Credit Card Surcharging Laws in Connecticut

Connecticut has some of the strictest credit card surcharging laws in the country. 

As a merchant, it’s important to understand these surcharge laws to prevent legal penalties and fines for non-compliance. Consumers should also be aware of Connecticut’s surcharge laws to avoid getting ripped off by businesses. 

Disclaimer: This information is for reference only, and it does not constitute legal advice. Consult with an attorney with any legal-specific questions.

Is it Legal to Surcharge Credit Card Transactions in Connecticut?

No, it’s illegal for businesses to charge a surcharge fee on credit card transactions in Connecticut—as defined by CT Law Chapter 739, Section 42-133ff. 

Connecticut is just one of four states where credit card surcharging is banned (and hasn’t been overturned by federal courts). While other states have surcharging laws that prohibit surcharging with contingencies, Connecticut’s surcharge law is one of the strictest and most iron-clad in the nation.  

The state of CT defines a surcharge as “any additional charge or fee that increases the amount of a transaction for the privilege of using a particular form or method of payment.”

So if a customer pays for something at a business and is charged a separate line item when they choose to pay by a credit card, it’s considered a surcharge (and illegal in CT). Some businesses may not outright call it a surcharge and try to use another term, like:

• Processing Fee
• Transaction Fee
• Non-Cash Adjustment Fee

But all of these terms would still be illegal. 

Any additional charge on top of the listed price for goods or services when paying with a credit card is considered a surcharge and illegal in CT. 

Types of Businesses Affected by the Connecticut Surcharge Laws

According to Public Act 12-142, Section 28, “No person may impose a surcharge on any transaction.”

The state defines a “person” as any natural person, corporation, LLC, partnership, incorporated or unincorporated association. 

In simple terms, no individual or business can legally impose a surcharge on credit card transactions in Connecticut. This applies to both in-person and online businesses operating in Connecticut. It also applies to all B2B, B2C, and P2P transactions. 

Exceptions to Connecticut Surcharge Laws

There are a few noteworthy exceptions to Connecticut’s surcharging laws:

• Government agencies, courts, and municipalities can legally add surcharge fees for using certain payment methods (like a credit card).
• State Marshals can charge additional fees if they are collecting taxes on behalf of a town.
• Public schools in CT can charge additional fees for collecting payments for school lunch accounts, according to Section 10-215 of Connecticut’s General Statutes.
• Condominium associations can legally charge for common fees, governed by CT General Statute 47-76. 

As you can see, these handful of exceptions do not apply to most businesses—meaning surcharges are prohibited on the vast majority of transactions in Connecticut. 

Are Cash Discounts Legal in Connecticut?

Yes, cash discounts are legal in Connecticut.

CT’s surcharging law does not prohibit businesses from offering a discount to customers paying with cash. But the discount must be applied to the listed price (as opposed to non-cash transactions getting charged more than the listed price). 

To legally apply a cash discount in Connecticut, the business must “clearly and conspicuously” provide notice of the discount. 

For in-person transactions, this means that the business must list both the cash and credit prices wherever prices are listed or post signs notifying a specific dollar amount or percentage discount in highly visible locations (like at the point of sale or on a menu). 

For online transactions and digital payments, notice must be provided on the merchant’s website or digital payment application with the pricing information and at checkout. 

Are “Convenience Fees” Legal in Connecticut?

If the “convenience fee” is applied as the result of a consumer paying with a particular form of payment, then the fee is illegal in Connecticut. 

How to Legally Charge Credit Customers For Credit Card Payments in Connecticut

There are only three ways for businesses in Connecticut to pass fees to their customers—and adding a surcharge is NOT an option.

Option 1: Offer a Cash Discount

As previously mentioned, cash discounts are legal in Connecticut. To legally implement a cash discount, businesses could post a sign saying something along the lines of:

“All prices listed are discounted by 4% if you pay with cash.”

This is legal because the listed prices are not increased when a customer chooses to pay by credit card—which is a key difference between surcharging and cash discounts. 

Option 2: Dual Pricing

Another option is to implement a dual pricing system. You’d list two prices for every product and service offered—the credit card price and the cash price.

This is something CT residents are used to seeing at gas stations (because it’s required by law). But any business could optionally use the dual pricing method to legally charge higher prices to consumers paying by credit card. 

Option 3: Let Customers Opt-In to Additional Fee

It’s legal for merchants to give customers the choice to opt-in to an additional fee. But it has to be voluntary, and it has to be a clear opt-in (as opposed to an opt-out).

For example, it’s illegal to charge customers a 3% credit card fee—even if you gave them the option to opt out of the surcharge. 

But it would be legal to have an option at the point of sale saying something like, “Would you optionally like to pay an additional 3% to help cover our costs of processing credit cards?”

Penalties For Violating Connecticut’s Surcharging Laws

Merchants in breach of Connecticut’s surcharging law can be penalized up to $500 per violation.

This is deemed to be a “unfair and deceptive trade practice” under state law and governed by the Commission of Consumer Protection. 

All payments made for violations under this law will be deposited into CT’s consumer protection enforcement account. 

Final Thoughts on Connecticut’s Surcharging Laws

Surcharging credit card transactions are illegal in Connecticut. While there are a handful of exceptions to this law, they don’t apply to most businesses. 

If you’re trying to offset the cost of accepting card payments, you could offer cash discounts, dual pricing, or optionally let your customers opt-in to an extra charge. 

Otherwise, you should just be looking for other ways to lower your credit card processing costs. 

Connecticut’s surcharge laws are strict and probably not charging anytime soon. But if you haven’t had a professional audit of your processing statements, there’s a good chance you’re paying more than you should to accept card payments. Whether it be hidden fees, high rates, or padded assessments, these charges can add up quickly—costing you tens of thousands of dollars annually.

Let our team here at Merchant Cost Consulting audit your statements so we can identify any cost-saving opportunities for your business. We’ll help you spot overages and even negotiate your rates directly with your processor, so you won’t have to switch providers or change any of your operations. Get a free analysis today.