Credit Card Surcharge Laws by State (as of Sept 2024)

Credit card surcharges are an additional charge that businesses can impose when customers choose to pay with a credit card instead of cash or debit. This fee helps merchants offset the costs they incur for processing credit card transactions.

While surcharging has been a hot topic in recent years, Visa is now taking a firm stance against merchants who aren’t playing by the rules. They’ve started secret shopping to catch businesses that are non-compliant with surcharge regulations.

If caught, these merchants face immediate fines, as Visa believes they’ve provided ample notice about the proper way to apply surcharges.

Avoid landing in hot water with Visa and other card networks by following our guide for credit card surcharge laws by state.

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Visa’s Secret Shopping and Fines for Non-Compliant Merchants

Visa is taking a proactive approach to ensure merchants are following the rules when it comes to credit card surcharges.

They’ve deployed secret shoppers to visit businesses and catch those who aren’t complying with the regulations. If a merchant is found to be breaking the rules, they’ll face immediate fines, as Visa believes they’ve given plenty of warning about the correct way to apply surcharges.

So, what kind of mistakes are these secret shoppers looking for? Some common issues include:

• surcharging debit cards (which is not allowed)
• failing to display proper signage about surcharges
• charging more than the maximum allowed amount

Penalties for non-compliance can range from $1,000 for a first offense up to a whopping $25,000 for repeat offenders. That’s a hefty price to pay for not following the rules!

It’s important to note that Visa recently lowered its merchant surcharge cap to 3% effective April 15, 2023. This means that businesses can’t charge customers more than 3% extra for using a Visa credit card. Merchants need to stay on top of these changes and make sure they’re always in compliance to avoid those costly fines.

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Credit Card Surcharge Laws by State

As of September 2024, most states allow merchants to add a surcharge when customers pay with a credit card. This means businesses can pass along the cost of processing credit card transactions directly to the customer.

However, there are a few states that still prohibit or restrict this practice. And things are changing fast.

States Where Surcharging is Prohibited

While most states allow businesses to add a surcharge when you pay with a credit card, a few states still say “no way” to this practice.

1. California: The Golden State used to be okay with surcharges, but that all changed on July 1, 2024, when a new law called Senate Bill 478 went into effect. Now, businesses in California can’t charge extra for using a credit card.
2. Connecticut, Maine, and Massachusetts: These three states in New England have put their foot down and completely banned credit card surcharges.
3. Puerto Rico: Leave any notion of credit card surcharges at the door. This U.S. territory has also banned the practice altogether.

States with Specific Surcharge Restrictions

A couple of states have put their own spin on credit card surcharges. They allow businesses to charge extra for credit card payments, but with a few strings attached.

1. New Jersey: In 2023, the Garden State passed a law that says merchants can only charge as much as it actually costs them to process your credit card transaction. So, if a business tries to make a profit off the surcharge, they’ll be breaking the law. The new rules also require businesses to clearly display their surcharge policy, so customers know what to expect before they pay.
2. New York: NY also recently joined the anti-surcharge club. In December 2023, a new law was passed that says businesses can’t charge more than what it actually costs them to process your credit card payment.
3. Washington: The state is considering a bill that would give the green light to credit card surcharges, but only if the business offers at least one way to pay that doesn’t have any extra fees. This means that if a store wants to add a surcharge for credit cards, they’d need to have an alternative payment method available, like cash or debit, that doesn’t come with a surcharge. The bill is still pending, so we’ll have to wait and see if it becomes law.

States Where Surcharging is Permitted

In the majority of states across the U.S., businesses are allowed to add a surcharge when a customer pays with a credit card.

So, which states give the green light to credit card surcharges? Here’s the list:

• Alabama
• Alaska
• Arizona
• Arkansas
• Delaware
• Hawaii
• Idaho
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maryland
• Mississippi
• Missouri
• Montana
• Nebraska
• New Hampshire
• New Mexico
• North Carolina
• North Dakota
• Ohio
• Oregon
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Utah
• Vermont
• Virginia
• West Virginia
• Wisconsin
• Wyoming

So, if a customer uses a Visa card, the most a business can charge extra is 3% of the transaction amount, even if the state allows a higher percentage.

Keep in mind that just because a state allows credit card surcharges doesn’t mean every business will charge them. It’s up to each individual merchant to decide whether or not to add a surcharge.

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