Massachusetts has one of the strictest credit card surcharge laws in the country.
While the outright ban might seem straightforward, there are still several nuances that must be considered for merchants and consumers alike. Businesses need to understand these laws to ensure compliance, and consumers should be aware so they can recognize when businesses may overstep legal boundaries.
Disclaimer: This information is for reference only, and it does not constitute legal advice. Consult with an attorney with any legal-specific questions.
Are Credit Card Surcharges Legal in Massachusetts?
No, credit card surcharges are illegal in Massachusetts. This is clearly defined under MA General Law Chapter 140D, Section 28A.
Massachusetts is one of just a handful of states that maintains an outright ban on surcharges for credit card transactions.
This law clearly states that no seller can impose a surcharge on cardholders who elect to pay with a credit card in lieu of cash, check, or similar means.
The state defines a surcharge as any additional fee imposed specifically because a customer chooses to pay via credit card. This means that if a business charges customers extra solely because they’re using a credit card, that business is in violation of state law—regardless of what they call the fee.
Some businesses attempt to disguise surcharges using terms like:
- Processing Fee
- Transaction Fee
- Non-Cash Adjustment
- Service Fee
But regardless of the terminology used, any additional fee imposed specifically for credit card usage constitutes an illegal surcharge in Massachusetts.
What Businesses Are Affected by Massachusetts Surcharge Laws?
Massachusetts General Laws apply to virtually all businesses and individuals conducting sales transactions within the state.
The law uses the term “seller” to broadly cover all potential transaction types—including brick-and-mortar establishments, B2B transactions, B2C sales, online sales, phone sales, and any commercial exchange where credit card payments are accepted.
So whether you’re running a small retail shop in Boston, operating an ecommerce business, or providing professional services in the state, the MA surcharge prohibition applies to your transactions.
Exceptions to Massachusetts Surcharge Prohibitions
According to the Massachusetts Division of Banks Opinion 21-005, convenience fees might be allowed in extremely rare circumstances.
But this only applies when specific (and strict) criteria are met, including that the merchant is using a completely independent third-party processor, the merchant receives no compensation from the arrangement, and the fee goes entirely to the independent processor. The customer must also have a choice on whether they decide to use the third-party processor to submit a payment.
For 99% of businesses, this won’t apply. So it’s best practice to ignore it altogether or consult with a local attorney about these stipulations before you consider implementing something like this.
Legal Alternatives to Surcharging in Massachusetts
Even though surcharges are illegal, Massachusetts businesses do have other legal options to help manage their credit card processing costs.
Cash Discounts: Businesses can legally offer discounts to customers who pay with cash or debit cards. The key difference here is that the posted price remains the same for credit card users, and cash customers receive a reduction. Signs must clearly indicate the discount amount and terms.
Dual Pricing: Similar to what you see at gas stations, MA businesses can display two prices—one for cash/debit and another for credit cards. This is legal as long as both prices are clearly posted and the credit card price represents the standard rate (while the cash price is discounted).
Minimum Purchase Requirements: Massachusetts does not prohibit businesses from setting minimum purchase amounts on credit card transactions. According to the Durbin Amendment of the Dodd-Frank Act (federal law), merchants can legally impose up to a $10 minimum for customers paying with a credit card.
Check out our full list of surcharging alternatives for additional options.
Penalties for Violating Massachusetts Surcharge Laws
Violations of Massachusetts surcharge laws can be treated as an unfair and deceptive trade practice under the MA Consumer Protection Law Chapter 93A.
This states that consumers can pursue legal action for damages, and state courts may award actual damages that double or triple the initial amount if the violation was willful and knowing.
Furthermore, the Massachusetts Attorney General’s Office can pursue enforcement actions against any business that engages in unfair or deceptive practices, which includes charging a customer higher rates than the marked, published, or advertised price.
How to Report Illegal Surcharging in Massachusetts
Despite the clear ban on surcharging, some Massachusetts businesses continue to impose illegal credit card surcharges on their customers.
If you encounter a business that charges surcharge fees in Massachusetts, you have a few options:
- File a complaint with the MA Attorney General Consumer Protection Division.
- Report the violation to your local consumer protection office.
- Document the transaction and fee for potential legal action.
The Massachusetts Attorney General Consumer Protection Division also has a consumer hotline that’s available Monday-Friday, 8am-4pm ET: (617) – 727 – 8400.
Consumers should be particularly vigilant about businesses adding any unexpected fees at checkout or misleading terminology to disguise surcharges.
We don’t offer any consumer-specific services here at MCC. But if you’ve encountered a surcharge fee in Massachusetts or anywhere else, please feel free to drop a comment and let us know how you feel about it.
The Bottom Line
Surcharging credit card transactions is illegal in Massachusetts, period. Despite the obscure exception that outlines ultra-specific contingencies, the vast majority of businesses cannot add any additional fee above the marked price to consumers paying with a credit card.
If your payment processing fees feel like they’re eating into your profits, you have other options to consider that are 100% legal and don’t involve surcharging your customers.
Most businesses don’t realize that their credit card processing rates are negotiable. That’s right. You contact your processor and ask for a reduction. There’s also a good chance your processor is charging unnecessary or hidden fees to your account, which can be incredibly difficult to spot to the untrained eye.
But our team here at MCC finds savings on 96% of statements we audit. So there’s a high chance we’ll find savings opportunities on yours.
As a bonus, we’re based right here in Boston. So we’re local, and happy to help you save money on credit card processing without changing providers.