Is It Legal To Charge A Credit Card Fee? An Introduction to Card Brand And State Requirements

The answer isn’t always straightforward. Whether a business can legally charge a credit card surcharge depends on a combination of state laws and card brand requirements. While surcharging is allowed in most states, businesses must comply with specific rules regarding fee calculation, disclosure, and implementation. Because these requirements can change, it’s important to review surcharge programs regularly with both legal counsel and your payment provider.

For businesses considering surcharging, understanding both state requirements and card brand rules is essential before implementing any type of processing fee program. While the concept of surcharging can seem daunting at first, it is possible to build out a compliant surcharging program that serves the customer with freedom of choice while also helping businesses to recoup some of their payment operating costs.

Note that you should check with legal counsel to help ensure full legal and regulatory compliance. While we strive to keep information accurate and updated, laws, regulations, and guidance are subject to change, and this information should not be used as a substitute for consultation with legal counsel.

What is a Credit Card Surcharge?

A credit card surcharge is a percentage-based fee added to a transaction when customers elect to pay with a credit card. The purpose of the fee is to help offset the merchant’s cost of card acceptance. For example, if a customer makes a $1,000 purchase and the business applies a 3% surcharge, the additional fee would be $30 based on the transaction amount.

An important distinction is that surcharges only apply to credit card transactions. Debit and prepaid cards cannot be surcharged, even when processed without a PIN.

It is also important not to confuse a surcharge with a convenience fee. A surcharge is specifically tied to the use of a credit card. A convenience fee, by contrast, is generally charged for using an alternative payment channel, such as paying online instead of in person, and follows different card brand rules.

For many businesses, the appeal is straightforward: surcharging can meaningfully offset payment acceptance costs when implemented correctly. The key is building a program that is consistent for employees, transparent for customers, and compliant across payment channels.

Are Credit Card Surcharges Legal?

It depends on where you are and how you surcharge. The rules are not identical everywhere. Some states prohibit surcharging entirely, while others allow it with restrictions tied to fee caps, disclosure requirements, or pricing transparency rules.

At the same time, card brands such as Visa and Mastercard maintain their own surcharge requirements that businesses must follow regardless of state law. Interest in surcharging has increased significantly in recent years as businesses look for ways to offset rising payment acceptance costs. That growth has also increased scrutiny around compliance.

Businesses should understand that they must comply with both state law and card brand requirements. Even in states where surcharging is permitted, merchants must still follow the rules established by the card networks and their payment processor.

State Credit Card Surcharge Laws

Surcharge laws vary by state, and the applicable legal requirements may differ across jurisdictions and are always subject to change. Businesses should consult legal counsel and regularly review current laws, regulatory guidance, and card brand requirements before implementing a program and throughout the life of the program.

Visa does not currently permit surcharging in the following states because of state laws prohibiting it: Connecticut, Maine, Massachusetts. While Visa permits surcharging in all other U.S. states, there are important considerations and additional requirements in many states. For additional information on state-specific surcharge issues, read more here.

Surcharging for Businesses That Operate In Multiple States

For businesses operating nationally, state-by-state compliance management quickly becomes more complicated. Businesses with locations across multiple states should avoid treating surcharging as a one-size-fits-all policy.

As described above, different states may impose different disclosure requirements, fee limitations, or restrictions on how pricing is presented to consumers.

Many businesses create centralized compliance checklists to standardize:

• Employee training
• Customer disclosures
• Receipt formatting
• Signage/disclosure requirements
• Processor configuration settings
• Audit and reporting practices

Consistency matters, especially when multiple locations, departments, or payment systems are involved.

Credit Card Surcharging Rules Set By Card Brands

Card brands maintain their own surcharge requirements, and businesses are responsible for complying with them.

While rules can vary slightly by card network, some requirements include:

• Limiting surcharges to the merchant’s cost of acceptance
• Capping surcharge percentages, which in the U.S. are generally limited to 3% of the transaction total
• Clearly disclosing fees before payment
• Displaying surcharge amounts listed separately as line items on invoices or payment confirmations
• Excluding debit and prepaid cards from surcharging

Because card brand requirements can change periodically, merchants should regularly review official guidance directly from Visa, Mastercard, American Express, and Discover.

Notify Card Brands And Processors

Businesses may also be required to give 30 days' notice to card brands and processors before launching a credit card surcharge program, depending on the network and processor. Many businesses may overlook the notification step when implementing a surcharge program.

Depending on the card brands involved, merchants may need to provide advance written notice before surcharging begins. Businesses should:

• Submit required notifications before launch
• Retain copies of submitted forms
• Save confirmation emails or processor acknowledgements
• Document implementation dates internally

Maintaining these organized records can help support compliance efforts if questions arise later.

Prepaid Card, Debit, And Other Restrictions

One of the most important surcharge rules involves debit and prepaid cards. Businesses cannot apply surcharges to:

• Debit cards
• Prepaid cards
• Certain regulated payment types depending on jurisdiction or card network rules

This is one reason automated payment workflows matter, like PayJunction’s SmartSurcharge^TM technology that automatically detects debit cards so surcharges are applied appropriately.

When employees manually apply fees or rely on inconsistent checkout processes, businesses increase the risk of accidentally surcharging prohibited transaction types. If you implement surcharging, make sure you use a payment system that automatically identifies and excludes debit card transactions from surcharge calculations to help reduce that risk.

How To Implement Surcharges And Set Processing Fee Practices

A successful surcharge program usually depends on operational consistency just as much as legal compliance.

Businesses considering surcharging should:

• Review state laws and card brand requirements and note that requirements differ by state.
• Notify processors and card brands where required to configure payment systems correctly and complete all required registration steps.
• Ensure debit cards are automatically excluded and surcharge percentages are applied consistently.
• Update customer-facing disclosures, ensuring that signage, receipts, invoices, and online checkout flows clearly communicate surcharge information.
• Train employees on customer communication, checking that staff understand how surcharging works and how to explain it consistently during checkout.
• Assess both in-person and online checkout processes. For clients that make a request to pay online, any disclosure should appear on the payment page before completion.

When accepting credit cards, businesses incur processing fees and may use surcharging to help offset those costs. Any surcharge should remain reasonable from a customer experience perspective and cannot be used to generate profit. Businesses should periodically review their processing expenses to ensure surcharge amounts remain within applicable card brand limits and do not exceed the actual cost of acceptance.

Convenience Fee Versus Processing Fee Versus Surcharge

These terms are often used interchangeably, but they are not the same.

Credit card companies, card brand rules, and state law can limit how and when an extra fee labeled as a convenience fee may be charged.

Businesses should be careful about how fees are labeled on receipts, invoices, and customer-facing materials. Improper labeling can create confusion and may introduce compliance concerns under card brand rules and state laws.

Enforcement, Penalties, And How To Report Violations

Businesses that violate surcharge rules may face:

• Card brand fines
• Processor penalties
• Customer disputes
• Regulatory complaints
• Reimbursement obligations

Penalties vary depending on the violation and jurisdiction involved. Consumers who believe they were improperly surcharged can often report concerns through:

• State attorney general offices
• Consumer protection agencies
• Card issuers
• Payment processors

For businesses, maintaining clear documentation around surcharge policies, disclosures, and processor communications can help support dispute resolution if issues arise.

Alternatives To Charging Credit Card Fees

Surcharging is not the only option for businesses looking to manage payment acceptance costs. Alternative strategies can help reduce payment processing expenses without requiring businesses to raise prices for all customers. Some approaches may also encourage customers to use cash or debit instead of credit cards, which can help lower transaction costs.

Depending on the state and business model, alternatives may include cash discount programs, negotiating lower processing rates, and encouraging PIN debit usage. 

Cash discount programs

In some states, businesses may choose to offer discounts for cash payments instead of adding surcharges to credit card transactions.

Negotiating lower processing rates

Businesses with higher transaction volume may be able to negotiate pricing adjustments with their processor, and long-term customer loyalty with merchant services can also help secure lower rates. Choosing a cost-effective processor may help businesses reduce payment processing expenses enough to avoid surcharges altogether.

Encouraging PIN debit usage

PIN debit transactions may carry lower processing costs than credit transactions.

Creating and Maintaining a Compliant Surcharge Strategy

Businesses considering surcharging should engage legal counsel and review both legal and card brand requirements and their operational processes to ensure a smooth, compliant implementation process. Helpful resources include, but are not limited to:

• State attorney general guidance pages
• Surcharge compliance checklists
• Customer disclosure templates and employee training materials
• Legal review (especially for businesses using an online payment solution or a service-fee model instead of a surcharge)

Before implementing a surcharge program, businesses should confirm their payment workflows, employee processes, and customer communications are aligned with both state requirements and card brand rules. A payment processor, like PayJunction, can help you weigh the benefits and risks of surcharging and offer guidance to see if this credit card fee strategy is the right match for your business.

Want to see how much you could save by surcharging? Some businesses have offset over 50% of their payment processing costs. Use our savings calculator, or reach out to us directly for an in-depth surcharge savings analysis.