessment questionnaires and, in some cases, quarterly vulnerability scans
Many Washington small businesses are charged “PCI non-compliance” fees if they fail to complete the required questionnaires or scans. These fees directly inflate credit card fees for Washington small businesses — and they’re usually avoidable.
Completing the compliance process, or working with a processor that simplifies PCI requirements through validated terminals and tokenized payment pages, can eliminate these costs.
PCI compliance also reduces the risk of breaches and chargebacks, which can be extremely expensive. A serious breach can result in card-brand fines, forensic audits, and card reissuance fees, on top of reputational damage.
While PCI compliance might feel like a checklist, it’s really part of protecting your business and controlling the total cost of accepting cards in Washington.
Avoiding Illegal or Non-Compliant Fee Practices
Because surcharges, convenience fees, and “service fees” are now common tools to manage credit card fees for Washington small businesses, it’s easier than ever to accidentally cross legal or card-brand lines. Some common mistakes include:
- Surcharging debit cards. Absolutely prohibited, even when processed as “credit.”
- Exceeding allowed surcharge caps. Going over 3%–4% of the transaction amount can violate network rules and may be considered unfair or deceptive.
- Failing to disclose surcharges clearly. Washington guidance and card rules expect visible signage and receipt disclosure.
- Implementing “cash discount” programs that are really surcharges in disguise. If the card price is not truly the standard, posted price, you could still be treated as surcharging.
Washington consumers can report suspected surcharging violations to the state Attorney General’s Office, which offers an informal complaint process. Processors and card networks can also take action, including terminating merchant accounts in severe cases.
To protect your business, document your policies around fees and train staff accordingly. Work with your processor or a knowledgeable consultant when designing any program that affects credit card fees for Washington small businesses.
A little upfront effort can prevent expensive disputes later, and it helps maintain customer trust at a time when people are very sensitive to extra fees at checkout.
FAQs
Q1. What is a “normal” credit card processing rate for a Washington small business in 2025?
Answer: Most Washington small businesses see total effective rates — including interchange, assessments, and markup — between about 1.5% and 3.5% of transaction volume.
Lower-risk, card-present operations with good pricing can be near the low end, while card-not-present or high-rewards-card businesses may be near the top. If your effective rate is significantly higher, it’s worth reviewing your contract, pricing model, and card mix to reduce credit card fees for Washington small businesses.
Q2. Are credit card surcharges legal in Washington State?
Answer: Yes. Washington does not have a state law prohibiting credit card surcharges, so businesses may surcharge credit card transactions if they follow federal and card-brand rules.
You must not surcharge debit cards, and you must respect surcharge caps (generally up to 4% by law, but often 3% by network policy). Clear disclosure and proper receipt itemization are required, and surcharges are treated as part of the taxable sales price in Washington.
Q3. Do I have to charge sales tax on surcharges in Washington?
Answer: In most cases, yes. Washington’s Department of Revenue treats cost reimbursements and surcharges added to cover business expenses as part of the gross amount billed for goods or services.
That means surcharges are included in both the B&O tax base and, where applicable, the retail sales tax base. Your POS should be configured so that any surcharge flows into the taxable total correctly. This is an important detail in managing credit card fees for Washington small businesses.
Q4. Can I negotiate with my processor to lower my fees?
Answer: Absolutely. While you can’t negotiate interchange or basic network assessments, you can negotiate the processor markup — the percentage and per-transaction add-on, plus monthly and annual fees.
Ask for interchange-plus pricing, challenge junk fees, and compare competing quotes using your current statement. Many Washington small businesses have reduced total credit card fees by 0.25%–0.75% of volume simply by renegotiating or switching providers.
Q5. Is a cash discount program safer than a surcharge program in Washington?
Answer: It depends on how it’s structured. A true cash discount program posts a higher standard price and offers a discount for cash or debit. A surcharge program posts a base price and adds a fee only when a customer uses a credit card. Both approaches must follow card-brand rules and Washington tax rules.
Cash discount programs can be perceived more positively by customers, but if mis-implemented, they can still be treated as surcharges. Work with your processor to ensure your program is compliant and transparent, whichever approach you choose to manage credit card fees for Washington small businesses.
Q6. How does PCI compliance affect my credit card fees?
If you don’t complete PCI DSS requirements, many processors add monthly “PCI non-compliance” fees, which directly increase credit card fees for Washington small businesses.
Completing the required self-assessment and scans usually removes these fees and reduces security risk. Using PCI-validated terminals and hosted payment pages can also simplify compliance and protect you from expensive data breaches.
Q7. Are there special rules if my Washington business is also a local government contractor or accepts payments on behalf of a government entity?
Answer: Local governments in Washington follow specific statutes and guidance regarding how they can pass along transaction costs. If your small business works closely with government entities or runs payments through their systems, you may need to align with those rules.
In general, though, the same principles apply: clear disclosure, caps on fees, and ensuring any extra charges are consistent with state and card-brand rules. When in doubt, confirm expectations in your contracts and talk with the government finance office you serve.
Conclusion
Credit card fees for Washington small businesses are not going away. As customers increasingly expect seamless card and digital payments, refusing cards isn’t a realistic strategy. But accepting card fees as a mysterious, uncontrollable cost isn’t necessary either.
By understanding interchange, assessments, and processor markups — and how Washington’s unique B&O tax and surcharge rules work — you can turn credit card acceptance into a managed, predictable part of your financial plan rather than a constant frustration.
The most successful Washington small businesses combine multiple tactics: they optimize how they accept cards (favoring EMV and contactless over keyed transactions), negotiate aggressively for transparent interchange-plus pricing, and remove junk fees.
Some implement carefully designed surcharging or cash discount programs, configured to comply with Washington’s tax rules and card-brand restrictions, while others simply lean on better pricing and operational efficiency. In all cases, they monitor their effective processing rate regularly instead of letting it drift upward unnoticed.
Finally, remember that this landscape keeps evolving. National settlements over interchange, state tax law changes, and new processor offerings will continue to shape what you pay. Schedule a periodic “payments checkup” for your business — just as you’d review insurance, leases, or vendor contracts.
By staying informed and proactive, you can keep credit card fees for Washington small businesses under control, protect your margins, and make it easier for customers to pay you in the ways they prefer.