Surcharging adds the processing fee directly to the customer's bill — typically 3% on credit cards. Done correctly (with signage at point of sale, on menus, on the receipt, and with the surcharge clearly itemized as a separate line), surcharging is legal in 47 US states for credit card transactions. Debit card surcharging is illegal everywhere.
Visa and Mastercard rules require: 30 days advance notice to the card networks, signage at the point of sale, a maximum surcharge of 3% (or your effective rate, whichever is lower), and surcharge applied only to credit cards. Cash discounting is a related but distinct strategy that's legal in all 50 states.
The upside: a $50,000/month merchant on 2.6% effective can save $1,300/month by surcharging credit cards. The downside: customer pushback varies by industry. B2B and high-ticket service businesses (contractors, law firms, HVAC) generally accept surcharges; restaurants and retail get more friction.