As featured in the May 2025 issue of AutoSuccess Magazine
Over 16,000 dealership employees trained in compliant surcharging.
Dealer Merchant Services helps dealerships legally and compliantly pass credit card processing fees to customers – without hurting CSI scores or risking compliance violations.
As featured in the May 2025 issue of AutoSuccess Magazine
Over 16,000 dealership employees trained in compliant surcharging.
Dealer Merchant Services helps dealerships legally and compliantly pass credit card processing fees to customers – without hurting CSI scores or risking compliance violations.
Implementing Credit Card Surcharging without Risking Your CSI
As dealership margins tighten in the post-COVID market, maximizing profitability has never been more critical. Among the many expenses scrutinized today, credit card processing fees often rank near the top – but what if you could pass those fees to customers legally, compliantly and without damaging your customer satisfaction scores? Surcharging offers that opportunity, but there’s a right way and a wrong way to implement it.
It’s Not a DIY Project
Credit card fees are increasing every year, quietly siphoning tens of thousands of dollars from dealership profits. However, many are not aware that, on average, for every $10,000 spent on credit card fees, a dealership can recover approximately $7,000 through a compliant surcharge program — that’s up to $84,000 a year added back to the bottom line.
But this is not a do-it-yourself endeavor. Surcharging requires deep understanding of federal, state and card brand compliance, along with dealership-specific needs across departments like sales, service, parts and F&I.
“If you’re considering surcharging, the biggest mistake you can make is assuming it’s simple,” says Amberly Allen, founder and managing partner of Dealer Merchant Services. “And a non-compliant surcharge can lead to fines, failed audits and – worse – a damaged reputation.”
Compliance: The Right Way
Surcharging isn’t illegal – but it is heavily regulated, Allen warns. Dealers must follow federal law, state-specific legislation, and card brand rules from Visa, Mastercard, Discover and American Express. And while a cash discount may be easier to implement, it is rarely compliant in an automotive environment.
“We’re not here to scare anyone – we’re here to educate,” says Allen, “but the risk of non-compliance is real, and the savings are undeniable when done the right way.”
Currently, about 30-40% of new merchant accounts are opened with a surcharge program. Forward-thinking dealers see it as the next evolution, similar to the industry-wide adoption of shop supplies and DOC fees.
Here are just a few of the compliance requirements dealers need to know:
- Surcharging is illegal in Massachusetts, Connecticut and Maine.
- California, New York and Colorado have strict additional requirements.
- You may not surcharge more than 3% – even though some outdated processors still allow 4%.
- Debit cards may never be surcharged.
- You must use compliant signage at cashier stations and entry points.
- You must register with the card brands as a surcharge merchant.
DMS has helped unwind countless non-compliant programs at dealerships, often implemented by general merchant providers that are unfamiliar with dealership operations.
After hearing DMS’s presentation at a 20 Group meeting, Dustin Johnson, platform general manager for McGrath Auto Group, credited the DMS team’s automotive-specific experience as a key reason the dealership group chose to work with them.
“We chose to work with Dealer Merchant Services because their team truly understands the dealership world — they’ve been in our shoes,” Johnson says. “It wasn’t just a sales pitch; it felt like a real partnership. Their background working inside dealerships gave us confidence that they knew what we needed and how to support us. We did our homework, and after looking into several options, DMS stood out — especially with their hands-on training and industry experience. That made the decision easy.”
CSI: Protecting the Customer Experience
One of the most common concerns dealers have is: Will surcharging hurt my CSI?
The answer: Not if it’s done transparently and professionally. “Our training emphasizes communication as much as compliance,” Allen says. Every service advisor, cashier and manager is trained with word tracks like:
“Tim, thank you for coming to ABC Toyota. Your RO today is $206 if you use a credit card, or $200 if you use cash, check or debit. How would you like to pay?”
This level of transparency prevents surprises and empowers the customer with choice – two key ingredients to a positive experience. “CSI protection isn’t just possible with surcharging – it’s expected, and it starts with training,” Allen confirms.
“The key is getting your team fluent in how to explain it to customers,” says Johnson. “When you present it clearly – that you’re simply offering options, like paying with a debit card instead of credit – it makes all the difference. Sure, there might be some initial pushback, but my biggest advice is this: if you’re considering the switch, just do it.”
The Technology & The Training
At the heart of a compliant surcharge program is one thing: the right technology.
DMS utilizes a patented, dealership-specific payment terminal that can automatically distinguish between credit and debit cards. This ensures dealers never surcharge a debit card (which is prohibited) and removes guesswork from the front lines. The terminal does the heavy lifting, not your staff.
This same technology extends beyond the cashier desk, allowing for remote payments via email or text – offering convenience without sacrificing compliance.
But payment hardware is only part of the equation.
“Implementation affects every department – IT, accounting, service, sales – and each needs tailored training. That’s why we created the Dealer Merchant Services University,” says Laura Sherman, chief operating officer and managing partner of Dealer Merchant Services. “Our DMS University is a proprietary LMS platform coupled with an in-store launch process that ensures real-world success at the dealership. With over 16,000 employees trained and certified, our blended learning model helps reduce process evaporation and improve adoption.”
Even the accounting side gets custom tools. Sherman, a former dealership controller, built custom software and reporting that transforms complex raw bank data into a simple format compatible with major DMS systems. “We’re also actively working on direct integrations with major platforms and third-party tools to further streamline daily operations,” she says.
A People-First Program
Rolling out a compliant surcharge program that won’t hurt a dealership’s CSI isn’t just about hardware and policy – it’s about people.
“At DMS, we treat training as a cornerstone.” Sherman says. “We train in perpetuity – meaning anytime you get new staff or need a refresher, we’re there. Whether it’s live on-site, via Zoom or through LMS updates, we make sure your staff stays sharp, and your program stays compliant.”
“When it comes to accounting, we help your controllers handle the added complexity of surcharging,” Sherman continues. “Some states treat surcharges as taxable, others don’t – and we help navigate that with CPA guidance and custom reporting.”
Through Dealer Merchant Services University, your staff gets certified in:
- Legal compliance and policy
- Customer-facing word tracks
- Department-specific protocols (F&I, service, parts, accounting)
- Signage requirements
- Internal reporting processes
“With anything new, there are bound to be some challenges,” Johnson acknowledges. “That’s exactly why we chose DMS – their team is quick to jump on a call with our office management staff and walk us through every step. That level of support made all the difference.”
Dealer Merchant Services was built by car people, for car people.
Want to see how much your dealership could save?
Request a free demo and complimentary credit card statement analysis at:
214 683 4088 | amberly@dealermerchantservices.com