Credit Card Surcharge Laws by State (Is It Legal?)
There’s a lot of misinformation and conflicting facts about surcharging laws in the United States. In an effort to clarify some of these questions, I’ve compiled the credit card surcharging laws in all 50 states—making it easy for anyone to quickly determine whether credit card surcharging is legal or illegal in their state.
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.
Is It Legal to Surcharge Credit Cards? (The Quick Answer)
In most cases, yes—it’s legal to surcharge credit cards. According to federal law, there’s a 4% maximum allowable surcharge on credit card transactions. Debit card surcharging is illegal in all 50 states.
With that said, it’s illegal to surcharge credit card transactions in:
- Connecticut
- Maine
- Massachusetts
Other states have laws that allow surcharging but with some contingencies.
- Colorado allows credit card surcharging up to 2%.
- Illinois allows surcharging up to 1%, or the cost of the processing fee, whichever is less.
- New York, New Jersey, Nevada, and South Dakota prohibit surcharges from exceeding the cost that the merchant pays to accept the card.
- Texas law prohibits surcharging but allows merchants to impose convenience fees, service fees, and cash discounts (and federal courts have previously ruled against Texas surcharge laws).
- California law has language to prohibit surcharging, but federal courts overturned it in 2018.
- Kansas also has anti-surcharging laws that were overturned by federal courts, but merchants must include the credit card fees in the listed price to legally impose a surcharge.
Merchants in the remaining 38 states can likely surcharge credit card transactions without breaking the law. But again, make sure to consult with an attorney and verify this information with your state to ensure you’re in compliance.
Credit Card Surcharging Laws: State-by-State
Below is a quick reference guide on the credit card surcharging laws in all 50 states. Simply scroll to your state to find out whether it’s legal or illegal to surcharge credit card transactions. I’ve also included any contingencies or noteworthy information, along with links to helpful resources for each state.
Alabama Surcharge Laws
Credit card surcharging is legal in Alabama as long as it meets federal guidelines.
Alaska Surcharge Laws
There is no state law that prohibits merchants from adding a surcharge to credit card transactions in Alaska. Credit card surcharges are legal, assuming they follow federal regulations.
Arizona Surcharge Laws
It is legal to surcharge credit card transactions in Arizona. In fact, the state itself imposes surcharges on various payments made to state agencies.
Arkansas Surcharge Laws
Credit card surcharging is legal in Arkansas as long as the business posts a notice of the surcharge. Sellers may not impose a surcharge on buyers if the customer wants to use a credit card in lieu of cash.
- Arkansas Department of Finance and Administration Bill SB291
- Arkansas Attorney General Consumer Protections
California Surcharge Laws
Surcharging is legal in California, with some contingencies.
In 1985, California passed a law (Civil Code section 1748.1) to prohibit businesses from adding surcharge fees to customers who paid with a credit card instead of cash. This law did allow merchants to offer discounts to customers who paid with cash, check, or a debit card—as long as this discount was an option for every customer.
But in 2018, federal courts overturned this law—making it legal for merchants in California to, once again, add a surcharge fee on credit card transactions. This is legal as long as the business doesn’t falsely advertise a lower price and impose surcharges “surreptitiously” at the point of sale.
California Governor Gavin Newsom signed Senate Bill 478 (Consumer Legal Remedies Act) to eliminate “junk fees” to attract customers. While this is not quite the same as surcharging, it’s still relevant and noteworthy to California businesses and consumers.
Colorado Surcharge Laws
Colorado merchants may impose a surcharge of up to 2% of the total transaction cost for credit card transactions. Surcharges cannot be imposed on cash, check, debit card, or gift card redemptions.
Colorado law also states that the merchant must display a notice of the surcharge on-premises and/or on websites for online transactions.
Connecticut Surcharge Laws
It is illegal for merchants in Connecticut to impose surcharges on credit card transactions. Connecticut law prohibits businesses from surcharging one payment type (like a credit card) over another payment type (like cash).
Connecticut businesses can legally offer a discount if customers choose to pay with one payment form over another (like a cash discount) as long as the discount policy is clearly presented to the customer and the receipt also shows the discount.
However, businesses cannot list the discount price for one payment type and then add a fee at the point of sale. For example, menus cannot list the cash price and then charge the credit card price when it’s time to pay.
Businesses in violation of Connecticut surcharging laws can be fined $500 per violation.
Delaware Surcharge Laws
Surcharging credit card transactions is legal in Delaware. But House Bill 488 sets to amend this law so that sellers cannot impose a surcharge on cardholders who choose to pay by credit card in lieu of cash, check, or debit card.
Florida Surcharge Laws
Florida’s existing credit card surcharge laws were deemed unconstitutional by federal courts. So while Florida law prohibits credit card surcharges, businesses in Florida are legally allowed to surcharge credit card transactions based on the latest federal court rulings.
All surcharges in Florida must be disclosed prior to purchase.
Georgia Surcharge Laws
Credit card surcharging is legal in the state of Georgia.
Hawaii Surcharge Laws
Hawaii law prohibits merchants from assessing credit card surcharges on consumers who choose to pay by credit card in lieu of cash, check, or similar means. Otherwise, it is legal to add a surcharge.
Idaho Surcharge Laws
Credit card surcharge fees are legal in Idaho. In fact, the Idaho state government office also imposes these fees on debts owed to the court or state offices if payment is made by credit card.
- Idaho Legislature Statute Title 32 Chapter 32
- State of Idaho Controller’s Office Fiscal Policies For Credit Card Fees
Illinois Surcharge Laws
Illinois limits credit card surcharges to 1% of the transaction or the credit processing fees associated with the transition, whichever is less. This applies to all in-person, online, and telephone transactions in Illinois. Notice must be given to consumers if surcharges are imposed on credit card transactions.
Indiana Surcharge Laws
Credit card surcharging is legal in Indiana. But some lawmakers are attempting to bring forth new legislation that would prohibit these fees when paying for government services (like at the Indiana Bureau of Motor Vehicles). If these laws get passed, they would not take effect immediately—and likely not until 2027 or later.
We’ll keep this updated with any news on the proposal.
Iowa Surcharge Laws
Surcharging credit card transactions is legal in Iowa.
Kansas Surcharge Laws
Kansas state law prohibits merchants from surcharging credit cards. But federal courts overruled this law. For merchants to legally add a surcharge fee in Kansas, they must include the credit card use fee in the listed price and offer a discount for non-credit card payments, or list both prices (credit card price and cash/check/debit price).
Kentucky Surcharge Laws
Currently, credit card surcharging is legal in Kentucky. Surcharges must be properly disclosed based on the payment method.
Louisiana Surcharge Laws
Credit card surcharging is legal in Louisiana, and the state itself imposes surcharges to residents paying certain state offices. For example, payments made to the Louisiana Department of Revenue have a 2.49% convenience fee for credit cards.
Maine Surcharge Laws
Credit card surcharging is prohibited in Maine. Various Maine laws make it illegal for businesses to add surcharge fees when a customer pays with a credit card. However, government entities in Maine are legally allowed to impose a surcharge on credit cards for taxes, fines, utilities, regulatory fees, licenses, permits, and similar items.
Maryland Surcharge Laws
Surcharging credit card transactions is legal in Maryland up to 4%.
Massachusetts Surcharge Laws
Credit card surcharge fees are illegal in Massachusetts.
Michigan Surcharge Laws
Credit card surcharges are legal in Michigan. However, brick-and-mortar merchants who impose surcharge fees must post a notice at the store’s entrance and at the point of sale that clearly explains these charges. Gas stations with different prices for cash must post both prices (cash and credit) with equal illumination in the same lettering and style on road sides that advertise prices.
Minnesota Surcharge Laws
Sellers in Minnesota can legally impose a surcharge if a purchaser pays with a credit card in lieu of cash, check, or similar means. Minnesota law requires the seller to inform the purchaser of the surcharge at the time of the sale and also have a sign that’s conspicuously posted on the premises. Surcharges must not exceed 5% of the purchase price (although federal law limits surcharges to 4%, and most card networks limit surcharges to 3%).
Failure to comply with these rules can result in civil penalties of $500 per violation and require a refund to each buyer.
Mississippi Surcharge Laws
Surcharging is legal in Mississippi, although recent laws have specific rules that limit how state agencies can impose surcharges on credit cards and other electronic payments.
Missouri Surcharge Laws
Credit card surcharges are legal in Missouri.
Montana Surcharge Laws
Merchants, vendors, creditors, and other parties can legally charge a card transaction fee of up to 3% in the state of Montana. Furthermore, financial institutions and credit card companies cannot prohibit the collection of this fee. Any party imposing a credit card surcharge in Montana must disclose the fee prior to the transaction being processed.
Nebraska Surcharge Laws
It’s legal to surcharge credit card transactions in Nebraska—and there are no state laws that prohibit this practice for businesses.
Nevada Surcharge Laws
Credit card surcharging in Nebraska is legal as long as the surcharge does not exceed how much the merchant pays to accept the card. Any surcharge fees must be clearly disclosed. The Nevada Attorney General goes as far as to say that if consumers see surcharges that exceed 1.5%, they should ask the merchant to provide written documentation of the policy.
New Hampshire Surcharge Laws
Credit card surcharging is legal in New Hampshire.
New Jersey Surcharge Laws
It’s legal for sellers in New Jersey to surcharge credit cards. However, the surcharge cannot be greater than the actual cost for the seller to process the payment. This New Jersey surcharge law was signed by the governor in 2023 as P.L. 2023, c.146 (N.J.S.A. 56:8-156.1 and -156.2).
New Mexico Surcharge Laws
According to New Mexico House Bill 545, merchants may not surcharge a cardholder who elects to use a credit card in lieu of payment by cash or check. However, surcharging is legal if a cash discount is offered to all prospective buyers and clearly disclosed.
New York Surcharge Laws
Effective January 2024, New York enacted a new law prohibiting sellers from imposing surcharge fees that exceed what’s being charged to process the transaction. According to this new law, merchants must also “clearly and conspicuously” display the total price for paying by credit card, including the surcharge.
The law does not prohibit dual pricing, which means merchants in New York can implement pricing systems that show the price for paying by credit card alongside the price by paying with another method. But if multiple prices are being used, the highest price that a consumer might pay must be disclosed.
Merchants in violation of this law can be penalized $500 per violation.
North Carolina Surcharge Laws
Surcharging credit cards is legal in North Carolina.
North Dakota Surcharge Laws
It’s legal to surcharge credit card transactions in North Dakota.
Ohio Surcharge Laws
Ohio does not have any laws that prohibit merchants from imposing a surcharge on credit card transactions. Furthermore, no Ohio laws prohibit businesses from imposing minimum purchase amounts on credit cards.
Oklahoma Surcharge Laws
Oklahoma law says that surcharges may not be imposed on any transaction where a consumer elects to pay by credit card in lieu of cash, check, or other means. Federal courts have invalidated this statute, saying that it’s unconstitutional—meaning it’s currently legal to surcharge credit cards in Oklahoma (even though Oklahoma law actually prohibits it).
Oregon Surcharge Laws
It’s legal to surcharge credit card transactions in Oregon.
Pennsylvania Surcharge Laws
Pennsylvania law allows merchants to surcharge credit card transactions.
Rhode Island Surcharge Laws
Credit card surcharges are legal but regulated in Rhode Island. To legally impose a surcharge on credit card transactions, sellers must display the total price charged for paying by credit card and/or another form of payment. Notices must be placed at the merchant’s entry and point of sale—explaining the surcharge and how much it costs. If the sale of goods or services is through a website, this must be clearly displayed online.
This is in accordance with Rhode Island SB925.
South Carolina Surcharge Laws
A South Carolina Bill from 2013 amends an old law from 1976 that previously prohibited surcharging. The new language legalizes surcharging, by letting South Carolina merchants offer cash discounts.
South Dakota Surcharge Laws
South Dakota law allows credit card surcharging, so long as the surcharge does not exceed the merchant’s cost to accept credit cards, up to 4%. This only applies to commercial and consumer credit card transactions. Debit card or prepaid card surcharging is not allowed.
Merchants must clearly disclose the surcharge at the store’s entrance, point of sale, and homepage of their website (if the company operates online). The dollar amount of the surcharge must be displayed on the transaction receipt.
Tennessee Surcharge Laws
Credit card surcharges are legal in Tennessee, but the additional fees must be clearly communicated in advance of the transaction. Merchants cannot mislead customers by displaying a lower price than what they’ll actually pay when using a credit card. Merchants should list the credit card price and cash prices separately if implementing a surcharge.
Texas Surcharge Laws
Section 339.001 of the Texas Finance Code prohibits credit card surcharging, but it does not prohibit the use of convenience fees, service fees, or cash discounts. If using a convenience fee or service fee to offset credit card processing costs, those fees must be uniformly added to all payment methods.
In 2018, a federal court ruled that the Texas laws related to surcharging are unconstitutional. But one year later, the Texas Attorney General issued an opinion saying that the court ruling only applied to the parties in a particular lawsuit, and the surcharging statutes are still enforceable.
The US Court of Appeals, Fifth Circuit found that the no-surcharge statute in Texas does not violate the First Amendment or Due Process Clause.
Utah Surcharge Laws
Credit card surcharging is legal in Utah. Businesses must inform customers exactly how much they’re paying for any goods or services and whether any additional fees (including surcharges) will be added to the total cost. Merchants cannot knowingly or intentionally mislead a customer about the nature of a surcharge.
Notification to the consumer after the fact (like a line item on a receipt) is not sufficient.
Vermont Surcharge Laws
Surcharging credit card transactions is legal in Vermont. Merchants in this state are also allowed to set a minimum purchase amount of up to $10 for credit card transactions.
Virginia Surcharge Laws
Credit card surcharging is legal in Virginia. There are no laws or statutes prohibiting this practice.
Washington Surcharge Laws
It’s legal to surcharge credit card transactions in Washington.
West Virginia Surcharge Laws
Surcharging credit cards is legal in West Virginia. In fact, the West Virginia State Treasurer’s Office imposes surcharges on credit card transactions for tax payments made by credit cards.
Wisconsin Surcharge Laws
Credit card surcharging is legal in Wisconsin.
Wyoming Surcharge Laws
It’s legal to surcharge credit card transactions in Wyoming.
Final Thoughts
Most businesses that add surcharges to card transactions do so as a way to offset processing costs. But passing merchant fees to customers isn’t always straightforward.
This can be especially tricky for states where surcharging is technically illegal at the state level, but federal courts have overturned some rulings. It’s also challenging in states that have specific contingencies on how surcharges can legally be applied.
Legality aside, surcharges can be a burden for your customers.
If you’re looking for a way to lower your credit card processing fees without charging more to your customers, contact our team here at MCC. We can help lower those fees by negotiating directly with your processor. So you can eliminate your surcharges and still save money.
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