Credit card surcharging is legal in Vermont. The surcharge laws in Vermont are relatively relaxed and straightforward compared to neighboring states (like Massachusetts, where surcharging is banned, and New York, where it’s regulated).
Here’s what you need to know:
- Surcharge fees are legal on credit card transactions in Vermont
- No state-specific laws prohibit surcharge fees.
- Debit card surcharging remains illegal (as it is nationwide).
- Merchants in Vermont can default to federal guidelines and card network rules for compliance.
- Vermont legislative proposals attempted to address credit card fees in Vermont.
Beyond these key highlights, there’s a lot more to understand about surcharging credit cards in Vermont. The recent legislative developments could be a sign of future changes to how processing fees are handled across the state.
So whether you’re running a business in Vermont and need to stay compliant or you’re a consumer concerned about extra charges, read on for the full picture.
Disclaimer: This information is for reference only. It does not constitute legal advice. Please consult an attorney for any legal-specific questions.
Can Businesses in Vermont Add Surcharge Fees to Credit Card Transactions?
Yes, surcharging credit cards is legal in Vermont.
There are no current laws restricting credit card surcharges, meaning Vermont businesses can implement surcharge programs under federal regulations. This caps surcharge fees at 4% of the transaction amount.
Is it Legal to Surcharge Debit Cards in Vermont?
No, debit card surcharging is illegal.
This applies to traditional debit cards, pre-paid cards, and government benefits cards (like 3SquaresVT cards).
It’s still illegal to surcharge debit cards, even if they’re processed as a “credit” transaction. So businesses need to ensure their staff is trained to recognize when a debit card is being used and remove any surcharge fees that might be automatically added by the POS system.
Federal Regulations and Card Network Rules Still Apply
Similar to other states where surcharging is legal, Vermont businesses can rely on federal laws and card network rules to guide surcharge programs (if you choose to implement one).
This means:
- Surcharges cannot exceed 4% of the transaction amount.
- Surcharge fees can only be applied to credit cards (not cards or prepaid cards).
- Merchants must clearly disclose any surcharge fees before the transaction is completed.
- Card networks require notice before you implement a surcharge program (usually 30 days).
It’s worth noting that while the legal maximum surcharge in Vermont is 4%, the card network rules effectively limit you to charging just 3% of the transaction.
Each card network has slightly different rules. But if you combine them, you’ll find that Visa limits surcharges to 3% and other networks say that all cards must be treated equally (which is where the 3% cap across the board comes into play).
Violating the card network rules isn’t technically against the law. But you can still be subject to fines and penalties for non-compliance.
Vermont’s Recent Legislative Attempt to Regulate Credit Card Fees
While Vermont allows surcharging, the state legislature has shown interest in addressing credit card processing fees at a broader level. Most recently, House Bill 317 (H0317) was introduced to combat rising costs that are ultimately passed to consumers.
Vermont H017 Explained
H0317 was introduced on February 25, 2025, but died in committee without advancing.
The bill aimed to prohibit credit card processors, banks, and card networks from assessing interchange fees on tax or gratuity (similar to the groundbreaking legislation passed in Illinois).
Had it passed, it would have helped lower the effective processing rate for businesses throughout the state. And this reduction could have potentially swayed merchants away from passing costs to their customers in the form of a surcharge.
What This Means for Vermont Businesses
Nothing is changing in Vermont right now. However, the introduction of this bill should put businesses on alert for potential changes down the road.
It’s a signal that Vermont lawmakers are paying close attention to credit card processing fees. And I wouldn’t be surprised if this was reintroduced in the next year or two.
Similar legislation has been proposed in other states as well, including Pennsylvania.
At the end of the day, lawmakers are concerned with how these fees impact consumers. So if the “no interchange fees on tax or gratuity” angle doesn’t stick, they could take another approach and simply ban surcharging to prevent customers from being burdened by merchant fees.
Alternatives to Surcharging in Vermont
Despite it being legal, there are plenty of reasons why businesses shouldn’t surcharge their customers.
If you weigh the pros and cons of surcharging, you’ll likely realize that it’s not the best decision for your business. Consider these alternatives instead:
- Offer a Cash Discount: Rather than increasing the transaction amount when customers pay using a credit card, you can give them a discount when paying cash. The result is effectively the same, but psychologically, it’s better for the customer.
- Set a Minimum Purchase Amount: You can legally set a minimum purchase amount of $10 for credit cards. This will help you avoid high processing fees on low-ticket transactions.
- Identify and Remove Bogus Fees: If you audit your monthly merchant statement, you’ll likely find that it’s filled with hidden fees and bogus charges that can be eliminated. Removing these charges can save you hundreds or potentially thousands every month.
- Negotiate a Better Rate: Most businesses don’t realize that their processing fees are negotiable. Contact your processor directly to ask for a rate reduction.
- Restructure Your Contract: If you’re currently on a flat-rate contract, you need to switch to interchange-plus pricing ASAP.
- Make Sure Your Equipment is Updated: Outdated hardware and software can lead to problems capturing proper card data. When this happens, your transactions get “downgraded” and get charged the highest possible rate.
Looking for alternatives to surcharging will end up saving you more money in the long run. You can lower your processing costs without hurting your reputation and losing customers in the process.
If you need some help understanding the fees on your statement or negotiating a better rate with your processor, contact our team here at MCC for assistance. We can handle all of this on your behalf and continue monitoring your statements in the future to ensure your processor doesn’t try to sneak in more bogus charges.
How to Report Illegal Surcharging in Vermont
If you suspect a business in Vermont is illegally surcharging transactions, you can file a complaint online with the state’s Attorney General’s office.
Examples of violations may include:
- Surcharge fees that exceed 4%.
- Surcharges on debit cards.
- Improper disclosure of surcharge fees.
- Using deceptive trade practices to hide surcharges.
We also encourage consumers in Vermont to let us know how they feel about surcharge fees (whether legal or illegal). If you’ve paid a surcharge, comment on this post and let us know about it.
Final Thoughts on Vermont’s Surcharge Laws
Vermont’s surcharge laws are pretty simple. The state doesn’t prohibit surcharging, so businesses can refer to federal laws to remain compliant.
That said, it doesn’t mean that surcharging is right for your business.
Prior to implementing a surcharge fee, you should consider whether this aligns with your customer service goals and long-term business strategy.
The recent legislative interest in credit card fees suggests that Vermont may explore alternative approaches moving forward. New laws similar to H0317 could pass and lower your processing costs, or a completely different bill could be introduced that bans or regulates surcharging.
Fortunately, you have other options. Our team at MCC can help lower your credit card processing fees. We’ll audit your statements for free, and negotiate better terms directly with your current processor.
So you can save money without changing providers or burdening your customers with additional fees.