Credit card surcharging is legal in Arizona. AZ follows federal regulations without adding any unique state-specific restrictions, making it one of the most straightforward states for implementing surcharge fees on card transactions.
Here’s a quick summary of what you need to know:
- Surcharging is legal in AZ.
- There are no state laws in Arizona prohibiting credit card surcharges.
- The state itself imposes surcharges on payments made to various agencies.
- Merchants must follow federal guidelines and card network rules to remain compliant.
- Debit card surcharging is illegal in Arizona (as it is in all 50 states)
Beyond these key highlights, there’s still a bit more to know and understand about credit card surcharging in Arizona.
So whether you’re running a business in Arizona and need to stay compliant or you’re a consumer who’s concerned about being charged extra fees, read on to learn more.
Disclaimer: This information is for reference only. It is not legal advice, and you should consult with an attorney before implementing a surcharge. Rules are constantly changing, and you should verify the accuracy of surcharge laws directly with your state.
Merchants in Arizona Can Legally Add a Surcharge Fee on Credit Card Transactions
Currently, there are no laws in Arizona governing credit card surcharges. This means that businesses operating in AZ can default to the 4% maximum allowable surcharge imposed at the federal level.
That said, credit card networks have their own rules when it comes to surcharging credit cards—which effectively caps your surcharge at 3% per transaction. While violating these rules isn’t technically illegal, you can still be subject to penalties and fines from the card networks. And at worst, you might even lose your ability to accept certain cards.
Exceptions
Interestingly enough, various state agencies within Arizona impose surcharge fees on collections if people choose to pay with a credit card. But according to Arizona Revised Statutes, Section 35-142, state agencies are prohibited from adding a surcharge fee or a convenience fee on permits, licenses, or authorizations needed for:
- Pursuing a trade or occupation
- Establishing, expanding, or operating a business
- Registering a vehicle or license to drive
While none of these apply to general merchants operating in Arizona, I think it’s still worth pointing them out.
Federal Regulations and Card Network Rules Still Apply
While the state doesn’t have specific laws on surcharging, merchants must still comply with federal regulations and card network rules.
This means:
- Surcharges can’t exceed 4% of the transaction amount (federal law)
- Surcharge fees cannot be charged on debit cards or prepaid cards (also federal).
- Some card networks cap surcharges at 3%, and others say you must universally apply the same surcharge for all cards—which effectively caps you at 3%.
- You need to clearly inform your customers about any applicable surcharge fees before completing the transaction.
Learn More: Surcharge Laws in All 50 States Explained
Compliance Steps For Arizona Merchants
Just because surcharging is legal in Arizona, it doesn’t mean that you can just add these fees haphazardly and assume you’re fine.
Aside from not surcharging debit cards and ensuring the surcharge percentage is within federal limits, you also need to notify the card networks about your decision. Most networks, like Visa and Mastercard, require 30 days’ notice before you can add this fee.
Your POS system must be up to date so it can properly track, display, and apply surcharges properly. Contact your processor about this.
But be careful, we’ve caught some processors giving merchants outdated information about surcharging. So you’ll need to double and triple-check whatever they’re telling you. We definitely recommend consulting with a local attorney on this.
You also need to post notices and clear signage at your entrance and at the point of sale to clearly disclose the surcharge to your customers—plus, ensure the surcharges appear as a separate line item on all of your receipts. For ecommerce sites and online stores, surcharge notices must be added to your website.
How to Report Illegal Surcharging in Arizona
For consumers, you still need to be on the lookout for illegal surcharging practices in Arizona. Just because the state allows surcharging, merchants can be reported for deceptive practices, trying to hide fees, adding surcharges that exceed 4% of the transaction volume, surcharging debit cards, and more.
Any complaints against merchants can be made online directly to the Arizona AG’s office.
We don’t offer any consumer services here at MCC. But we’d still like to know your opinion on surcharging. So drop a comment and let us know about your experience with surcharging in Arizona, and we’ll pass those comments along to any businesses we work with.
Final Thoughts
While legal, businesses in Arizona still need to weigh the pros and cons of surcharging before passing this burden to customers.
Recouping 3% of your processing costs may not be worth it in the long run if you’re losing business (and that’s definitely something that businesses nationwide are experiencing).
Alternatively, you can look for other ways to reduce your processing costs. Contact our team here at MCC for assistance with this. We’ll audit your statements for free to identify hidden fees and savings opportunities before negotiating better rates directly with your existing processor. So you can save money without switching providers or passing costs to your customers.