Merchants can charge a credit card fee in most states, but the rules depend on the card type and what they call the charge

Whether a merchant can charge you extra for paying with a credit card is legal in most of the United States, but with specific limits. The key distinction is between a surcharge (a percentage added to the total) and a convenience fee (a flat dollar amount for a specific service). Federal law and state law treat these differently, and the card network rules add another layer.

A surcharge on a credit card purchase is legal in 40 states and Washington, D.C., but banned outright in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. A convenience fee — charged when you use a payment method outside the merchant's normal channel, like paying an invoice by phone or online when the default is in person — is legal in all 50 states. The merchant must also disclose the fee before you complete the transaction, not after.

The card networks themselves (Visa, Mastercard, American Express, Discover) have their own rules that override state law in some cases. Visa and Mastercard prohibit surcharges on their cards in all states, even in states where surcharges are otherwise legal. American Express and Discover allow them where state law permits. This means a merchant in a surcharge-legal state cannot legally add a percentage fee to a Visa or Mastercard purchase, even though state law would allow it.

Key Takeaways

  • Surcharges (percentage-based fees added to the purchase price) are banned by Visa and Mastercard in all states, and also banned by state law in 10 states.
  • Convenience fees (flat-dollar charges for paying outside the merchant's normal method) are legal in all 50 states if disclosed before you pay.
  • The merchant must tell you the fee amount before you complete the transaction; a fee revealed after you've paid is not enforceable.
  • American Express and Discover allow surcharges where state law permits, but Visa and Mastercard do not, so the card type matters.
  • If a merchant charges an illegal fee, you can dispute it with your card issuer as an unauthorized charge or billing error.

The difference between a surcharge and a convenience fee

A surcharge is a percentage of the purchase price added to your bill because you chose to pay with a credit card. A merchant might add 2% or 3% to a $100 purchase, making it $102 or $103. Visa and Mastercard rules prohibit this on their cards everywhere. American Express and Discover allow it only in states where state law permits it.

A convenience fee is a flat dollar amount charged for using a payment method that is not the merchant's standard way of doing business. Examples include paying a utility bill by phone instead of by mail, paying property taxes online instead of in person, or paying tuition by credit card when the school normally accepts checks. These fees are legal in all states as long as the merchant discloses them before you pay. The fee does not have to be small — a merchant can charge $5 or $10 — but you must know the amount before you commit to the transaction.

The distinction matters because a merchant cannot repackage a surcharge as a convenience fee to get around the rules. If the merchant accepts credit cards as a normal payment method and adds a fee simply because you chose that method, it is a surcharge, not a convenience fee, regardless of what the merchant calls it.

State laws that ban surcharges entirely

Ten states have their own laws that prohibit surcharges on credit card purchases, even for American Express and Discover. These states are California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. In these states, a merchant cannot add a percentage fee to your credit card bill under any circumstances.

If you live in one of these states and a merchant charges you a surcharge, the charge is illegal under state law. You can dispute it with your card issuer as a billing error or unauthorized charge. You can also report it to your state's attorney general or consumer protection office, though most focus on patterns of violations rather than single incidents.

The ban applies to all card types in these states — Visa, Mastercard, American Express, and Discover. A merchant cannot charge a surcharge on any of them. This is stricter than the Visa and Mastercard rules, which apply everywhere but allow American Express and Discover surcharges in other states.

How Visa and Mastercard rules override state law

Visa and Mastercard have their own merchant agreements that prohibit surcharges on their cards in all 50 states. This rule applies even in states where state law would otherwise allow surcharges. The card networks enforce this rule by fining merchants or terminating their ability to accept the card.

A merchant in a state where surcharges are legal under state law cannot legally add a surcharge to a Visa or Mastercard purchase because the card network agreement forbids it. The merchant can add a surcharge to an American Express or Discover card in that state, but not to Visa or Mastercard. This creates a situation where the same merchant charges different fees based on which card you use.

If you see a sign that says "2% surcharge for credit cards," the merchant is likely violating Visa and Mastercard rules if you pay with those cards. You can report this to Visa or Mastercard directly through their websites, though enforcement depends on whether the merchant is a repeat violator.

Disclosure requirements: when the merchant must tell you the fee

A merchant must disclose any fee — surcharge or convenience fee — before you complete the transaction. This means the fee must appear on the screen before you enter your card number, or be stated verbally before you authorize the charge. A fee that appears only after you have paid is not enforceable.

For in-person transactions, the disclosure can be a sign at the register or on the pump (for gas stations). For online transactions, the fee must appear on the checkout page before you click "confirm" or "pay." For phone transactions, the merchant must state the fee before you provide your card number.

If a merchant charges you a fee without disclosing it first, you can dispute it with your card issuer as a billing error. The burden is on the merchant to prove they disclosed the fee. If you have no record of being told about the fee before you paid, the card issuer will typically reverse the charge.

What to do if a merchant charges an illegal fee

If you are charged a fee that you believe is illegal or undisclosed, your first step is to contact your card issuer. Call the number on the back of your card and report the charge as a billing error or unauthorized charge. Explain that the fee was either not disclosed before you paid or violates the rules for your card type.

The card issuer will open a dispute and contact the merchant for proof of disclosure. If the merchant cannot provide evidence that they told you about the fee before you completed the transaction, the issuer will reverse the charge. This process typically takes 30 to 60 days.

You can also contact the merchant directly and ask them to remove the fee. Many merchants will do so rather than deal with a chargeback. If the merchant refuses and the fee is illegal under state law or card network rules, you can file a complaint with your state's attorney general or consumer protection office.

Gas stations and other industries with special rules

Gas stations have a specific exemption from Visa and Mastercard surcharge rules. They are allowed to charge a surcharge for credit card purchases at the pump, even in states where surcharges are otherwise banned. This exemption exists because gas stations historically operated on thin margins and needed the flexibility. The surcharge must still be disclosed — usually on a sign at the pump — before you swipe your card.

Utility companies, government agencies, and other businesses that collect payments by phone or online can charge a convenience fee for credit card payments. These are not surcharges because the merchant is charging for a specific service (processing a payment outside their normal channel) rather than simply because you chose a payment method. The fee must be disclosed before you provide your card number.

Restaurants, retail stores, and other merchants that accept credit cards as a normal part of business cannot charge a surcharge on Visa or Mastercard, and cannot charge one on any card in the 10 surcharge-ban states. They can charge a convenience fee only if they offer an alternative payment method that does not incur the fee — for example, a discount for paying in cash.

Frequently Asked Questions

Can a merchant charge a surcharge if they post a sign saying they do?

Not on Visa or Mastercard, even with a sign. The card network rules prohibit surcharges regardless of disclosure. On American Express or Discover, a sign satisfies the disclosure requirement in states where surcharges are legal, but the surcharge is still illegal in the 10 surcharge-ban states.

Is a "processing fee" the same as a convenience fee?

It depends on what the merchant means. If they call it a processing fee but charge it only when you use a credit card, it is a surcharge, not a convenience fee, and the same rules apply. A true convenience fee is charged for a specific service like paying by phone instead of in person.

Can I dispute a fee if I saw the sign but forgot about it?

Yes. The merchant's disclosure protects them from liability, but if the fee violates card network rules or state law, you can still dispute it. The legality of the fee does not depend on whether you noticed the sign.

What if the merchant says the fee is for a third-party payment processor?

The merchant is responsible for the fee regardless of who processes the payment. They cannot pass the surcharge rule violation to a third party. If the fee is illegal, you can dispute it with your card issuer, and the issuer will pursue the merchant.

Do debit cards have different surcharge rules than credit cards?

Debit cards are treated differently by some card networks. Visa and Mastercard allow surcharges on debit cards in some cases where they prohibit them on credit cards, though the rules vary. Check with your card issuer if you are unsure whether a surcharge on a debit card is legal.