Can a Business Charge a Credit Card Fee? State Laws & Rules Explained (2026)

Businesses can legally charge certain types of credit card fees in most states, subject to state laws and card network rules

Legality depends on the state where the business is located, the fee type, and meeting proper disclosure requirements.

Businesses that charge credit card fees do so to offset payment processing costs. Typical processing fees range from 1.5% to 3.5% per credit card transaction, or $1.50 to $3.50 on a $100 purchase.

There are three types of fees businesses can use to reduce payment processing costs: credit card surcharges, convenience fees, and cash discount programs.

Credit card surcharges

A credit card surcharge is a percentage-based fee added to credit card transactions. Surcharge limits are 3% for Visa and 4% for Mastercard or the merchant’s actual processing costs, whichever is lower. American Express and Discover don’t set surcharge limits, but American Express requires that merchants apply the same surcharge to all card brands.

You must formally notify the card networks and your payment processor at least 30 days before you start credit card surcharging. Some payment processors will handle notification of the card networks on your behalf. Credit card surcharges can’t be applied to debit cards or prepaid cards, including if the customer runs them as credit.

Convenience fees

A convenience fee is an additional charge for an alternative payment method outside of a merchant’s usual payment channel. Convenience fees are normally a flat rate.

Convenience fees are generally permitted in all states when structured and disclosed properly with a few important stipulations. Businesses must properly disclose convenience fees upfront – the FTC introduced a Junk Fee Rule in December 2024 specifically to ensure transparent pricing for live-event tickets and short-term lodging.

Businesses also can’t charge convenience fees for standard face-to-face transactions. Convenience fees can apply to online and phone orders if those methods are outside the merchant’s normal payment channel. For example, a brick-and-mortar retailer that sells products in person could add a convenience fee for online orders. An e-commerce company can’t add a convenience fee for online orders, because that’s its regular payment channel.

Cash discount and dual pricing programs

A cash discount program, also known as a dual pricing program, is a lower price for cash payments. The advertised price applies to credit and debit card payments. If the customer pays with cash, they receive a discount. Cash discounts are common in areas that prohibit credit card surcharges and at certain types of businesses, including gas stations and convenience stores.

To comply with legal and card network regulations, businesses with cash discounts must always display the card price. They can also display the cash price. Businesses that have dual pricing programs should ensure they have clear signage and that employees are properly trained in how to explain cash discounts to customers.

Minimum purchase amounts

Merchants may impose a minimum transaction amount for credit cards, but it can’t exceed $10 and must be applied consistently to all card brands. The minimum must be applied consistently to all card brands: Visa, Mastercard, American Express, and Discover.

Debit card minimums are prohibited. Even if the customer runs a debit card as credit, the merchant can’t require a minimum purchase amount.

Processing fees

Processing fees are the cost of accepting card payments. There are three types of credit card processing fees:

• Interchange fees go to the card-issuing bank.
• Assessment fees go to the card network.
• Payment processing fees go to the company that processes the payment.

These are merchant credit card fees, not customer-facing fees. Processing fees are deducted from the transaction, and the merchant receives the remainder of the payment. Merchants either absorb the costs themselves or add a credit card surcharge to pass the costs onto customers.

Although most states allow credit card surcharges, a few prohibit them, and several have surcharge limits and/or enhanced disclosure requirements. Since laws can change, every business should verify current regulations in its state and stay on top of any updates. Here are the credit card surcharge rules by state as of March 2026.

States that prohibit credit card surcharges

Three states prohibit credit card surcharges:

• Connecticut
• Maine
• Massachusetts

Note that laws change frequently and may have exceptions. Businesses should consult legal counsel or verify with state authorities before implementing surcharges. A cash discount program is a legally compliant alternative to credit card surcharging for businesses in these states.

States with caps or enhanced disclosure requirements

Several states allow credit card surcharges with restrictions:

• California: Requires businesses to include all fees with the advertised price.
• Colorado: Caps credit card surcharges at 2% and requires clear signage with specific disclosure language.
• Minnesota: Caps credit card surcharges at 5% and requires clear disclosure.
• Nevada: Prohibits businesses from imposing credit card surcharges greater than their actual processing costs.
• New Jersey: Prohibits businesses from imposing credit card surcharges greater than their actual processing costs and requires that businesses notify customers of the surcharge amount prior to customers incurring any charges.
• New York: Requires businesses charging credit card fees to display the highest total price for the purchase (excluding sales tax).
• Oklahoma: Caps credit card surcharges at 2% and requires clear disclosure.

Here are the key differences between surcharges vs. convenience fees:

A credit card surcharge can’t exceed the merchant’s actual processing cost for the payment. The business can recoup its processing fees, but it can’t profit from a surcharge. For example, if a business pays a flat rate of 2.6% for credit card transactions, it can’t charge a 3% surcharge.

Some card networks and states also have hard caps on credit card fees. The maximum credit card surcharge allowed is 3% with Visa and 4% with Mastercard, subject to card network rules, which may change. You can’t charge more than the card network’s limit, even if your processing costs on a transaction exceed it. State limits generally range from 2% to 5% in states that cap surcharges.

Convenience fee limits have more variation, but they must be reasonable and disclosed upfront.

Businesses that charge credit card fees must follow several important rules:

• Notify the card networks and your payment processor at least 30 days before adding a credit card surcharge.
• Disclose the surcharge at your business’s point of entry, point of sale, and on receipts. The disclosure must notify customers of the surcharge, provide the exact surcharge amount, and explain that the surcharge doesn’t exceed your payment processing costs.
• Receipts must include the credit card surcharge, clearly labeled on its own line. The surcharge can’t be hidden in the total cost of the purchase.
• Fees must apply to all credit cards. You can’t discriminate by the card-issuing bank or the card network.
• Credit card surcharges can never be applied to debit card transactions.

Businesses charge credit card fees to offset the cost of accepting credit cards. When a customer pays by credit card, the business pays transaction fees. A typical fee structure is a percentage and a flat fee, such as 2.6% plus $0.15 on every transaction.

Credit card processing fees lower profit margins, which can be a major issue for businesses that have low margins to begin with, such as restaurants and gas stations. By passing these costs onto customers, businesses can accept credit cards without reducing profits.

However, surcharging runs the risk of customer dissatisfaction. Several surveys have found that credit card surcharges are unpopular with consumers. In a 2025 J.D. Power study, customer satisfaction scores fell by an average of 39 points because of credit card surcharges. A 2025 WalletHub survey reported that 87% of consumers felt they were being nickel-and-dimed by businesses that charged credit card fees.

If you suspect a business charged you an illegal credit card fee, start by verifying that it doesn’t comply with legal or card network regulations. A business likely charged an illegal credit card surcharge if it:

• Didn’t disclose the fee at its point of entry or point of sale.
• Added a surcharge even though you paid by debit card.
• Didn’t list the surcharge as a separate line item on your receipt.
• Charged more than its actual processing fees or charged more than 3% (if you paid with Visa) or 4% (if you paid with Mastercard).
• Charged a fee only for a specific type of card, such as American Express cards or Chase cards.

Get proof of your purchase and the violation. Your receipt serves as proof of purchase and could also be proof of the violation, if the issue is that the merchant charged an excessive fee or didn’t include the surcharge as a separate line item. If the merchant didn’t properly disclose the fee, try to take a photo of the store entrance or checkout counter. For online orders, you can take screenshots of the merchant’s website.

An illegal surcharge may qualify as a billing error under applicable regulations, and you may be able to request a refund. Contact the merchant first, explain the issue, and ask for a fee refund. If the business refuses, you can dispute that portion of the charge with your card issuer.

You can also report violations to the card network and your state’s attorney general. Visa offers an online form to report a purchase issue, where cardholders can report illegal surcharges. Mastercard offers an email for surcharge issues: merchantsurcharges@mastercard.com. With American Express and Discover, report illegal credit card surcharges by calling the number on the back of your card.

There are two ways to avoid credit card fees as a consumer:

• Pay with a debit card or cash at businesses that charge extra for credit cards.
• Avoid businesses that charge credit card fees entirely.

If you shop at businesses with credit card surcharges, you may want to consider if you want to pay with another method or use a credit card anyway and eat the fee. In some cases, rewards credit cards earn enough in cash back or points to outweigh the fees, in which case it can still make sense to pay by credit card.

Here are a few alternatives for businesses that want to reduce processing costs without resorting to surcharging:

• Offer a cash discount. Consumers generally view cash discount programs more positively than surcharges. Instead of getting penalized for paying by credit card, they get rewarded for paying in cash.
• Compare payment processing options. Consider a processor that offers interchange-plus pricing, which is often the cheapest pricing model. See if you can negotiate rates or qualify for volume discounts, which are available with many of the best credit card processing companies.
• Set a minimum purchase amount for credit cards. This works well if your business has lots of small-ticket purchases, since fees often take out a larger portion of these transactions. Remember that the minimum credit card purchase amount can’t exceed $10.
• Encourage debit card, cash, or ACH payments if it’s appropriate for your business. This practice is fairly common with certain types of businesses, such as contractors and B2B operations.