Credit card surcharging can be a complex topic. Surcharge laws vary by state, and even in locations where it’s legal, there are often stipulations and regulations.
Michigan falls into this category.
Whether you’re running a business in Michigan or you’re a consumer who’s confused about extra fees, this guide has everything you need to know about Michigan’s credit card surcharge laws.
Disclaimer: This information is for reference only, and it does not constitute legal advice. Consult with an attorney for any legal-specific questions.
Is it Legal in Michigan to Add Surcharge Fees to Credit Card Transactions?
Yes, credit card surcharge fees are legal in Michigan. There are no state-specific laws that prohibit merchants in Michigan from surcharging credit card transactions.
- Surcharge fees are only legal on credit cards.
- Debit card surcharging is illegal.
- Merchants must give proper disclosure on surcharge fees to comply with local laws.
- Legally, the maximum allowable surcharge is 4% of the transaction amount (federal).
- However, merchants are effectively capped at 3% due to a combination of various card network rules (even though exceeding 3% isn’t technically against the law).
While Michigan doesn’t have any specific laws banning surcharges, the Consumer Protection Division offers guidance saying surcharge fees are legal (as of 2013), but merchants must follow strict disclosure requirements.
Disclosure Requirements For Credit Card Surcharges in Michigan
Businesses in Michigan must do the following to comply with the state’s surcharge rules:
- Brick and mortar merchants must post a surcharge notice at the store’s entrance and at the point of sale.
- The surcharge notice must clearly say that the surcharge applies to purchases made using a credit card.
- Receipts must be itemized showing the exact amount of the surcharge fee on a separate line.
- Online sellers need to disclose surcharge fees on the first web page where credit cards are mentioned.
Like other states, these disclosure requirements are all about transparency.
Similar to the FTC’s junk fee rule, the state of Michigan doesn’t want consumers to feel like they’ve been duped, misled, or surprised with extra fees at checkout. If your business imposes a surcharge program, it should be crystal clear to customers that they’ll pay extra by using a credit card.
Surcharge Fees in Michigan Are Subject to Sales Tax
As of May 2024, the Michigan Department of Treasury officially announced that credit card surcharge fees are subject to state sales tax under the General Sales Tax Act.
The guidance from the state says that surcharges are considered a service cost at the expense of the seller and must be included in the sales price, which is taxable.
This means that any business in Michigan that surcharges credit cards needs to remit a 6% sales tax on that charge.
This law is definitely unique compared to the surcharge laws in other states.
Example of Sales Tax Applied to a Surcharge Fee in Michigan
There tends to be lots of confusion on how surcharge fees are taxed by merchants and consumers alike. So we’ll look at a hypothetical example so you can clearly see exactly what’s charged to the customer, plus how taxes need to be collected and reported.
Let’s say there’s a $50 item for sale, and the business applies a 3% surcharge fee.
- Base Price: $50.00
- Credit Card Surcharge (3%): $1.50
- Subtotal: $51.50
- Sales Tax on Base Amount (6%): $3.00
- Sales Tax on Surcharge Fee (6%): $0.09
- Total Sales Tax Due: $3.09
- Total Amount Charged to Customer: $54.59
This example shows why it’s crucial for merchants to factor in the sales tax implications when setting up a surcharge program. The surcharge itself becomes part of the taxable transaction amount, increasing the overall tax liability.
And for consumers in Michigan—yes, this means that you’ll also pay sales tax on any credit card surcharge fees.
Special Rules For Gas Stations in Michigan
Dual pricing is common at gas stations nationwide. But Michigan has special laws for how gas stations advertise prices.
If the advertised price of gas is subject to special conditions (like paying cash vs. paying with a credit card), those conditions on road signs must be posted next to the price with equal illumination in lettering that’s the same style and at least half the size of the sales price.
This special rule for gas stations in Michigan went into effect in July 2017.
Credit Card Surcharge Fees on Bridge Tolls in Michigan
Many Michigan residents have noticed an increased fee when paying bridge tolls, and wonder whether this is legal.
For example, on January 1, 2025, the Mackinac Bridge began charging a 2.3% surcharge on tolls paid with credit cards. This has resulted in vehicles paying an extra $0.09 on a standard $4 bridge toll.
This practice of surcharging bridge tolls is perfectly legal in the state of Michigan. The 2.3% surcharge falls within the legal range, and the fee is clearly disclosed.
Residents with a MacPass can pre-load deposits using cash or electronic checks to avoid a surcharge fee on tolls.
In addition to the new surcharge fee, the Mackinac Bridge stopped accepting American Express cards on January 1, 2025, citing that Amex is more expensive to accept compared to other cards.
How to Report Illegal Surcharging in Michigan
If you think a business in Michigan has an illegal surcharge policy, then you can file a complaint online with the Attorney General’s Consumer Protection Team.
Mailed complaints can be sent to:
Consumer Protection Team
PO Box 30213
Lansing, MI 48909
You also have the option to call or fax complaints using the following numbers:
- Phone: 517-335-7599
- Toll-free: 877-765-8388
- Fax: 517-241-3771
Drop a comment on this page if you’ve experienced surcharges (legal or illegal) in the state of Michigan. While we don’t offer any consumer services, we’d love to hear your thoughts so we can share them with local businesses that we work with.
Is Surcharging Worth it for Michigan Merchants?
Just because it’s legal to surcharge credit card transactions in Michigan, it doesn’t mean that you automatically should do it.
When you compare the pros and cons and look at all the steps you need to remain compliant, the cost of implementing your surcharge program may exceed what you recoup.
Michigan’s strict disclosure laws are just part of the equation. The tax collection and remittance is what makes Michigan’s surcharge laws more complex than other states.
Additionally, you need to factor in consumer sentiment. Do you really want to risk losing your customers over a dollar or two? Customers will be even more upset to see that their surcharge is subject to tax.
This is ultimately a decision that you need to make for yourself. But before you implement a surcharge program, just make sure you explore other ways to reduce your processing costs.
Here at MCC, we can help lower your credit card processing fees without forcing you to switch providers, and you won’t have to pass those costs to your customers, either.