Merchants can charge a credit card fee in most U.S. states, but the rules depend on which card network you use and what state you're in
A credit card surcharge — a fee added to your bill when you pay with a credit card instead of cash or debit — is legal in most places. Visa, Mastercard, American Express, and Discover all permit merchants to add surcharges, though the amount and how it's disclosed are regulated. The catch: a handful of states and some cities have banned the practice entirely, and even where it's allowed, the merchant must follow specific rules about how much they can charge and how they tell you about it.
The federal government does not set a surcharge cap. Instead, card networks set their own limits, and state and local laws can be stricter. A merchant charging 3% is usually within the card network rules but may violate state law depending on where you live and shop.
Key Takeaways
- Visa, Mastercard, American Express, and Discover allow surcharges, but each network caps the amount — typically at or near the merchant's actual processing cost.
- California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas ban credit card surcharges entirely, and some cities within other states do as well.
- Even where surcharges are legal, the merchant must disclose the fee before you complete the purchase, not after.
- A 3% fee is often within card network rules but may exceed state caps or violate state bans, so the legality depends on your location and the card you're using.
What each card network allows
Visa permits surcharges up to the merchant's actual cost to accept the card, which Visa defines as the interchange fee plus assessment fees. In practice, this often means 2% to 3% depending on the card type and merchant category. Mastercard has the same rule. American Express and Discover also allow surcharges but cap them at the merchant's actual processing cost.
The key word is actual cost. A merchant cannot charge 3% as a flat surcharge if their processing cost is 1.5%. The surcharge must reflect what the merchant actually pays the payment processor. This is where many merchants run into trouble — they charge a round number like 3% without calculating their true cost, which can violate the card network's rules even in states where surcharges are legal.
None of the card networks allow a surcharge on debit cards. If a merchant charges you a fee for using a debit card, that violates the network rules and federal law (the Durbin Amendment). Credit cards are the only payment method where surcharges are permitted under card network rules.
States and cities that ban surcharges
Ten states prohibit credit card surcharges outright: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. If you live in or are shopping in one of these states, a merchant cannot legally charge you a surcharge for using a credit card, regardless of the card network rules.
Some cities within other states have also banned surcharges. For example, Chicago and Cook County, Illinois prohibit them. Puerto Rico also bans surcharges. If you're unsure whether your location has a local ban, check your city or county government website or contact your state's attorney general's office.
Even in states where surcharges are legal, a merchant must still follow the card network rules. So a merchant in a state with no surcharge ban still cannot charge more than their actual processing cost, and they must disclose the fee before you pay.
How the fee must be disclosed
Whether you're in a state that allows surcharges or not, the merchant must tell you about the fee before you complete the transaction. This means the surcharge must appear on the receipt or invoice before you authorize the payment, not after you've already swiped or tapped your card.
The disclosure must be clear and conspicuous. A small note at the bottom of a receipt or a barely visible sign at the register does not meet this standard. The merchant should state the surcharge amount or percentage at the point of sale — on the menu, price tag, or checkout screen — so you know the total cost before you commit to paying.
If a merchant charges you a surcharge without disclosing it first, or charges you in a state where surcharges are banned, you can dispute the charge with your credit card company. The card issuer will investigate and may reverse the charge.
What to do if you're charged an undisclosed or illegal surcharge
Contact your credit card issuer and report the charge as a dispute. Explain that the merchant either did not disclose the surcharge before you paid or charged you in violation of state law. Provide the merchant's name, the date of the transaction, and the amount of the surcharge if it was itemized on your receipt.
The card issuer will contact the merchant and ask for proof that the surcharge was disclosed and legal. If the merchant cannot provide that proof, the issuer will typically reverse the charge and credit your account. This process usually takes 30 to 60 days.
If the merchant is repeatedly charging illegal surcharges, you can also file a complaint with your state's attorney general or consumer protection agency. Many states have online complaint forms on their websites. The state may investigate and take action against the merchant.
The difference between surcharges and convenience fees
A surcharge is a fee for paying with a credit card instead of another method. A convenience fee is a fee for using a particular payment channel, such as paying online instead of in person, or paying by phone instead of in person. Convenience fees are treated differently under the law.
Convenience fees are generally legal even in states that ban surcharges, because they are not tied to the payment method itself but to the channel or service. For example, a utility company can charge you a fee for paying online, even in California, because the fee is for the online service, not for using a credit card. However, the fee must still be disclosed before you pay, and it must be reasonable.
Some merchants blur the line between surcharges and convenience fees to get around state bans. If you see a fee labeled as a "convenience fee" but it only applies when you use a credit card, it may actually be a surcharge in disguise. If you live in a state that bans surcharges and you believe a merchant is using this tactic, report it to your state's attorney general.
Frequently Asked Questions
Can a restaurant charge me 3% for using a credit card?
It depends on where you are. If you live in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, or Texas, no — surcharges are banned. In other states, the restaurant can charge up to its actual processing cost, which is often 2% to 3%, but only if it disclosed the fee before you ordered and the fee does not exceed the card network cap.
What if a gas station charges a surcharge but doesn't show it until I pump?
That is an undisclosed surcharge, which violates card network rules and may violate state law. Dispute the charge with your credit card issuer and explain that the fee was not disclosed before you authorized the transaction. The issuer should reverse it.
Is a 3% surcharge the same as a 3% tip?
No. A tip is voluntary and goes to the employee or business as income. A surcharge is a mandatory fee for using a payment method and is supposed to cover the merchant's processing cost. Tipping and surcharges are separate — a merchant cannot combine them or use a tip line to hide a surcharge.
Can a merchant charge a surcharge on American Express but not Visa?
Yes, if the merchant's processing cost is different for each card. American Express typically costs more to process than Visa, so a merchant might charge a higher surcharge for Amex. However, the surcharge must still not exceed the actual cost and must be disclosed before you pay. The merchant must also follow any state or local bans that apply.
If I dispute a surcharge, will the merchant know it was me?
The merchant will see that a chargeback was filed, but your credit card issuer does not share your personal information with the merchant during the dispute process. The issuer will ask the merchant for documentation of the disclosure and legality of the fee. If the merchant cannot provide it, the charge is reversed.