If you accept credit cards at your business, you already know that processing fees eat into your margins. One way to offset those costs is to add a surcharge to credit card transactions, passing some or all of the fee to the customer. The catch? Every state handles surcharges differently. Some states allow them with no extra conditions beyond card network rules. Others cap the amount you can charge, and a handful ban surcharges altogether. On top of state law, Visa and Mastercard each enforce their own limits and disclosure requirements.
This guide breaks down credit card surcharge laws by state so you can determine what applies to your business, stay compliant, and avoid costly penalties. You will find a complete state-by-state table, step-by-step compliance instructions, and answers to the most common surcharge questions merchants ask.
Key Takeaways
The table below provides a quick snapshot of where credit card surcharges stand across the country. For the complete breakdown of each jurisdiction’s rules, scroll to the detailed reference table later in this guide.
| Status | Jurisdictions | Details |
| Strictly Prohibited | Connecticut, Massachusetts, Maine, Puerto Rico | These jurisdictions maintain active laws or regulations that prohibit merchants from adding a fee to credit card transactions. |
| Legal with Restrictions | New York, New Jersey, Colorado, Minnesota, Nevada, South Dakota, Nebraska, Georgia, Illinois, Kansas, Oklahoma, California, Texas | Surcharging is allowed, but fees cannot exceed the merchant’s actual cost to process the card. Some states impose additional caps (Colorado at 2%, Illinois at 1%). California and Texas have statutory bans that federal courts found unconstitutional, creating unique compliance considerations. |
| Broadly Allowed | All other states | Merchants can surcharge up to 3% per Visa guidelines (4% for Mastercard), provided they follow federal disclosure rules and card network requirements. |
What You Need to Know Before Adding a Surcharge
Credit card surcharges are permitted in most of the country, but the details matter. Card networks cap the fee at 3% for Visa and 4% for Mastercard. However, no processor will separate this out, so unless you don’t accept Visa, your max surcharge will be 3%. Debit and prepaid card transactions cannot be surcharged in any state because federal law and card network rules prohibit it nationwide. A small number of states, including Connecticut, Massachusetts, Maine, as well as Puerto Rico still prohibit credit card surcharges entirely. Several others, such as Colorado, New York, New Jersey, and Nevada, allow surcharges only under specific conditions. Disclosure is required everywhere surcharging is legal. That means signage at the point of entry, notice at the point of sale, and a separate line item on every receipt.
How Credit Card Surcharging Works
A credit card surcharge is a percentage-based fee that a merchant adds to a transaction when the customer pays with a credit card. The purpose is to recover some or all of the processing cost that the merchant pays to accept that card. For example, if your processing cost on a given transaction is 3%, you could add a surcharge of up to 3% to the customer’s total. The surcharge must appear as a separate line item on the receipt, not folded into the listed price.
This is different from a cash discount program, where the posted price already includes the processing cost, and customers who pay with cash or debit receive a reduction. Cash discounts are legal in all 50 states. Surcharges, on the other hand, are subject to state-specific rules. It is also different from a convenience fee, which is a flat charge for using a non-standard payment method (like paying by phone or online when the business primarily accepts in-person payments). Visa and Mastercard do not allow a merchant to apply both a surcharge and a convenience fee to the same transaction.
Surcharges, Cash Discounts, and Convenience Fees Compared
| Feature | Credit Card Surcharge | Cash Discount |
| How it works | Extra fee added at checkout for credit card payments | Discount applied when paying with cash or debit |
| Legal nationwide? | No. Prohibited or restricted in some states | Yes. Legal in all 50 states |
| Applies to | Credit cards only | Cash, debit, and sometimes check payments |
| Pricing display | Listed price stays the same; surcharge added at checkout | Posted price includes processing cost; discount reduces total |
| Card network rules | Must follow Visa/Mastercard caps and disclosure rules | Fewer restrictions from card networks |
Card Network Rules You Must Follow
State law is only part of the equation. Visa, Mastercard, American Express, and Discover each set its own surcharge policies, and merchants are required to comply with all of them. Visa limits surcharges to 3% of the transaction amount. Mastercard allows up to 4%, but as indicated above, no processor will separate this out, so unless you don’t accept Visa, your max surcharge will be 3%. In both cases, the surcharge cannot exceed your actual cost of accepting the card, even if the cap is higher. American Express requires that its cards be surcharged at the same rate as other cards. Discover does not allow surcharges that exceed the cost of processing. Before you start surcharging, you are required to notify the card networks and your payment processor at least 30 days in advance. You must also exclude debit and prepaid cards from the surcharge, even if those cards are processed through a credit network at checkout.
Credit Card Surcharge Laws Reference Table
The table below summarizes the surcharge status, maximum fee, and key restrictions for all 50 states. Laws change frequently, so always verify the current rules with your state legislature or attorney general before implementing a surcharge program.
This table is for informational purposes only and does not constitute legal advice.
| State | Status | Max Surcharge | Key Restrictions |
| Alabama | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Alaska | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Arizona | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Arkansas | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| California | Conditional | Varies | Dual pricing and all-in pricing permitted; separate surcharge line items restricted under drip pricing law; federal courts found ban unconstitutional |
| Colorado | Allowed w/ Limits | 2% | Capped at 2% or processing cost; disclosure required |
| Connecticut | Prohibited | N/A | State law bans surcharges; penalties for violations |
| Delaware | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Florida | Allowed | 4% (Visa 3%) | State ban deemed unconstitutional by federal courts; card brand rules apply; disclosure required |
| Georgia | Allowed w/ Limits | Cost of acceptance | Convenience fees allowed if alternate payment methods are accepted; surcharge cannot exceed processing cost |
| Hawaii | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Idaho | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Illinois | Allowed w/ Limits | 1% or cost | Capped at 1% or processing fee effective July 2026, interchange fees cannot be charged on tax or gratuity portions |
| Indiana | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Iowa | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Kansas | Allowed w/ Limits | 4% (Visa 3%) | Federal court overturned anti-surcharge law; merchants must include credit card fees in listed price |
| Kentucky | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Louisiana | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Maine | Prohibited | N/A | State law bans surcharges; penalties for violations |
| Maryland | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Massachusetts | Prohibited | N/A | State law bans surcharges; penalties for violations |
| Michigan | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Minnesota | Allowed w/ Limits | 4% | Surcharges allowed for private entities; restricted for government; total price including surcharge must be disclosed upfront |
| Mississippi | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Missouri | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Montana | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Nebraska | Allowed w/ Limits | Cost of acceptance | Surcharge cannot exceed processing cost; state agencies may impose surcharges on electronic payments |
| Nevada | Allowed w/ Limits | Cost of acceptance | Surcharge cannot exceed processing cost; AG advises documentation if surcharge exceeds 1.5%; consumer fraud statutes apply |
| New Hampshire | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| New Jersey | Allowed w/ Limits | Cost of acceptance | Surcharge cannot exceed actual processing cost (P.L. 2023, c.146); disclosure required |
| New Mexico | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| New York | Allowed w/ Limits | Cost of acceptance | Surcharge cannot exceed cost of card acceptance; total credit card price must be disclosed (effective Feb 2024); $500 fine per violation |
| North Carolina | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required; HB 13 (2025) may introduce new restrictions effective Jan 2026 |
| North Dakota | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Ohio | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required; no minimum purchase restrictions |
| Oklahoma | Allowed w/ Limits | 4% (Visa 3%) | Federal court found ban unconstitutional; SB 677 (2025-2026) finalized; card brand rules apply; disclosure required |
| Oregon | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Pennsylvania | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Puerto Rico | Prohibited | N/A | Territory laws ban credit card surcharges, penalties for violations |
| Rhode Island | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| South Carolina | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| South Dakota | Allowed w/ Limits | Cost of acceptance | Surcharge cannot exceed actual processing cost; excessive or undisclosed surcharges may result in prosecution |
| Tennessee | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Texas | Conditional | N/A (see notes) | State law bans surcharges, but federal courts found ban unconstitutional; convenience fees, service fees, and cash discounts permitted |
| Utah | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Vermont | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Virginia | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Washington | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| West Virginia | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Wisconsin | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
| Wyoming | Allowed | 4% (Visa 3%) | Card brand rules; disclosure required |
States That Prohibit Credit Card Surcharges
The states, Connecticut, Massachusetts, and Maine, as well as Puerto Rico continue to enforce outright bans on credit card surcharges. If you operate in any of these jurisdictions, you cannot pass processing fees to your customers through a surcharge under any circumstances. Businesses found in violation face fines and potential regulatory action.
States with Unique Surcharge Restrictions
Several states permit surcharging but impose conditions that go beyond standard card network rules.
- Colorado caps the surcharge at 2% of the transaction or the merchant’s actual processing cost.
- New York requires that the total price a customer will pay, including the surcharge, be disclosed before the transaction is completed. Violations in New York carry a $500 fine per occurrence.
- New Jersey and South Dakota both limit surcharges to the merchant’s actual processing cost.
- Nevada follows a similar approach, and the state attorney general has advised consumers to request written documentation if a surcharge exceeds 1.5%.
- Minnesota allows surcharges for private businesses but restricts them for government transactions, and the surcharge must be reflected in the advertised price.
Some states have a more complicated legal history.
- California’s statutory surcharge ban was found unconstitutional by the Ninth Circuit, and surcharging with proper disclosure is generally permitted under current enforcement guidance. However, California’s drip pricing law restricts surcharges displayed as separate line items, so merchants in that state should verify the latest guidance from the California Attorney General before launching a program.
- Texas bans surcharges by statute, but a federal court ruled that ban unconstitutional as well. Texas merchants may charge convenience fees, service fees, and offer cash discounts, but should consult a Texas attorney before implementing a surcharge.
- Oklahoma’s surcharge ban was also found unconstitutional by federal courts, and the state finalized SB 677 (2025-2026). Card brand onboarding for surcharge accounts in Oklahoma is expected to begin in early to mid-2026.
- Kansas had anti-surcharging laws that were overturned by federal courts, but merchants must incorporate credit card fees into the listed product price to lawfully impose a surcharge.
Illinois introduced a cap of 1% or the actual processing fee. Starting in July 2026, Illinois will also prohibit charging interchange fees on the tax and gratuity portions of a transaction if the acquiring bank is notified during authorization or settlement.
Georgia allows convenience fees on credit card transactions as long as the merchant accepts alternative payment methods. The surcharge cannot exceed the merchant’s processing cost. North Carolina currently allows surcharging, but HB 13 (introduced in 2025) could impose new restrictions if it passes before January 2026.
How to Set Up a Compliant Credit Card Surcharge Program
Getting a surcharge program right takes preparation. The process involves several steps that must be completed in order. First, confirm that surcharging is legal in every state where you do business, including states where you sell online. Second, notify the card networks. Visa, Mastercard, and other networks require at least 30 days of advance notice before you begin surcharging. Your payment processor or ISO agent can often handle this notification on your behalf.
Third, determine the correct surcharge amount. Review your processing statements to find your actual cost of acceptance, then set your surcharge at or below that amount. Make sure you also stay within card network caps (really 3%) and any state-specific limits. Fourth, configure your payment system to exclude debit and prepaid cards from the surcharge automatically. This is a federal requirement, and getting it wrong can result in fines. Fifth, post clear signage at the entrance to your store or on the landing page of your website. Notices should also appear at the point of sale and on every receipt as a separate line item.
If you use a point-of-sale system that supports surcharging, many of these steps can be automated. A quality system will distinguish between credit and debit cards, apply the correct surcharge percentage, and generate compliant receipts without manual intervention. that supports surcharging, many of these steps can be automated. A quality system will distinguish between credit and debit cards, apply the correct surcharge percentage, and generate compliant receipts without manual intervention.
Tips for Maintaining Surcharge Compliance
Surcharge laws change. What was legal last year may not be legal today, and new legislation is introduced in state capitols every session. Set a calendar reminder to review your surcharge practices at least twice a year. Subscribe to updates from your state attorney general’s office or your payment processor’s compliance team to stay informed. Train every employee who handles transactions on your surcharge policy, including how to answer customer questions and how to handle complaints. A well-informed staff reduces the risk of accidental violations and keeps customer relationships strong.
If your business operates across multiple states, defaulting to the most restrictive rules is a safe approach. For example, if you sell in both Colorado (2% cap) and Ohio (standard card brand limits), applying the 2% cap across the board simplifies compliance. Working with a knowledgeable payment partner also helps. The right ISO agent or processor can automate compliance by state, handle card network notifications, and flag changes in the law before they take effect. Our merchant account solutions are designed to help small businesses navigate these complexities.
Take the Next Step with AllayPay
Navigating credit card surcharge laws by state does not have to be overwhelming. Whether you want to implement a surcharge program, switch to a cash discount model, or simply find a merchant account that fits your business, we can help. Our team works with you to evaluate your options, handle compliance requirements, and connect you with the right processing partner. Contact us today to get started.
Frequently Asked Questions
Are credit card surcharges legal in the United States?
Credit card surcharges are legal in most states. However, Connecticut, Massachusetts, and Maine prohibit them entirely, and several other states impose caps or conditions. California and Texas have statutory bans that federal courts have found unconstitutional, creating a complicated enforcement landscape in those states. Always check the current law in every state where you operate before adding a surcharge.
Which states ban credit card surcharges?
As of 2026, Connecticut, Massachusetts, Maine, and Puerto Rico enforce outright bans on credit card surcharges. California and Texas have bans on in place, but federal courts have ruled those bans unconstitutional. Enforcement in California and Texas varies, so merchants in those states should consult an attorney.
What is the maximum credit card surcharge allowed?
Technically, the maximum is 4% under Mastercard rules and 3% under Visa rules. However, if accepting both, you will be maxed out at 3%. Some states set lower caps. Colorado limits surcharges to 2%. Illinois caps them at 1% or the processing fee. New York, New Jersey, Nevada, South Dakota, Nebraska, and Georgia limit surcharges to the merchant’s actual processing cost.
Can I surcharge debit card transactions?
No. Surcharging debit card transactions is prohibited nationwide under the Durbin Amendment to the Dodd-Frank Act and card network rules. This applies even when a debit card is processed through a credit network (signature debit). Prepaid cards also cannot be surcharged.
What is the difference between a surcharge and a cash discount?
A surcharge adds a fee at checkout for credit card payments, keeping the listed price the same. A cash discount posts a higher price that includes the processing cost, then reduces the total for customers who pay with cash or debit. Cash discounts are legal in all 50 states. Surcharges are restricted or banned in some states.
How do I notify customers about a credit card surcharge?
You must display clear signage at your store entrance and at the point of sale. Online businesses should show the surcharge in the checkout flow before the customer confirms payment. The surcharge must also appear as a separate line item on every receipt. Some card networks require specific language in your disclosures, so check Visa and Mastercard guidelines or ask your payment processor for compliant templates.
Do I need to notify Visa and Mastercard before surcharging?
Yes, but this will be handled by your processor.
What happens if I violate surcharge laws?
Consequences vary by state. Common penalties include fines (New York charges $500 per violation), loss of card processing privileges, and potential prosecution. Card networks may also impose hefty fines into the tens of thousands, and/or terminate your merchant account if you violate their surcharge rules.
Can I apply a surcharge to online transactions?
Yes, as long as the surcharge complies with the laws of the state where the customer is located, not just your business’s home state. If you sell to customers in states that ban surcharges, you cannot apply a surcharge to those transactions.
Is a 3% credit card surcharge the legal limit?
Yes, a 3% surcharge is legal in most states that allow surcharging, provided it does not exceed your actual cost of acceptance. However, it would exceed the legal cap in Colorado (2%) and Illinois (1%), and it may be too high in states that limit surcharges to processing cost if your actual cost is below 3%.
What is the difference between a surcharge and a convenience fee?
A surcharge is a percentage added to credit card transactions to offset processing costs. A convenience fee is a flat charge for using a non-standard payment method, such as paying online when the business primarily accepts in-person payments. Card networks do not allow both on the same transaction.
