Is It Legal to Add a Credit Card Surcharge? (2026 State-by-State Guide)
Everything you need to know about the legality of passing credit card fees to customers, including state restrictions, fee limits, and disclosure rules.
Yes, it is legal to add a credit card surcharge in most U.S. states. Following a landmark 2013 class-action settlement, merchants are generally permitted to pass the cost of credit card processing to customers. However, you must follow strict rules: 10 states currently restrict surcharging, the fee is capped at 4%, and you must notify customers before purchase and on the receipt. Debit cards cannot be surcharged.
📋 Table of Contents
The Quick Answer: Is Surcharging Legal?
Yes, in most of the United States. Since January 27, 2013, merchants in the U.S. and its territories have been permitted to impose a surcharge on credit card transactions. This right came from the settlement of a class-action lawsuit between retailers and major card brands (Visa, Mastercard).
While surcharging is broadly legal, it is not legal everywhere. Some states have specific laws that prohibit or restrict surcharging. You must check your local laws before implementing any fee. According to GSA’s acquisition guidelines, states like Colorado, Connecticut, Florida, Maine, Massachusetts, New York, Oklahoma, Texas, and Utah prohibit merchant surcharges.
The Legal Foundation: The 2013 Class-Action Settlement
The ability for U.S. merchants to surcharge credit cards stems directly from the 2013 settlement between a class of retailers and the major card brands (Visa, Mastercard). Before this settlement, the card networks’ “no-surcharge rules” effectively banned merchants from adding a fee for credit card use in most states.
The settlement changed the landscape, allowing merchants to surcharge, but with significant conditions designed to protect consumers and maintain network integrity. These conditions are the rules you must follow today.
State-by-State Legality (2026 Update)
The most critical factor for any merchant is their location. The 2013 settlement did not override existing state laws. Here is the breakdown of states with known restrictions, based on authoritative government sources.
| State | Legality Status | Notes / Source |
|---|---|---|
| Colorado | Prohibited | State law restricts surcharging. Merchants violating this may be reported to state authorities. (Source: GSA) |
| Connecticut | Prohibited | General prohibition on credit card surcharges. (Source: GSA) |
| Florida | Prohibited | Surcharging is not permitted under state law. (Source: GSA) |
| Maine | Prohibited | State law prohibits merchants from adding a surcharge. (Source: GSA) |
| Massachusetts | Prohibited | General Law chapter 140D prohibits surcharges. (Source: GSA) |
| New York | Prohibited* | While listed, legal challenges have occurred. Merchants should verify current enforcement. (Source: GSA) |
| Oklahoma | Prohibited | Surcharges on credit card transactions are prohibited. (Source: GSA) |
| Texas | Prohibited | Business & Commerce Code prohibits surcharges. (Source: GSA) |
| Utah | Prohibited | State law includes restrictions on surcharging. (Source: GSA) |
| All Other States | Generally Allowed | Surcharging is permitted, subject to card network rules and disclosure laws. |
Laws regarding surcharging are complex and subject to change. The information above is based on the provided reference from the official GSA website and is current as of the publication date. You should consult with legal counsel to ensure compliance with all applicable federal, state, and local laws and card network rules.
Card Network Rules: The 4% Cap & Disclosure
Even in states where surcharging is allowed, you must follow the specific rules set by Visa, Mastercard, Discover, and American Express. These rules are not optional—violating them can result in fines or losing the ability to accept those cards.
Visa & Mastercard Rules
- Surcharge Cap: The surcharge is limited to 4% of the transaction amount or the merchant discount rate, whichever is less. You cannot charge more than what it costs you to accept the card.
- Advance Notice: You must notify customers in advance that a surcharge will be applied at the point of entry, at the point of sale, and on the receipt. This can be through in-store signage or a disclosure on your website’s checkout page.
- Receipt Disclosure: The surcharge amount must be itemized as a separate line item on the transaction receipt, clearly identified as a “surcharge.”
- No Surcharge on Debit: You are strictly prohibited from applying a surcharge to debit card or prepaid card transactions.
American Express & Discover
Amex and Discover have their own specific rules, which are generally similar but may have different notification requirements or fee caps. Merchants are responsible for reviewing and complying with the rules of each card brand they accept.
Surcharge vs. Cash Discount: What’s the Difference?
Many merchants use a “cash discount” program to achieve the same result—avoiding processing fees—while navigating legal complexities. Here’s the key difference:
Two Models, One Outcome: You Keep the Full Amount
Surcharge: You advertise a base price of $100. If the customer pays by credit card, you add a fee (e.g., 3%), making the total $103.
Cash Discount: You advertise a price of $103 for all customers. If the customer pays by cash (or a non-surchargeable method like ACH), you give them a discount of $3, making their final price $100.
In both scenarios, the customer paying by card pays $103, and you net $100. The cash discount model is often favored because it can be structured to avoid technically adding a “surcharge,” potentially circumventing state-level prohibitions in some jurisdictions. However, you must still comply with disclosure rules.
How a Cash Discount Appears at Checkout
Cash discounted price
Standard price
How to Legally Add a Surcharge in 2026
Follow this step-by-step checklist to ensure your surcharging program is compliant:
- ✅ Verify State Law: Confirm your state is not on the prohibited list (see table above).
- ✅ Register with Card Brands (if required): Visa and Mastercard require merchants to notify their acquirer/processor and register their intent to surcharge. Your payment processor can handle this.
- ✅ Cap Your Fee: Ensure your surcharge does not exceed 4% or your effective processing rate, whichever is lower.
- ✅ Provide Clear Disclosure: Post clear signage at your point of sale and include a notice on your online checkout page stating that a surcharge applies to credit card payments. The GSA notes that cardholders are required to be notified in advance.
- ✅ Itemize on Receipts: The surcharge must appear as a separate line item on the customer’s receipt.
- ✅ Exclude Debit Cards: Program your POS system to only apply the surcharge to credit cards, never to debit or prepaid cards.
Frequently Asked Questions
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Get Your Free Compliance Check →Sources: GSA Acquisition.gov (6-6. Surcharges) · Mastercard Surcharge Rules · Stripe Resources
Team Merchant Insiders is the editorial and research team behind Merchant Insiders, an independent U.S.-focused publication covering credit card processing, payment pricing, and fee optimization for small and mid-size businesses.
Our team combines hands-on experience in merchant services with deep research into processing fees, pricing models, compliance rules, and processor contracts.