Credit card surcharging in Ontario: dos, don'ts, customer reactions

Surcharging is legal in Ontario — with one big exception

Since October 6, 2022, Canadian merchants have been allowed to add a surcharge when a customer pays with a Visa or Mastercard credit card — the outcome of a long-running class-action settlement (Visa Canada's merchant surcharging FAQ). Ontario adds no provincial restriction of its own, and neither does any other province — except one (BLG).

The exception is Quebec, where consumer-protection law requires all-inclusive pricing, so surcharging consumers is prohibited — and the ban follows the customer, not the store. A Quebec resident checking out on your Ontario web shop can't be surcharged either, and signage doesn't cure it (Office de la protection du consommateur).

So a Toronto café, a Mississauga contractor, or a Scarborough nail salon can legally pass credit-card acceptance costs to the customers who generate them. Whether you should — and how to do it without breaking network rules or goodwill — is the rest of this guide.

The dos: what a compliant surcharge looks like

• Do cap it at the lesser of your cost of acceptance or 2.4%. This is the most under-explained rule in surcharging. The 2.4% figure is a ceiling, not an entitlement: your real cap is your average effective merchant discount rate for that network's credit cards, whichever is lower (Visa FAQ; FCAC). A merchant paying a 1.5% effective credit rate may pass through at most 1.5%. If a provider tells you to "just set it to 2.4%," they're skipping the rule that matters most. (Curious what goes into your cost of acceptance? Start here: Interchange fees in Canada: how card processing fees really work.)
• Do pick one level. You can surcharge at the brand level (one uniform rate across all of a network's credit cards) or at the product level (a specific premium card type) — never both (Visa FAQ).
• Do give 30 days' written notice — and note the asymmetry. Visa requires notice to your acquirer only (Paya). Mastercard requires notice to both your acquirer and Mastercard itself, via its Surcharge Disclosure webform (Chase Canada). Miss the second one and you're offside on all of your Mastercard volume.
• Do post signage at the entrance and the point of sale. It must state the exact amount or percentage, that the fee is assessed by the merchant — not the card network — and that it applies to credit cards only. Online, the disclosure belongs at checkout before the order completes; on phone orders, it must be said out loud (Visa FAQ; FCAC).
• Do print the surcharge as a separate line on every receipt. Not folded into the price, not a footnote — its own line, every time (Visa FAQ).
• Do refund it pro-rata. When you refund a sale, in whole or in part, the matching share of the surcharge goes back too (Visa FAQ).
• Do keep HST off a properly separated surcharge. Under CRA guidance GI-200, a credit-card surcharge that is shown and charged separately is an exempt financial service — no GST/HST on that line, with Ontario's 13% HST applying to the base sale only. Four conditions: the fee is charged solely for the use of a credit card, imposed by the merchant itself (not by your processor), compliant with the network surcharge rules, and shown separately (CRA GI-200). Bundle it into your prices and you likely lose that treatment. And if you've heard that "surcharges became taxable in 2023" — that claim appears to trace to a Budget 2023 amendment aimed at payment-card clearing services between networks and processors, not at merchant surcharges (McMillan).

The don'ts: the lines not to cross

• Don't surcharge debit — any debit. Visa and Mastercard debit and prepaid cards can never be surcharged (Visa FAQ; Chase Canada). Interac is more nuanced: you can't add your own surcharge to Interac debit, but Interac's rules do allow a separate, acquirer-applied fee of up to $0.25, prompted at the terminal, in-store only, printed on the transaction record and cancellable, with prescribed "Fee Notice" signage (Interac). If you're surcharging credit, leaving debit untouched is precisely the point. (For how Interac pricing works, see Interac fees for merchants: flat fee vs percentage in Canada.)
• Don't call it a convenience fee. Convenience fees are not permitted in Canada at all, and the customer-facing name must be a merchant-assessed credit-card surcharge (Visa FAQ).
• Don't stack fees or play favourites. A surcharge can't be combined with other service fees, and your Visa surcharge must not exceed whatever you add on Amex or PayPal (Visa FAQ).
• Don't spring it at the terminal. Customers must be able to cancel without penalty and pay another way (FCAC). As the research below shows, this isn't just a compliance rule — surprise is the biggest driver of anger.

How customers actually react — and why it works out for merchants

Here is the reframe that matters the moment you turn surcharging on: every credit-card interaction now resolves into one of two outcomes, and both of them work in your favour. Either the customer pays the disclosed surcharge — in which case your cost of accepting that credit card is effectively $0, because the fee you used to absorb is now covered — or the customer switches to debit, in which case your cost drops to a flat ~5.9¢ (Interac, from 3.9¢ on a chip insert) instead of roughly 1.5% of the sale. A $50 credit-card sale that used to cost you about $0.75 in fees now costs you either nothing or about six cents. A customer reaching for their debit card isn't pushback — it's the program doing exactly what it is designed to do.

The Canadian data says this is what actually happens. The best evidence comes from the Angus Reid Institute's November 2022 survey of 2,774 adults, run just after surcharging became legal, using a 1.5% surcharge scenario (Angus Reid):

The headline pattern: at small businesses, switching beats leaving. Most customers keep buying — they just pull a different card. Fresher signals point the same way: according to press materials for J.D. Power's 2025 Canada Credit Card Satisfaction Study, 53% of Canadian cardholders now report seeing different prices for credit, and in 88% of surcharge encounters the customer switches payment method rather than abandoning the purchase — though surcharged customers score notably lower on satisfaction (J.D. Power).

This matches what we see on the ground. Across our own GTA merchants who surcharge, we haven't run into customer loss — what we see is exactly what the switching data predicts: some customers move to debit, and the rest pay the disclosed fee without fuss. That is our own experience, not a guarantee about your storefront, but it lines up with every number in this section.

Two more findings worth planning around. First, rewards-card holders are the angriest segment: 82% of Canadians' primary cards carry rewards, and 61% say they would reconsider or drop a points card if surcharges became universal, with higher-income cardholders the most sensitive (Angus Reid, above). Second, surprise — not the fee itself — drives the worst reactions. In a US study, 32% of surcharged consumers said they weren't warned, 92% demanded upfront disclosure, and 73% said they'd use cards less (LendingTree). Pricing researchers have found the identical math reads as fair when framed as a saving for debit and cash, and "sneaky" when framed as a penalty (TRC).

An honest caveat — and notice which way it cuts. The Angus Reid and RFI Global figures above are stated intent, mostly at a 1.5% scenario, not observed behaviour; the fresher J.D. Power 2025 Canadian numbers describe real surcharge encounters, but they are cardholders' self-reported recall in a satisfaction survey, not transaction data. Treat them all as directional, not gospel. What survey research shows consistently, though, is that stated intent overpredicts punishment: people say they will walk, and then mostly don't. Adoption is the tell. US small-business surcharging climbed to 34% in 2025 (US data, J.D. Power), and merchants keep opting in precisely because the mass walk-outs they were warned about don't materialise at businesses that disclose well.

Australia is the cautionary tale worth studying — not because surcharging failed there, but because it spread so far. Card surcharges grew to about A$1.2 billion a year (Australian data, not Canadian), and once surcharging was that widespread and that careless, the Reserve Bank of Australia concluded it should end, with a ban reported to take effect in October 2026 (RBA). The lesson for Ontario merchants isn't "don't" — it's "do it right." Careless, universal, undisclosed surcharging is what invites a regulatory backlash; transparent, capped, debit-friendly surcharging is how the option stays on the table.

Should your business surcharge at all?

A four-step playbook — this is how the merchants who make surcharging work actually run it:

1. Lead with "debit is always fee-free here." Network rules guarantee it, and it hands the 59% who would rather switch than leave an easy, positive way to do so. A sign that celebrates the fee-free option lands very differently from one that announces a fee.
2. Disclose before the terminal, everywhere. Entrance sign, a note at the counter, a line on your website, a sentence in your phone script. The rules require it anyway — and 92% of surcharged consumers in the US study above demanded exactly this.
3. Frame it as cost recovery, never a penalty. "We add 1.5% on credit cards — exactly what accepting them costs us. Debit and cash carry no fee." One sentence that satisfies the lesser-of rule and the framing research at the same time.
4. Model your card mix first. If your clientele skews to premium rewards cards, you're facing the most surcharge-sensitive segment, and it may pay to keep absorbing the cost. Pull a recent statement, work out your effective rate (Credit card processing fees in Canada: junk fees explained), and run both scenarios before deciding. Restaurant or café owner? Start with Restaurant & café payment processing in the GTA: fees, tips, terminals.

How does surcharge-funded processing work at Newdays?

As of July 2026, Newdays' Zero-Cost Credit Card Processing program is built around exactly these rules: 0% credit-card processing fees for the merchant, funded by the program's 2.4% credit rate being passed fully to your customers as a disclosed surcharge — so the surcharge is your cost of acceptance and never exceeds the 2.4% network cap. To be equally clear about what "zero-cost" does not cover: you still pay Interac debit (from 3.9¢ per transaction) and your terminal rental (from $30/month, available with Clover terminals — see terminals); the program applies to credit cards only; and it is not available in Quebec. On the Zero-Cost program, Newdays handles the compliance setup — the 30-day network notification (to your acquirer for Visa; your acquirer plus Mastercard's webform for Mastercard), signage templates, and receipt configuration — each step reviewed and approved by you — and you keep a personal account manager with 24/7 support in English, Korean, and Vietnamese.

Not sure surcharging suits your customer mix? Send us a recent statement for a free, line-by-line audit and see exactly what you'd pay on Newdays' standard pricing — a 1.5% credit rate on Visa and Mastercard (1.8% on American Express) and a flat Interac fee from 3.9¢ (chip) to 5.9¢ (contactless tap), as of July 2026 — before you decide anything.

This article is general information, not legal or tax advice — confirm the details for your own situation with your acquirer and a professional advisor.