What Merchants Need to Know: 2026 Credit Card Surcharge Laws Across the U.S.

Navigating the complex landscape of credit card surcharge laws is essential for businesses aiming to comply with state regulations while managing transaction costs. As of March 2025, the legality and limitations of surcharging vary across the United States. This guide provides an overview of credit card surcharge laws in each state, along with links to official resources for detailed information.

Disclaimer: This information is for reference purposes only and does not constitute legal advice. Credit card surcharge laws are subject to change; consult with legal counsel and refer to official state resources to ensure compliance.

Understanding Credit Card Surcharges

A credit card surcharge is an additional fee that merchants may add to transactions when customers choose to pay with a credit card. These fees are intended to offset the costs associated with credit card processing, such as merchant service fees and transaction processing charges. While federal credit card surcharge laws permit surcharges up to 4% of the transaction amount, individual states have enacted specific regulations governing their application.

It’s also important to note the difference between convenience fees and credit card surcharges, as both can apply to credit card transactions, but under different circumstances and legal guidelines.

Clarification of Convenience Fees vs. Surcharges

Understanding the difference between convenience fees and surcharges is crucial for merchants, as both involve additional charges on a transaction, but they apply in different situations.

• Credit Card Surcharges: A surcharge is an extra fee applied when a customer chooses to pay with a credit card. Surcharges are typically tied to the cost of credit card processing fees and can be applied to the credit card payment method specifically.

  • Example: A merchant adds a 3% surcharge when a customer uses a credit card, reflecting the cost of processing the payment.

  • Legal Requirements: Surcharges are regulated at both the federal and state levels. In many states, the surcharge cannot exceed the merchant’s processing cost and may be capped at a specific percentage (e.g., 2% or 4%).

• Convenience Fees: A convenience fee is charged when customers use a specific payment method, such as paying online or over the phone. These fees are for providing an alternative payment method, and the customer must be offered other payment options that do not incur this fee.

  • Example: A concert venue charges a $5 convenience fee if tickets are purchased online, but if the customer buys tickets in person, they avoid the fee.

  • Legal Requirements: Convenience fees are generally permissible as long as an alternative payment method is available, and the fee is disclosed upfront.

Key Differences:

• Surcharges apply only to credit card payments and are meant to cover credit card processing costs.

• Convenience Fees apply to specific payment channels (such as online payments), regardless of whether the payment is made with a credit card, as long as an alternative payment method is available.

Understanding this distinction is crucial for merchants to ensure they are complying with both state and card network rules. To learn more about the differences and the credit card surcharge laws surrounding them, refer to Visa’s Merchant Surcharge Guidelines and MasterCard’s Merchant Surcharge Guidelines.

States Where Surcharging Is Prohibited

As of March 2025, some states prohibit merchants from imposing credit card surcharges. Here’s a list of these states:

• Connecticut: State law prohibits surcharging on credit card transactions.

• Maine: Surcharging is illegal, but offering a cash discount is permitted.

• Massachusetts: State law prohibits surcharges on credit card transactions.

• California: Effective July 1, 2024, surcharging is prohibited under Senate Bill 478.

For more information on the specifics of credit card surcharge laws in these states, consult the California Department of Consumer Affairs or visit the Maine Consumer Protection website.

States with Specific Surcharge Regulations

Some states allow surcharging but impose specific restrictions. Here are the rules for certain states:

• Colorado: Permits surcharges up to 2% of the transaction amount.

• New York: Allows surcharges that do not exceed the merchant’s cost of acceptance; strict disclosure requirements apply. For more details on this, refer to the New York State Department of Financial Services.

• New Jersey: Surcharges must not exceed the actual cost incurred by the merchant for credit card processing.

• Nevada: Permits surcharges up to the merchant’s cost of acceptance, with a maximum surcharge of 1.5%. Merchants must provide documentation for any surcharge exceeding this.

• Texas: Surcharges are prohibited, but convenience fees are allowed if alternative payment methods are accepted. The state’s credit card surcharge laws have been challenged in federal courts.

For more information on the surcharge rules in these states, visit the New Jersey Division of Consumer Affairs or Nevada Department of Business and Industry.

States Where Surcharging Is Generally Permitted

In the remaining states, surcharging is generally allowed, provided merchants adhere to federal guidelines and state-specific requirements. These states include:

• Alabama

• Alaska

• Arizona

• Florida

• Hawaii

• Illinois

• Indiana

• Michigan

• Missouri

• Ohio

• Oregon

• Pennsylvania

• South Carolina

• Tennessee

• Virginia

• Washington

• Wisconsin

Merchants in these states should ensure they comply with any disclosure requirements and state-specific rules. For more information, you can consult the SBA’s guide on credit card acceptance.

General Guidelines for Implementing Surcharges

When considering the implementation of credit card surcharges, merchants should adhere to the following general guidelines:

1. Disclosure: Clearly inform customers about the surcharge before completing the transaction, both at the point of entry and point of sale.

2. Fee Limitations: Ensure that surcharge amounts do not exceed the actual cost of credit card acceptance or any state-mandated caps.

3. Receipt Details: Itemize the surcharge on customer receipts, specifying the exact amount charged.

4. Debit and Prepaid Cards: Do not apply surcharges to debit or prepaid card transactions, even if processed as credit.

5. Card Network Compliance: Follow the guidelines set by card networks such as Visa and MasterCard. These guidelines often have specific rules regarding surcharging practices.

For more details on card network compliance, visit the Visa Surcharge Rules and MasterCard Surcharge Rules.

Resources and Legal Assistance

Navigating credit card surcharge laws can be complex, so it’s always wise to consult reliable resources for up-to-date information:

1. Federal Trade Commission (FTC) – Offers guidelines on credit card surcharging practices at the federal level.
   FTC Credit Card Surcharging Overview

2. U.S. Small Business Administration (SBA) – Provides information on credit card acceptance and fees.
   SBA – Credit Card Acceptance

3. State-Specific Legal Resources

   • California: California Department of Consumer Affairs

   • New York: New York State Department of Financial Services

4. Legal Assistance

   • National Association of Consumer Advocates (NACA): Provides legal resources for businesses seeking assistance.
     NACA – Legal Assistance

   • Merchant Law Group: Specializes in advising merchants on payment processing regulations and compliance.
     Merchant Law Group

Consulting these resources can help you stay compliant with the latest regulations and avoid legal pitfalls in your business operations.

Conclusion

Understanding and complying with state-specific credit card surcharge laws is crucial for merchants to avoid legal repercussions and maintain customer trust. Given the variability and evolving nature of these laws, it is advisable to regularly review official state resources and seek legal counsel when necessary. By ensuring transparency and compliance, merchants can create a smooth payment experience while adhering to legal requirements.

By incorporating best practices, staying updated with relevant laws, and understanding the distinction between surcharges and convenience fees, merchants can confidently manage payment processing costs without running into legal trouble.