As operating costs rise and fixed operations take on greater importance, more dealerships are turning to credit card surcharging as a way to protect margins. Industry estimates suggest that roughly 35% of U.S. dealers have already implemented some form of surcharging, signaling a broader industry shift in how dealers approach payments in 2026.
“Dealers lean on us because of our full service on-site launch, making sure they’re in compliance… so we’re just going to insulate the dealer and make sure everything is done properly."– Amberly Allen
On today’s episode of Driving Solutions, we welcome back Amberly Allen, Managing Partner at Priority DMS, and Tom Priore, CEO and Chairman of Priority, to discuss how their partnership is aiding dealers in navigating payments, compliance, and the future of automotive commerce.
Rising adoption
With customers keeping their vehicles longer and affordability pressures continuing to limit new vehicle turnover, service departments have become a more reliable profit center. Surcharging is increasingly viewed as a method to offset transaction fees tied to higher service volumes without raising posted prices. However, Allen and Priore caution that improper execution can expose dealers to regulatory risk and financial penalties.
Allen notes that dealers need to remember these key principles:
- Credit card surcharges are capped at 3% and are prohibited on debit card transactions
- Several states imposed additional restrictions on surcharging, such as California, New York, Colorado, and Oklahoma
- Surcharging is illegal in Massachusetts, Connecticut, and Maine
- Dealers are also prohibited from profiting from surcharges
- In certain states, surcharge revenue is subject to state tax.
As audits become more common, Priore notes that penalties for noncompliance can reach up to $1,000 per transaction, per instance. In some cases, the financial exposure from penalties and tax liabilities can outweigh any savings generated by surcharging, turning a cost-control strategy into a detrimental risk.
Compliance first
Priority DMS positions itself as a compliance-first partner in the ever-changing landscape. Rather than offering self-directed tools, the company emphasizes full-service program launches that involve dealerships’ accounting teams, service advisors, IT staff, and leadership. Allen notes that education and consistent execution across departments are central to ensuring that surcharges are communicated correctly at the point of sale.
The company sets itself apart by specializing solely in automotive retail. A dedicated compliance team manages card network rules, state laws, and tax obligations, assisting dealers in navigating the increasingly complex regulatory landscape as payments become more prominent.
“From a compliance perspective, we have a deep team, over a dozen people, that just focus on compliance within Priority to ensure that everything we’re doing from a network standpoint, from a tax standpoint, also a licensed money transmitter… It’s a designation that we think differentiates us.” – Tom Priore
Moreover, Priority’s platform supports close to 3,000 dealerships nationwide, giving the company insight into how payment costs scale across single rooftops and large dealer groups. Priore mentions that payment processing remains one of the largest recurring expenses for many dealerships, particularly those with high service volumes. Even dealers that choose not to surcharge are being encouraged to review their payment structures to identify inefficiencies and compliance risks.
NADA 2026
Looking ahead, industry attention is expanding beyond surchagring alone. Allen notes that Dealer Associations and payment providers are increasingly focused on payment optimization, such as payables, vendor payments, reconciliation, and back-office efficiency. As service operations grow and transactions become more complex, financial workflows are emerging as a strategic lever rather than a back-office function.
As dealers gear up for this year’s NADA Conference, Priority DMS will be located at booth 6112 in the North Hall, offering dealers insights on how to enhance profitability or generate new liabilities.
