---
title: Credit Card Surcharges
description: "## Enabling/Disabling Surcharge 1. Go to **Setup**, then **System Setup**. ![](https://salon-software.com/wp-content/uploads/setup-system-setup-menu.png) 2. Go to the **Defaults tab**. 3. Click on **Sales**. 4. Check or Uncheck the box to **Enable Surcharge**. ![](https://salon-software.com/wp-content/uploads/enable-surcharges-insight.png) 5. If enabling, **Set the Surcharge rate** to whatever…"
url: "https://salon-software.com/kb/credit-card-surcharges/"
updated: "2023-11-29"
category: Sales
---

# Credit Card Surcharges

## Enabling/Disabling Surcharge

1. Go to **Setup**, then **System Setup**.
   ![](https://salon-software.com/wp-content/uploads/setup-system-setup-menu.png)
2. Go to the **Defaults tab**.
3. Click on **Sales**.
4. Check or Uncheck the box to **Enable Surcharge**.
   ![](https://salon-software.com/wp-content/uploads/enable-surcharges-insight.png)
5. If enabling, **Set the Surcharge rate** to whatever percentage you prefer.

## How Credit Card Surcharge Works

The credit card surcharge charges the set percentage **on the full charge to the credit card.** This feature is meant for the business to recoup some of the costs the credit card processing company applies to all transactions made via credit card.

This means that **if tips are enabled on the machine**, the surcharge may effect the tip left, as it is a part of the transaction the business is being charged a fee for by the credit card processing company.

**There is no way to enable surcharges without it potentially effecting the tips left via credit cards.** This can get complicated depending on how someone leaves a tip on the credit card machine.

**Example Tip Scenarios:**

**In this example, Tammy gets a Cut and Color for $100 and wants to pay with Visa. The business has a surcharge set for 5%.**

**Percentage Tip -** **If Tammy leaves a 20% tip**

1. **The credit card machine is sent $105** as a charge for Tammy to pay ($100 + surcharge).
2. Tammy adds a 20% tip on the pinpad **which Insight doesn't see**.
3. **The total charge on the pinpad is now $126**, as the 20% tip of $105 comes out to $21.
4. Once approved, **the pinpad sends a total of $126 to Insight as the total amount charged**.
5. **Insight first calculates the surcharge on the total amount authorized, then subtracts the surcharge from the total**, as the surcharge is meant to offset costs of running transactions on credit cards and $126 was charged.
6. The formula for this example is: 126 - (126 / 1.05) = $6
   *`AuthAmount - (Auth Amount / (1 + surcharge Rate))`*.
   **A** **$6 surcharge is subtracted from the total payment**, leaving $120.
7. **Insight then applies $100 to the invoice** as a payment for the service Tammy received.
8. This leaves **$20 for the tip.**

**Without Surcharge:** $100 service and 20% tip = **a $20 tip to the employee**.
**With Surcharge:** $100 service and 20% tip = **a $20 tip to the employee** after surcharge is subtracted.

**Dollar Tip -** **If** **Tammy leaves a $20 tip**

1. **The credit card machine is sent $105** as a charge for Tammy to pay ($100 + surcharge).
2. Tammy adds a $20 tip on the pinpad **which Insight doesn't see**.
3. **The total charge on the pinpad is now $125**. As the pinpad simply adds $105 and $20.
4. Once approved, **the pinpad sends a total of $125 to Insight as the total amount charged**.
5. **Insight first calculates the surcharge on the total amount authorized, then subtracts the surcharge from the total**, as the surcharge is meant to offset costs of running transactions on credit cards and $125 was charged.
6. The formula for this example is: 125 - (125 / 1.05) = $5.96
   *`AuthAmount - (Auth Amount / (1 + surcharge Rate))`*.
   **A $5.96 surcharge is subtracted from the total payment**, leaving $119.04.
7. **Insight then applies $100 to the invoice** as a payment for the service Tammy received.
8. This leaves **$19.04 for the tip.**

**Without Surcharge:** $100 service and $20 tip = **a $20 tip to the employee**.
**With Surcharge:** $100 service and $20 tip = **a $19.04 tip to the employee** after surcharge is subtracted.