Credit card fees continue to be a pain point for contractors, and the question of whether to pass those costs along to customers is resurfacing in the industry. On a recent “If Walls Could Talk” podcast, W&C’s Jill Bloom sat down with Thea Dudley, CEO of Pocket Protectors and widely known as the industry’s “Credit Overlord,” to break down what contractors should know before implementing surcharges.

The Right Way to Disclose Surcharges to Customers

Credit card surcharges are becoming more common as processing fees rise, but Thea Dudley stresses they must be implemented legally, transparently, and with advance notice to customers. She advises contractors to phase in changes carefully, avoid surprises at payment, and follow merchant service rules to maintain trust.

According to Dudley, surcharging is nothing new as it tends to appear in cycles as businesses grapple with the rising cost of credit card transactions. “Everybody gets all bent out of shape about the cost of credit cards,” Dudley explained. “Then we all get in a big hoopla, beat the topic to death, and eventually go back to business as usual without really solving it.”

But with processing fees continuing to rise, more contractors are reconsidering surcharges. Dudley emphasized that surcharging is legal and increasingly common, but only if handled correctly. “You can absolutely surcharge,” she said. “But you can’t just wake up one day and decide to add 5%. That’s where companies get into trouble.”

The key, Dudley explained, is transparency. Customers must be notified in advance, whether through credit applications, proposals, or payment agreements. Surprises at the point of payment can damage trust and even drive customers away. “I shouldn’t be hearing this for the first time when I’m getting ready to pay,” Dudley said. “It’s a lot less painful if you tell me in advance and give me the option to choose another method.”

She also reminded contractors that debit cards cannot be surcharged, since they are treated like cash transactions. And when it comes to setting a surcharge rate, companies are bound by the fees outlined in their merchant services agreements. “You can’t just pick any number out of thin air,” Dudley cautioned.

For contractors considering surcharges, Dudley recommends a phased rollout: announce the change, document it clearly across customer-facing materials, and give clients time to adjust. “It’s courtesy 101,” she said. “Don’t surprise me with anything to do with my money.”

While some customers may push back, many business-to-business clients welcome the flexibility, often using rewards points to offset costs. Ultimately, Dudley’s message is simple: surcharging can be an effective tool—but only when done thoughtfully, legally and with open communication.