What businesses are allowed to charge for credit card payments

Businesses can charge a fee for credit card payments in most situations, but the rules depend on the card type and where you live. Visa, Mastercard, and Discover allow merchants to pass fees to customers who pay with those cards. American Express has historically prohibited surcharges, though this changed in 2023 after a settlement. State laws add another layer — some states cap or ban credit card fees entirely, while others allow them without restriction.

The key distinction is between a surcharge (a fee added to the purchase price) and a discount (a reduction for paying another way, like cash). Federal law permits discounts for non-credit payment methods. Surcharges are more restricted and vary by state and card network.

Key Takeaways

  • Visa, Mastercard, and Discover permit merchants to charge surcharges on credit card purchases, but American Express rules are less clear after recent changes.
  • Ten states — California, Colorado, Connecticut, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Vermont — prohibit credit card surcharges entirely.
  • A business can always offer a discount for paying with cash or debit instead of credit, which is legal everywhere.
  • Any fee charged must be disclosed before you complete the transaction, and the merchant must display the fee clearly at checkout.
  • If a business violates surcharge laws in your state, you can report them to your state's attorney general or consumer protection office.

States that ban credit card surcharges

Ten states have laws that prohibit merchants from charging a surcharge when you use a credit card: California, Colorado, Connecticut, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Vermont. In these states, a business cannot add a percentage or flat fee to your bill because you chose to pay with a credit card instead of cash or debit.

If you live in one of these states and a merchant charges you a credit card fee, that charge violates state law. You can dispute it with your credit card company or report the merchant to your state's attorney general office. The enforcement office can investigate and take action against repeat violators.

States that allow surcharges with restrictions

Most states permit credit card surcharges but require merchants to follow specific rules. The most common requirement is disclosure — the business must tell you about the fee before you pay, not after. This means the fee must appear on the menu, price tag, or checkout screen before you hand over your card.

Some states cap the surcharge amount. For example, a few states limit the fee to a percentage of the transaction (often 2 to 4 percent) or require it not to exceed the merchant's actual cost of processing the card. Check your state's attorney general website to learn the exact rules where you live, since requirements change and vary widely.

How American Express surcharge rules changed

American Express historically prohibited merchants from charging surcharges on American Express cards, even in states where surcharges were otherwise legal. In 2023, American Express settled a lawsuit and agreed to allow surcharges on its cards, bringing its policy closer to Visa and Mastercard. However, the rollout has been gradual, and some merchants may not yet charge American Express surcharges.

If you use an American Express card and are charged a surcharge, check whether the merchant is actually permitted to do so under the current rules. Contact American Express directly if you believe a surcharge violates the card network's terms.

The difference between a surcharge and a discount

A surcharge adds a fee to the price because you used a credit card. A discount reduces the price because you paid a different way — usually cash or debit. Legally, these are treated differently. Discounts for non-credit payment methods are permitted everywhere and do not face the same restrictions as surcharges.

For example, a gas station can legally offer "$3.49 per gallon for cash, $3.59 per gallon for credit" in any state. That is a discount for cash, not a surcharge on credit. The same transaction framed as a surcharge — "$3.59 base price, minus 10 cents for cash" — faces state-level restrictions. In practice, the math is identical, but the legal treatment differs.

What to do if you are charged an illegal fee

If a business charges you a credit card fee that violates your state's law, you have several options. First, ask the merchant to remove the charge. Many businesses are unaware of state surcharge laws and will reverse it once you point out the violation.

If the merchant refuses, contact your credit card company and dispute the charge. Explain that the fee violates your state's surcharge law. The card issuer can investigate and may reverse the charge on your behalf. You can also file a complaint with your state's attorney general office or consumer protection division. Provide the merchant's name, location, the date of the transaction, and a description of the illegal fee. These offices track complaints and can take enforcement action against repeat offenders.

Disclosure requirements at checkout

In states where surcharges are legal, merchants must disclose the fee before you complete the transaction. The fee cannot be a surprise that appears only on your receipt after you have already paid. It must be clearly posted on the menu, displayed on the price tag, shown on the website before checkout, or announced at the point of sale.

At a restaurant, the surcharge should appear on the menu or be stated verbally before you order. At a retail store, it should be visible at the register or on signage. Online, it must appear before you submit your payment information. If a business charges a fee without disclosing it first, that violates the card networks' rules and may also violate state law, giving you grounds to dispute the charge.

Frequently Asked Questions

Can a business charge a fee for debit cards?

Card networks generally prohibit surcharges on debit cards, even in states where credit card surcharges are legal. Some merchants may still try to charge them. If you are charged a debit card fee, dispute it with your bank and report the merchant to your state's attorney general.

Is a convenience fee the same as a surcharge?

A convenience fee is often charged for using a specific payment method (like paying a utility bill online instead of by mail) and may be treated differently than a surcharge under state law. Some states allow convenience fees while banning surcharges. Check your state's rules to be certain.

Can a business refuse to accept credit cards to avoid surcharge rules?

Yes. A business can choose not to accept credit cards at all. However, if they do accept credit cards, they must follow surcharge laws in their state. Refusing credit cards entirely is a different decision from charging a fee when someone uses one.

What if I am charged a surcharge in a state that bans them?

Contact the merchant first and ask them to remove it. If they refuse, dispute the charge with your credit card company and file a complaint with your state's attorney general. Provide the transaction date, merchant name, and amount of the illegal fee.

Do online merchants have to follow state surcharge laws?

Yes. An online business must follow the surcharge laws of the state where the customer is located or where the business is based, depending on how state law is written. If you are charged an illegal surcharge by an online merchant, you can dispute it and report the business to your state's attorney general.