Credit Card Fees for Mechanics: What Square and Stripe Cost, Surcharging Rules, and 1099-K

Updated 2026-10-17. Sources are listed at the end.

Most customers want to pay with a card, and every card payment costs you money. On a $500 brake job, the difference between a tap in the driveway and an emailed invoice is a few dollars. Across a year it can be a few hundred. Here’s what the two most common processors publish, what you can and can’t pass on to the customer, and how card income gets reported to the IRS.

Published 2026 rates

On Square’s paid Plus and Premium plans, the in-person percentage drops to 2.5% and 2.4%, but those plans charge a monthly fee. Sources: Square fees, Stripe pricing. Processors change their rates, so check before you sign up.

Worked example: a $500 job

The takeaway: take payment in person, before you leave the driveway. A reader in the van is cheaper than an emailed invoice or a keyed-in card, and you go home with the money instead of a receivable.

Put fees into your rate, not your margin

At about 3% on most of your revenue, card fees are a real overhead line. In the labor rate & break-even calculator, add your expected annual card fees to the admin/other line. If you bill about $100,000 a year and roughly 3% goes to fees, that’s around $3,000 to cover before you profit. The calculator shows how much it moves your break-even rate.

Can you add a credit card surcharge?

Sometimes, within strict rules. Visa’s Merchant Surcharging Q&A says:

• Surcharges apply only to credit cards. You can’t surcharge debit or prepaid cards, even when the customer signs.
• The surcharge can’t exceed your merchant discount rate for that card, with a cap of 3%.
• You must notify your acquirer (processor) at least 30 days before you start.
• You must disclose the surcharge at the point of entry, at the point of sale and on the receipt.

Visa also says that following its rules “does not imply compliance with any relevant State laws.” Some states restrict surcharging, so check your state’s rules and your processor’s terms before adding one (Visa surcharging Q&A, PDF).

A simpler option for many mobile techs: set a labor rate that already covers card costs, and offer ACH or check for large fleet invoices.

1099-K: the IRS sees card income

Per the IRS (Understanding your Form 1099-K):

• Card payments taken through a processor are reported on Form 1099-K regardless of amount.
• Payment apps and online marketplaces must send a 1099-K when payments for goods or services exceed $20,000 across more than 200 transactions.

All business income is taxable whether or not you get a form. The 1099-K shows gross payments before fees and refunds. Deduct the processing fees as a business expense, and keep processor statements so your books reconcile. More in quarterly estimated taxes and tool and van tax deductions.

Choosing a processor

• If you already use shop management software, check its built-in payments first. They’re often tied to the invoice and signature workflow.
• Square is the easiest to start with: a free plan, published rates and a phone reader.
• Compare the all-in cost of how your customers pay (in person, by invoice or by ACH), not just the headline rate.

Related

• What must be on an estimate and invoice
• What to do when a customer won’t pay
• Trip & travel-fee calculator

Sources

• Square, Payment processing fees: https://squareup.com/us/en/payments/our-fees
• Stripe, Pricing: https://stripe.com/pricing
• Visa, Merchant Surcharging Q&A: https://usa.visa.com/content/dam/VCOM/global/support-legal/documents/merchant-surcharging-qa-for-web.pdf
• IRS, Understanding your Form 1099-K: https://www.irs.gov/businesses/understanding-your-form-1099-k