Credit card surcharging is a hot topic for businesses and consumers alike. In Louisiana, lots of businesses want to know if they can legally pass processing fees to customers or if the state has restrictions in place.
While the surcharge laws in Louisiana are fairly straightforward right now, new legislation may change things down the road. Read on for the full scoop.
Disclaimer: This information is for reference only, and it does not constitute legal advice. Consult with an attorney for any legal-specific questions.
Can Merchants Legally Surcharge Credit Cards in Louisiana?
Yes, credit card surcharging is legal in the state of Louisiana.
There are currently no state-specific bans that prevent businesses from adding a surcharge when customers choose to pay with a credit card instead of cash, check, or similar option.
But it’s important to understand that surcharging is only legal on credit cards. Merchants cannot legally surcharge debit cards, prepaid cards, or benefits cards issued by the government (like EBT cards).
Maximum Allowable Surcharge Amounts in Louisiana
In Louisiana, credit card surcharge fees are legal up to 4% of the transaction amount.
The state doesn’t actually specify this in any laws. So merchants can default to federal regulations (which is where the 4% comes into play).
It’s worth noting that the card networks also have their own surcharge rules. One of those rules that might throw a wrench into your surcharge plans comes from Visa, which caps surcharge fees at 3% of the transaction amount.
Since other card networks have rules in place saying that all card brands must be treated equally (meaning you can’t surcharge Visa cards 3% and Amex cards 4%), you’re effectively capped at 3% if you want your surcharge program to comply with the card networks.
While charging a 3.5% surcharge or 4% surcharge won’t technically be “illegal” (you can’t get in trouble with the law), you’d still be subject to penalties from the card networks and your processor.
How Louisiana House Bill 487 Almost Changed the State’s Surcharge Laws
In 2024, Louisiana lawmakers introduced House Bill 487, which would have added new state-level restrictions to surcharging on credit cards.
The bill ultimately died in committee and never became law. But it’s still worth highlighting how it could have changed things (as similar legislation might be coming soon).
HB 487 attempted to change the maximum allowable surcharge in Louisiana. It aimed to prevent businesses from implementing a surcharge exceeding their actual cost of acceptance.
So if a business was charging a 3% surcharge but it only costs them 2.5% to accept those cards, they’d be violating state law. They’d need to adjust the surcharge fee to 2.5% (or lower) to comply.
The bill was trying to prevent businesses from treating surcharges like a profit center. They could recoup costs in the form of a surcharge, but that’s all.
I’m actually surprised that this bill didn’t pass. We’ve seen similar surcharge laws pass in other states, like South Dakota, New York, Nevada, New Jersey, Georgia, and Nebraska.
Best Practices to Remain Compliant When Surcharging in Louisiana
If you’re surcharging credit cards in Louisiana, follow these tips to stay compliant:
- Be Transparent: Post clear signage at your entrance and point of sale to disclose your surcharge fees.
- Itemize Receipts: Surcharges should appear as a separate line item so customers know exactly what they’re paying.
- Provide Advance Notice: Card networks and processors typically require at least 30 days’ notice prior to implementing surcharges.
- Don’t Overcharge: Surcharges can’t exceed 4% of the transaction amount.
- Treat All Cards Equally: You can’t apply different surcharge rates for different credit cards.
- Only Surcharge Credit Cards: Remember, it’s illegal to surcharge debit card transactions nationwide.
Not only will these best practices help you avoid trouble in Louisiana, but they’ll also help you comply with the FTC’s new junk fee rules.
Should Businesses in Louisiana Rely on Credit Card Surcharges?
Just because surcharging is legal in the state of Louisiana, it doesn’t mean that your business should automatically implement this practice.
Relying on surcharge fees to offset processing costs can be a slippery slope, especially in a state that just came so close to restricting surcharges. While HB 487 failed, it’s a sign that lawmakers are watching closely.
I would be surprised if we don’t see another bill introduced in the next couple of years addressing surcharges in Louisiana. And the next attempt may go even further than regulation—they could ban surcharging altogether.
Cost and legality aside, customers hate surcharges.
Research shows that 71% of customers avoid businesses with surcharge fees. An additional 57% of consumers believe surcharge fees should be illegal.
Better Alternatives to Save Money on Credit Card Processing
If you decide that surcharging isn’t right for your business, you’re not necessarily stuck with high processing fees. Here are some alternatives to help you lower your credit card acceptance costs, without surcharging your customers:
- Offer a small discount to customers who pay with cash.
- Audit your merchant statements to identify bogus fees that should be removed (this could easily save you hundreds or thousands every month)
- Set a $10 minimum for credit card transactions to help eliminate fees on low-ticket purchases.
- Negotiate a better rate directly with your current processor (yes—your fees are negotiable).
- Make sure your hardware and software are secure and submit the right data, which can downgrade your transactions and make them more expensive.
Do not switch processors.
There’s a big misconception out there that switching providers can save you money on processing. But that’s rarely (if ever) true over the long run.
Any quote you get from a new processor will always undercut your existing terms. Your new processor is at a huge advantage here since they already know what you’re paying (so they don’t even have to undercut it by much).
That new rate will only last for so long, and within the next year or two your rates will go up again to the point where you’re paying more than you did before the switch.
Trust me, you have way more leverage negotiating better terms with your existing provider. If they won’t budge, let our team here at MCC handle this on your behalf.
Read More: 9 Surcharging Alternatives to Help You Save Money and Keep Your Customers
Final Thoughts on Louisiana’s Surcharge Laws
Louisiana’s current surcharge laws are fairly relaxed compared to other states. But the introduction of HB 487 in 2024 should put businesses on high alert.
While the bill failed, it’s a sign that changes could be around the corner.
State lawmakers typically don’t just give up after one attempt. And since surcharging has been such a hot topic for consumers who are against it, I think we’ll see attempts to further restrict how much businesses can charge—potentially in the next year or two.
I’ll keep this blog updated with any new bills or legislation in the pipeline for Louisiana. So check back again soon.