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Credit card surcharge fees can now be passed onto customers

4 min read

Credit card surcharge fees can now be passed onto customers

Written By

Clay Shiffman

Rounding it up

  • KOHO Prepaid Mastercard® cards will not incur any surcharge fees

  • As of October 6th, merchants will be able to pass on credit card surcharge fees to their customers, subject to certain limitations

  • Prior to this change, the merchants would have to cover the fee

As if dealing with sky high inflation wasn’t enough, as of October, Canadian bank accounts could be taking yet another hit. Merchants will now be able to pass on credit card surcharge fees to their customers. This means if you shop at a vendor or merchant that has chosen to charge surcharge fees, your purchases could be costing you more.

What are Surcharge Fees?

Let’s start with the basics. A surcharge is an additional fee that a merchant adds on a transaction when a consumer uses a credit card for payment.

A settlement between credit card companies and merchants will allow Canadian merchants to surcharge credit cards starting October 6, 2022. As long as merchants comply with certain limitations, they can legally surcharge customers for using a credit card.

Before the recent settlement, the agreement between credit card companies and merchants prohibited these fees from being passed on to customers. Instead, these fees would be incorporated into the cost of service or sale.. As part of the legal settlement, credit card companies agreed to modify their no-surcharge rules to allow merchants to charge customers up to a cap of 2.4%.

How will it work now?

Some merchants may choose to opt out of charging the fees entirely. Merchants who do decide to pass on surcharge fees to their customers will not be able to charge more than 2.4%.

Quebec customers will not be affected by this new policy because of Quebec legislation prohibiting merchants from charging more than the advertised price.

What does this mean for KOHO users?


KOHO Prepaid Mastercard cards will not incur surcharge fees, even if the merchant decides to apply it. This also applies to any pre-authorized debit transactions, like a bill payment. Only credit card users can be charged. So if you’re a KOHO user, you can breathe a sigh of relief (and show off this feature to your non-KOHO friends). If you notice a merchant charging you this fee on your KOHO card, contact our User Success team in your app for help resolving it.

How will this affect Canadians?

With the price of everyday goods getting higher and higher, and with no end in sight, we could see Canadians opting to use payment methods other than credit cards to avoid this extra fee. After all, who wants to pay even more to use their own money?

It will be up to the merchants to decide whether they want to pass on these fees to their customers or if they should avoid it entirely.

Either way, as a customer, there’s no need to fret. There are some great alternative methods of payment if you’re looking to avoid unnecessary fees…and we might know just the one  ;)

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!
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