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Credit Card Surcharging Rules — Current State & Merchant Guidance

Last updated: June 2026

⚠️ Our Recommendation: Don't Surcharge

We strongly advise merchants not to surcharge credit card transactions.

Surcharging is a fast-moving, heavily regulated, and litigation-prone area of payments law. The rules differ by state, change frequently, and are layered on top of strict card-network requirements (Visa, Mastercard, etc.). Getting any part of it wrong — the rate, the disclosure wording, the signage placement, the registration step, or applying it to a debit card — exposes you to real and compounding risk:

  • Card-network fines. Visa has informed clients that violations of its surcharge standards can result in fines of up to $1 million. (Troutman Pepper / Consumer Financial Services Law Monitor)
  • State penalties. Several states impose per-violation penalties — for example, $500 per transaction in New York and Connecticut, and up to $1,000 per violation in California. (NY — LegalClarity, Merchant Cost Consulting)
  • Account termination / MATCH listing. Improper surcharging is a compliance violation that can lead to your merchant account being shut off and your business being placed on the MATCH list (Mastercard's Member Alert to Control High-risk Merchants), which makes obtaining future processing extremely difficult.
  • Chargeback and reputational exposure. Surcharge disputes are a common source of friction, chargebacks, and consumer complaints.

The downside of getting it wrong is severe and the operational burden of staying compliant across jurisdictions is high. For most merchants, the safer path to recovering processing costs is a properly implemented cash-discount or dual-pricing program, or simply pricing the cost in — not a surcharge. If you still want to surcharge, do not implement it without sign-off from a qualified payments attorney for every state in which you operate.

This document is informational only and is not legal advice. Surcharging law is changing constantly and several states' rules turn on court interpretation rather than clean statutes. Verify current requirements with your processor, the card networks, and legal counsel before implementing anything.

What Changed — Recent Rule Updates

Surcharging has shifted significantly over the past few years. The most important changes:

  • Visa lowered its surcharge cap from 4% to 3% (April 2023). Even where state law would allow more, the network cap controls. Mastercard's cap remains 4%, so 3% is the effective practical ceiling for any merchant that accepts Visa. (Troutman Pepper / Consumer Financial Services Law Monitor)
  • New York's new disclosure law took effect February 11, 2024. Under General Business Law §518, the surcharge may not exceed what the card company charges the business, and merchants must clearly and conspicuously post the total credit-card-inclusive price (or use two-tiered pricing). Percentage-only signage is not sufficient on its own. (NY Governor's Office, Fox Rothschild)
  • California effectively banned line-item surcharges as of July 1, 2024. SB 478 (the "junk fees" law) requires all mandatory fees to be baked into the advertised price. Dual pricing and all-in pricing are still permitted, and restaurants are carved out, but a tacked-on surcharge is not compliant. (CA Attorney General, Merchant Cost Consulting)
  • Kansas legalized surcharging with notice (effective January 1, 2025) after its older ban was overturned by federal courts. (Merchant Cost Consulting)
  • Minnesota added conditions (effective January 1, 2025): the fee must be reasonably avoidable (e.g., by paying cash), and all other mandatory fees must be in the advertised price. (Merchant Cost Consulting)
  • Virginia added a total-price disclosure requirement (effective July 1, 2025). (Merchant Cost Consulting)
  • Illinois Interchange Fee Prohibition Act (effective July 2026): interchange cannot be charged on the tax or gratuity portion of a transaction if the acquiring bank is notified during authorization or settlement, with $500-per-violation penalties. (Merchant Cost Consulting)

The Rules That Apply Everywhere (the Overlay)

Regardless of your state, these always bind:

  1. Debit cards can never be surcharged — in any state. This is a federal rule under the Dodd-Frank Act / Durbin Amendment and the card-network rules, and it holds even where credit surcharging is permitted. Prepaid cards tied to HSA/FSA accounts also generally cannot be surcharged, even when run as credit. (PaymentCloud)
  2. Card-brand caps control: Visa 3%, Mastercard 4%, or your actual cost of acceptance, whichever is lower. (PaymentCloud)
  3. Network registration is required. You must notify the card brands (typically 30 days in advance) before you begin surcharging.
  4. Disclosure is effectively universal. Even where state law is silent, you must disclose at the point of entry, at the point of sale, and on the receipt.

State-by-State Breakdown

States are grouped by compliance posture, because the bulk of states allow surcharging under standard rules and the real risk lives in the exceptions.

1. Prohibited or effectively blocked

State Status
Connecticut Outright statutory ban (§42-133ff). $500 per violation. Cash discounts still allowed if properly presented. (CT DCP)
Massachusetts Outright ban (Ch. 140D §28A). (MA Legislature)
Maine Prohibited for businesses; government entities may surcharge for taxes, fines, utilities, permits, etc.
California SB 478 effectively bans separate line-item surcharges (July 1, 2024). Dual/all-in pricing permitted; restaurants carved out. Up to $1,000 per violation. (CA AG)
Puerto Rico Territory-level ban (relevant if scoping beyond the 50 states).

2. Statutory ban struck down by courts (enforcement risk varies)

Technically banned on the books but generally surchargeable in practice — except Texas.

State Status
Florida Ban ruled unconstitutional; surcharging legal with pre-purchase disclosure. (FL AG)
Oklahoma Statute invalidated by federal courts; currently legal despite the law on the books.
Kansas Old ban overturned; legal as of Jan 1, 2025 with clear point-of-sale/entry notice.
Texas Do not treat as struck down. The Fifth Circuit found the no-surcharge statute does not violate the First Amendment, and the TX AG considers it enforceable. Convenience/service fees and cash discounts are allowed if uniformly applied. Treat as effectively prohibited for line-item surcharges.

3. Capped at cost of acceptance (no profiting)

A flat percentage surcharge will exceed your actual cost on larger tickets in these states — that's the most common way a uniform program goes out of compliance.

State Cap
New York Cost cap plus strict disclosure (GBL §518, eff. Feb 11, 2024). Must post total credit-inclusive price or two-tiered pricing. $500 per transaction. (Katten)
New Jersey Cannot exceed actual processing cost (P.L. 2023, c.146). (NJ Consumer Affairs)
Nevada Cannot exceed cost of acceptance; AG flags anything over ~1.5% for documentation.
South Dakota Cannot exceed cost of acceptance, up to 4%; receipt must show the dollar amount; credit only.
Georgia Cannot exceed cost of acceptance; fee only allowed if a no-fee method is also accepted.
Colorado Hard cap: up to 2% OR processing cost, whichever is lower, with notice.

4. Allowed with notable conditions

State Condition
Minnesota Eff. Jan 1, 2025: fee must be reasonably avoidable; other mandatory fees in advertised price; 5% cap (network caps bind lower).
Maryland Legal up to 4%; cost-cap bills in 2024 failed.
Montana Capped at 3% with pre-transaction disclosure.
Wyoming Surcharging legal; uniquely caps cash discounts at 5%.
Virginia Total-price disclosure required (eff. July 1, 2025).
Illinois Legal with notice. Eff. July 2026: no interchange on tax/gratuity if acquirer notified during auth/settlement ($500/violation).
Michigan, Rhode Island, Tennessee, Arkansas Legal with specific disclosure/signage mechanics.

5. Allowed under standard federal/network rules + disclosure

Alabama, Alaska, Arizona, Delaware, Hawaii, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, New Hampshire, New Mexico, North Carolina*, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, Utah, Vermont, Washington, West Virginia, Wisconsin — plus Washington, D.C.

Notes:

  • Utah — legal, but disclosure must be up front; a receipt line item after the fact is explicitly insufficient. (Utah DCP)
  • North Carolina* — currently legal, but HB 13 (introduced 2025) could add restrictions; monitor.

Sources & Further Reading

Prepared as general informational guidance. Not legal advice. Confirm all requirements with your processor, the card networks, and qualified legal counsel before implementing any surcharge, cash-discount, or dual-pricing program.