Fee Passthrough Explained
How tobacco retailers eliminate credit card processing fees and keep 100% of their sales revenue.
What Is Fee Passthrough?
Fee passthrough -- also called cash discount or credit card surcharging -- is a pricing model where the credit card processing fee is added to the customer's total when they pay with a credit card. Customers who pay with cash or debit pay the regular listed price.
The concept is simple: credit card companies charge merchants a fee on every transaction (typically 2-3%). With fee passthrough, that cost is transparently passed to the customer who chooses to use a credit card, rather than being absorbed by the retailer.
This is not a new idea. Gas stations have offered "cash price" vs. "credit price" for decades. Fee passthrough applies the same principle to retail checkout, and it is fully supported within TORO POS.
How It Works
A straightforward process that takes minutes to set up and saves thousands per year.
Enable in TORO Settings
Navigate to Settings > Payment > Fee Passthrough and toggle it on. Set your passthrough percentage (typically 2% to match your processing rate).
Post Required Signage
Print and display the surcharge notice at your store entrance and at each register. TORO provides ready-to-print templates that meet card network requirements.
Process Sales as Normal
Ring up sales the same way you always do. When a customer pays with a credit card, the fee is automatically calculated and added as a separate line item on the receipt.
Keep Your Savings
At the end of the month, your processing statement shows the fees collected from customers offsetting your processing costs. Your net processing expense: $0.
What the Customer Sees
Credit Card Payment
Fee shown as a separate line item on receipt
Cash Payment
No processing fee -- regular price
Real Savings Example
For a tobacco shop processing $50,000/month in credit card sales
| Metric | Without Passthrough | With Passthrough |
|---|---|---|
| Monthly CC Volume | $50,000 | $50,000 |
| Processing Rate | 2% | 2% |
| Monthly Processing Cost | -$1,000 | $0 |
| Annual Processing Cost | -$12,000 | $0 |
| 3-Year Processing Cost | -$36,000 | $0 |
$12,000 saved per year
$50,000/month in CC sales x 2% rate = $1,000/month you never pay
Legal Compliance
Credit card surcharging is legal at the federal level in the United States following the 2013 settlement in the In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation case. However, individual states have their own laws regarding surcharges.
As of early 2026, the majority of states allow surcharging, but some states have restrictions or prohibitions. You are responsible for verifying that fee passthrough complies with the laws in your state before enabling it.
Key Compliance Requirements
- Check your state's laws -- Some states prohibit or restrict credit card surcharges. Verify compliance before enabling.
- Post clear signage -- Card networks require visible notices at the store entrance and at the point of sale.
- Show the fee on the receipt -- The surcharge must appear as a separate line item. TORO handles this automatically.
- Do not surcharge debit cards -- Federal law prohibits surcharges on debit transactions. The processing terminal handles this distinction.
- Cap at 3% maximum -- Card network rules cap the surcharge at 3% or your actual cost of acceptance, whichever is lower.
Fee Passthrough FAQ
Is fee passthrough legal?
In most U.S. states, yes. Surcharging credit card transactions is legal at the federal level and in the majority of states. However, a handful of states have restrictions or outright bans. You must check your specific state's laws before enabling fee passthrough. TORO does not provide legal advice -- consult with a local attorney or your state's attorney general office if you are unsure.
Does fee passthrough apply to debit cards?
No. Under federal law (the Durbin Amendment), surcharges cannot be applied to debit card transactions, even when the customer selects 'credit' at checkout. The processing terminal handles debit card detection — TORO does not detect card type automatically.
Will customers complain about the extra fee?
Most retailers report very few complaints. The fee is clearly disclosed on signage and on the receipt as a separate line item. Customers who prefer to avoid the fee can simply pay with cash or debit. Many gas stations and small businesses already use this model, so customers are increasingly familiar with it.
How much does the average retailer save?
It depends on your credit card volume. A store doing $50,000/month in credit card sales at a 2% rate would save $1,000/month -- that is $12,000 per year. Over three years, that is $36,000 in processing fees you never have to pay.
Can I enable or disable it at any time?
Yes. Fee passthrough is a setting within TORO that you can toggle on or off. There is no contract or commitment. If you decide it is not right for your store, turn it off and you simply pay the standard processing rate.
Do I need special signage?
Yes. Card network rules (Visa, Mastercard) require that you post clear signage at the entrance and at the point of sale notifying customers of the surcharge. TORO provides templates you can print and display.
Stop Paying Processing Fees
See how fee passthrough works in a live TORO demo with your real product data.