Passing the fee to the customer, and the rules that come with it.
Surcharging is legal in much of the US and governed by card network rules that are stricter than most merchants realize. Getting it wrong risks fines from the networks and, in some states, the law. Here is what Visa's own published guidance requires, and the simpler alternative most small merchants end up choosing.
What this page settles.
Three questions, in the order most people ask them.
Three different things that get called the same thing
Surcharging. You post your normal price and add a fee at the till when the customer pays by credit card. The fee appears as its own line on the receipt.
Cash discount. You post one price that applies to everyone, and reduce it for customers who pay with cash. The card price is the posted price; cash is cheaper.
Dual pricing. You display two prices on the shelf — a cash price and a card price — and the customer picks.
They sound like three descriptions of one idea. For compliance purposes they are not, because surcharging triggers a specific set of card network requirements and the other two are structured to avoid most of them. Which one you are actually operating is determined by how your signage, menus and receipts are worded, not by what you call it internally.
What Visa’s rules require if you surcharge
These come from Visa’s own published merchant surcharging guidance, which is worth reading in full before you start.
- Credit cards only. Debit and prepaid cards may not be surcharged in the US, including a debit card run as credit. Your terminal has to be able to tell the difference and apply the fee selectively.
- No more than your cost of acceptance for that credit card — and if your cost of acceptance is above 3%, the surcharge may not exceed 3%. The ceiling is your own real cost, not a round number you picked.
- 30 days advance notice to your acquirer before you begin.
- Disclosure at the point of entry and at the point of sale. A sign at the door and a sign at the till. Visa publishes example wording.
- Itemized on the receipt. The surcharge amount has to appear as its own line, not folded into the total.
Mastercard, Discover and American Express each have their own rules, and they are similar but not identical. If you accept more than one brand — and you do — you need to be compliant with all of them simultaneously, which in practice means complying with the strictest.
The cap is the part most often broken. It is set by your cost of acceptance, which means you need to know your effective rate before you can set a compliant surcharge. That is the number our calculator produces.
State law is separate, and it moves
The card networks’ rules and your state’s law are two independent layers. Satisfying one does not satisfy the other.
Visa’s own merchant guidance names Connecticut, Maine, Massachusetts and Oklahoma as states that prohibit or limit surcharging. Beyond that list, the picture has shifted repeatedly over the last decade — bans have been enacted, challenged in court, struck down, narrowed into disclosure requirements, and in some places replaced with caps. Several states that appear on older articles as outright bans no longer are, and the reverse has happened too.
Which is a long way of saying: do not take a state-by-state table from any article, including this one, as current. Check your own state’s position now, and ask your processor, who carries the compliance risk alongside you. If the amount of money involved is significant, ask a lawyer. We are not one.
Why many small merchants choose cash discount instead
Not because it is a loophole — because it is less machinery.
A properly implemented cash discount posts one price, applies it to every card, and reduces it at the till for cash. There is no selective fee to apply by card type, no cap tied to your cost of acceptance, and no surcharge line to itemize. The compliance surface is smaller.
It is not free of requirements either. The posted price must be the card price, the discount must be a genuine reduction from it, and your signage must say so clearly. Implemented sloppily — posting the cash price and adding a “fee” for cards — it is a surcharge with a different name on it, and it will be treated as one.
What to weigh before you do either
Your customers will notice. This is the real consideration and it is not a compliance one. Some trades have normalized a card fee entirely and nobody blinks. In others it reads as nickel-and-diming and it costs you more in goodwill than it saves in fees. You know your own customers better than any article does.
Your terminal has to support it properly. Selective surcharging by card type, correct receipt itemization, and the right prompts. If your hardware cannot do it cleanly, you are one audit away from a problem.
Your processor has to be in the loop. The 30-day notice is a rule, not a courtesy, and a processor who waves it off is not doing you a favor.
Lowering the fee is the other option. Worth saying plainly: before you build a program to pass a 3% cost to your customers, find out whether the cost is actually 3%. Quite often the simpler move is to stop paying the markup that made it 3% in the first place.
What we charge
Interchange + 0.50% + 10¢ in person, interchange + 0.75% + 25¢ keyed. No contract, no monthly fee, no PCI fee. Send us a statement and we will work out your real cost of acceptance — which you need before you can set a compliant surcharge anyway — and tell you honestly whether passing it on is worth the machinery.
While we are on the subject
Can I surcharge debit cards?
No. Visa’s published guidance is explicit that surcharging in the US applies to credit transactions only — debit and prepaid cards may not be surcharged, including when a debit card is run as credit.
How much can I surcharge?
No more than your actual cost of acceptance for that credit card, and Visa caps it at 3% even if your cost is higher. Charging a round 4% because you heard that was the limit is a rules violation.
Do I have to tell anyone before I start?
Yes. Visa requires 30 days advance notice to your acquirer before you begin surcharging. Your processor will usually have a form.
Is it legal in my state?
It depends on where you are, and state law in this area has changed repeatedly. Visa’s own merchant guidance names Connecticut, Maine, Massachusetts and Oklahoma as states that prohibit or limit it. Check your current state law and ask your processor before you start — do not rely on an article, including this one, as legal advice.
Is a cash discount the same thing?
No, and the difference is the whole point. A surcharge adds to the card price. A cash discount posts one price and reduces it for cash. The mechanics and the rules are different.