You hand over a card at the register and the total is higher than the sticker price. That extra line is often a credit card surcharge. A surcharge is a fee a merchant adds to cover its card processing costs when you pay by credit card. Whether it is allowed depends on where the merchant operates and who it does business with.

Close-up of a printed receipt with an added fee line on the total, beside a card terminal at a bright checkout counter
A customer reviewing a printed receipt at a checkout counter, with a card terminal beside it and one added fee line on the total.

Retailers gained the ability to add these fees after a preliminary court settlement among retailers, payment networks and nine major card issuers, according to the National Conference of State Legislatures (NCSL). Since then the rules have turned into a patchwork.

This guide walks through the pieces one at a time. It is general education, not advice about a particular purchase.

What a surcharge is, and what it is not

A surcharge raises the price of a card payment. A cash discount does the opposite. It lowers the price for someone who pays with cash or another non-card method. The two can look alike on a price tag, but the law treats them differently.

Some states allow the discount and ban the surcharge. New York is the NCSL example. Its statute bans surcharges on credit or debit card use but does not ban cash discounts.

Three rulebooks at once

A merchant that surcharges may answer to three sets of rules, as one processor-focused summary explains.

  1. State law, which may ban or limit surcharges.
  2. Card network rules, which apply to every merchant that accepts that brand.
  3. The merchant's own agreement with its payment processor, which can add conditions.

When the rules differ, the strictest one controls. So a state may allow a surcharge, yet a network rule or a processing contract can still forbid it. The reverse also holds. A network may allow it, but a state ban wins.

Where states ban or limit surcharges

The NCSL summary names California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas as places that prohibit credit card surcharges, along with Puerto Rico. The summary's own count of states does not match the names it lists, so check your state's current statute rather than counting on a tally.

Minnesota is narrower. It bans surcharges by a seller that issues and is responsible for its own customer credit card, such as a store card, when the buyer uses that card instead of cash or a check. That is a limit tied to one type of card, not a general ban.

Discount laws are a separate list. NCSL names California, Colorado, Connecticut, Maryland, Massachusetts, Nevada, Oklahoma, Washington, Wisconsin and Wyoming, plus Puerto Rico, as places with laws that let merchants offer discounts for paying some way other than a credit or debit card.

One caution. The NCSL page was last updated October 13, 2016. It describes a California ban ruled unconstitutional in 2015 and under appeal, and a New York challenge the U.S. Supreme Court agreed to hear in September 2016. The sources here do not show how those cases ended. Treat the list as a starting point.

Caps and the cost of acceptance

Card networks also limit how large a surcharge can be. The processor-focused summary reports these caps:

  • Visa: 3%, lowered from 4% in April 2023.
  • Mastercard: 4%.
  • Discover: 4%.
  • American Express: no separate cap, but its non-discrimination rules can tie a merchant to the lowest cap among the brands it accepts.

A cap is a ceiling, not a permission slip. A surcharge may never exceed what the merchant actually pays to accept the card. If a fee is bigger than that cost, it may not follow the rules.

The same summary says a merchant must give its acquiring bank (the bank that processes its card payments) 30 days' written notice before the first surcharged sale. The notice should state the business name and address, the amount, and whether the fee applies by card brand or by card product. The surcharge must also be disclosed and applied consistently.

Debit, prepaid and gift cards

Surcharging a debit, prepaid or gift card is prohibited nationwide under the Durbin Amendment (a federal law on debit fees) and network rules. Running the card as credit does not create an exception. Texas and Maine also ban it under state law.

Do not mix this up with interchange, the fee a merchant's bank pays the card issuer on each sale. The Federal Reserve's Regulation II sets debit interchange at 21 cents plus 0.05% of the sale and one extra cent for fraud prevention. That is a cost inside the payment system. It is not a surcharge on you.

Red flags and open questions

Three situations deserve a closer look:

  • A surcharge on a debit, prepaid or gift card.
  • A credit card surcharge in a state that bans them.
  • A credit card surcharge above the brand cap or the merchant's actual cost.

Any of these may signal a practice that breaks the rules. The sources do not say how to judge a specific merchant.

They also leave gaps. They do not explain how to dispute an improper surcharge. NCSL suggests contacting an attorney or your state attorney general with questions. They do not cover CFPB, FTC or Federal Reserve guidance on credit card surcharges, or how a surcharge should show on a receipt. The processor source also mentions a Louisiana debit surcharge ban set for August 1, 2026. NCSL does not confirm it, so read the statute itself before relying on that claim.

Please seek a professional. This article is general information, not financial, tax or insurance advice. Please seek a licensed financial, tax or insurance professional about your own situation.