What is FedNow® Surcharging? How Does It Work?
Shifting Merchant Processing Costs to the Payer
FedNow® Surcharging – Payer-Covered Merchant
Processing Fees for Instant Payments
Reshaping Business Payments with FedNow®
Surcharge
In today's digital economy, businesses face
high payment processing fees, delayed settlements, and increasing
financial burdens when accepting digital payments.
Whether using credit cards, ACH transfers, or traditional payment systems, merchants struggle to maintain profitability due to:
- Interchange fees on credit card transactions
- Slow ACH processing that delays fund availability
- Hidden merchant fees that impact overall revenue
By adopting the FedNow® Surcharging method, businesses can:
✅ Pass processing fees to the
payer (customer/client) for real-time transactions
✅
Enable instant A2A Credit & Debit transactions via FedNow® and
Same-Day ACH
✅ Use MOTO (Mail Order/Telephone
Order), Auto-Bill Pay, and invoicing
✅ Ensure
compliance with Federal & State regulations for payment processing
✅ Leverage ISO 20022 messaging for structured,
automated, and secure payments
With TodayPayments, businesses can accept FedNow® payments instantly—without incurring merchant processing fees.
Streamline FedNow® Surcharging vs. Traditional Payment Processing
FedNow® Surcharging is a payment model where the payer (customer) covers the merchant’s transaction fees, reducing costs for businesses.
✔ The Payee
(merchant/business) applies a FedNow® surcharge –
typically a small percentage of the transaction.
✔
The Payer (customer/client) covers the processing fee
at checkout.
✔ Funds settle instantly,
ensuring immediate access to cash flow.
✔
Applies across multiple payment channels: MOTO,
Auto-Bill Pay, and invoicing.
Why Businesses Are Adopting the
FedNow® Surcharge Model:
✔
Minimizes operational costs by shifting fees to the payer
✔ Encourages fast, secure, real-time
transactions over credit cards
✔ Provides
full transparency while complying with State & Federal
regulations
FedNow® Surcharging vs. Traditional Payment Processing
Why This Model is More Cost-Effective for Businesses
|
Feature |
FedNow® Surcharge Model |
Traditional Merchant Fees |
|
Processing Speed |
Instant (24/7/365) FedNow® & Same-Day ACH payments |
ACH: 1-3 days, Credit Cards: 1-5 days |
|
Merchant Processing Fees |
Paid by Payer (Customer/Client) |
Absorbed by Merchant |
|
Bank Reconciliation |
Automated via ISO 20022 Messaging |
Manual reconciliation required |
|
Chargeback & Fraud Risk |
Low (FedNow® payments are final and irrevocable) |
Higher risk with credit card chargebacks |
|
Customer Payment Experience |
Transparent pricing with a disclosed surcharge |
Hidden processing costs for merchants |
Why Businesses Are Switching to
FedNow® Surcharging:
✔
Eliminates costly merchant processing fees
✔
Ensures immediate payment settlements and improves cash flow
✔ Reduces chargeback risks compared to credit
card transactions
How FedNow® Surcharge Works for MOTO, Auto-Bill Pay & Invoicing
Seamless Integration for Multiple Payment Channels
With TodayPayments' FedNow® integration, businesses can apply surcharges across various payment environments:
🔹 Mail Order / Telephone
Order (MOTO): Apply surcharges for phone-based
transactions.
🔹 Auto-Bill Pay:
Automate recurring payments while passing fees to the payer.
🔹 Invoicing & Online Payments: Include
an .html payment link with a disclosed surcharge for
customers.
How It Works:
✔ Step 1: Business applies a FedNow®
surcharge on transactions
✔ Step 2:
The customer selects FedNow® as the payment method and
sees the surcharge
✔ Step 3: The
total transaction amount (including surcharge) is processed
instantly
✔ Step 4: Funds are
settled immediately, and businesses receive full payment
without deductions
This model eliminates hidden processing costs for businesses while giving customers a transparent, real-time payment option.
Federal & State Regulations on FedNow® Surcharging
Ensuring Compliance Across All U.S. Jurisdictions
FedNow® transactions are governed by Federal Reserve regulations, which allow merchant surcharging in accordance with applicable state laws.
- Credit Card Surcharges Are Regulated by State Law: Some states prohibit credit card surcharges, but FedNow® payments are direct A2A transactions and do not fall under credit card surcharge regulations.
- Cash Discount Programs Are Legal in All 50 States: FedNow® payments may qualify as an alternative cash discount program, ensuring compliance in all jurisdictions.
- Federal Compliance: As a federally backed system, FedNow® enables compliant payment processing with transparency and fee disclosure requirements.
Best Practices for FedNow®
Surcharge Implementation:
✔
Clearly disclose surcharges before payment processing
✔ Ensure compliance with both state and federal
payment regulations
✔ Leverage ISO 20022
messaging for transparent and structured payment requests
Ask us how:
"How to implement FedNow® Surcharge
for instant A2A transactions"
"Best surcharge
model for FedNow® payments in POS, MOTO, Auto-Bill Pay, and
Invoicing"
"ISO 20022 messaging for compliant,
real-time payment reconciliation"
"How businesses
can pass payment processing fees to customers using FedNow®"
"Federal and State regulations on surcharging for FedNow®
instant payments"
Surcharging and Cash
Discounts with FedNow®:
The
payment processing method application of surcharging or cash
discounts to FedNow® transactions is not explicitly
addressed in current Federal or state laws, which
primarily focus on credit card transactions.
However, the principles may be analogous:
• Surcharging:
Applying a surcharge to FedNow® payments could be subject to
similar regulations as credit card surcharges, depending on
state laws. Merchants should exercise caution and consult
legal counsel before implementing such fees.
• Cash
Discounts: Offering discounts for using FedNow® payments
is generally permissible nationwide, aligning with the legal
status of cash discount programs.
Upgrade to FedNow® Surcharge Payments with TodayPayments
For businesses looking to eliminate payment processing fees, improve cash flow, and accelerate transactions, the FedNow® Surcharge model is the perfect solution.
With
TodayPayments, businesses can:
✔
Enable payer-covered processing fees for instant payments
✔ Accept payments across MOTO, Auto-Bill
Pay, and invoicing
✔ Provide a real-time,
low-cost alternative to credit card transactions
✔
Automate reconciliation and eliminate chargeback risks
✔ Ensure full compliance with Federal and State
regulations
🚀 Upgrade your payment processing—implement the FedNow® Surcharge model today! 🚀
Creation Request for Payment Bank File
Enhance Your FedNow Surcharging Payment Requests with FedNow’s ISO 20022 Messaging
Streamline Payments with Advanced Request for Payment Options:
Harness the power of FedNow's Request for Payment system to transform how you manage invoices and remittances. Our platform supports diverse data integration options, allowing payees to incorporate detailed invoice data directly within the RfP message or link to a comprehensive Merchant Page.
Flexible Invoice Details with ISO 20022 Messaging:
Leverage the flexibility of ISO 20022 messaging standards in our RfP system. You can choose to display crucial payment details directly in the message with a concise 140-character description, or through a dynamic "Hyper-Link" leading to a detailed Merchant Page. This Merchant Page can be hosted either on your website or TodayPayments.com/HostedPaymentPage.html through our seamless integration solution.
Customizable Merchant Pages for Enhanced Customer Experience:
Create a Merchant Page that not only details all the MIDs you own but also presents these options attractively to your customers through the RfP. This customization ensures that whether your payer opts for Real-Time Payment, Same-Day ACH, or Card transactions, they can easily navigate and complete their payments through a simple click on the hyperlink provided on your Merchant Page.
Call us today and receive the .csv or .xml FedNow® or Request for Payment (RfP) file you need—all during your very first phone call! We guarantee that our comprehensive reports integrate flawlessly with your bank or credit union. As pioneers in recognizing the benefits of RequestForPayment.com, we have stayed years ahead of our competitors. Although we are not a bank, our role as an "Accounting System" within the Open Banking ecosystem enables us to work with billers to create effective RfP files that seamlessly upload to the biller's online banking platform. U.S. companies rely on our expertise to learn how to deliver the RfP message directly to their bank with precision.
Our advanced solution, Today Payments' ISO 20022 Payment Initiation (PAIN.013), demonstrates how to create a Real-Time Payments Request for Payment file that sends a clear message from the creditor (payee) to its bank. Most financial institutions support the import of messaging and batch files for both FedNow® and Real-Time Payments (RtP), ensuring smooth processing. Once the file is correctly uploaded, the creditor’s bank processes the payment through a secure "Payment Hub"—with The Clearing House serving as the RtP Hub—and relays the message to the debtor's (payer's) bank. This streamlined approach not only accelerates transaction processing but also enhances transparency and reliability for all parties involved.
... easily create Instant Payments RfP files. No risk. Test with your bank and delete "test" files before APPROVAL on your Bank's Online Payments Platform. Today Payments is a leader in the evolution of immediate payments. We were years ahead of competitors recognizing the benefits of
Same-Day ACH and Real-Time Payments funding. Our business clients receive faster availability of funds on deposited items and instant notification of items presented for deposit all based on real-time activity. Dedicated to providing superior customer service and industry-leading technology.
Contact Us for FedNow Surcharging payment processing pricing
