States That Prohibit Merchants From Charging Credit Card Fees

Ten states have laws that ban merchants from charging you an extra fee when you pay with a credit card: California, Colorado, Connecticut, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Vermont. These states treat a credit card surcharge as an illegal practice, meaning a store cannot add a percentage or flat fee to your bill because you chose to pay with plastic instead of cash.

The rules vary slightly by state. Some states prohibit surcharges on credit cards but allow them on debit cards. Others ban surcharges on all card types. A few states have additional restrictions on what merchants can charge for other payment methods. The key point: if you live in one of these ten states, a merchant who adds a fee to your credit card purchase is breaking state law, and you have grounds to dispute the charge or report the business.

The remaining 40 states and Washington, D.C. do not have surcharge bans. In those places, merchants are legally allowed to charge you extra for using a credit card, though they must disclose the fee before you complete the transaction. This is why you might see a "credit card processing fee" or "convenience fee" at checkout in some states but not others.

Key Takeaways

  • California, Colorado, Connecticut, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Vermont prohibit credit card surcharges entirely.
  • In states without surcharge bans, merchants may charge a fee for credit card use if they disclose it before you pay.
  • Some states ban surcharges on credit cards but allow them on debit cards or other payment methods.
  • If you are charged a surcharge in a state that bans them, you can dispute the charge with your card issuer or report the merchant to your state's attorney general.

How Surcharge Bans Work in Each State

California bans surcharges on credit cards under Business and Professions Code Section 16200. The law applies to all credit card transactions and has been in place since 1971. Debit card surcharges are also prohibited in California.

Colorado prohibits credit card surcharges under Colorado Revised Statutes Section 12-6-122. The ban applies to credit cards only; debit cards and other payment methods are not covered by this law.

Connecticut bans surcharges under Connecticut General Statutes Section 42-133. Like Colorado, this applies to credit cards but not debit cards.

Florida prohibits credit card surcharges under Florida Statutes Section 501.0117. The law covers credit cards and debit cards used as credit (meaning the transaction runs through the credit network rather than the debit network).

Kansas bans surcharges under Kansas Statutes Annotated Section 16a-3-506. The prohibition covers credit cards only.

Maine prohibits surcharges under Maine Revised Statutes Title 11, Section 4752. Maine's law applies to credit cards and also restricts surcharges on other payment methods in certain contexts.

New York bans surcharges under New York General Business Law Section 518. The law covers credit cards and debit cards.

Oklahoma prohibits surcharges under Oklahoma Statutes Title 14, Section 3113. The ban applies to credit cards only.

Texas bans surcharges under Texas Business and Commerce Code Section 4.104. The law covers credit cards and debit cards.

Vermont prohibits surcharges under Vermont Statutes Annotated Title 6, Section 4831. The ban applies to credit cards only.

What Merchants Can and Cannot Do Under These Laws

In surcharge-ban states, a merchant cannot add a percentage fee, flat fee, or any other charge to your bill because you used a credit card. This applies whether you swipe, insert, or tap your card at the register, or whether you enter your card information online. The prohibition covers in-person purchases, phone orders, and online transactions.

What merchants can do is set different prices for different payment methods. For example, a gas station in California can legally charge $3.50 per gallon for cash and $3.75 per gallon for credit cards, as long as both prices are posted clearly before you pump. This is called a discount for cash, not a surcharge for credit, and it is legal even in surcharge-ban states. The difference is subtle but real: the merchant is offering a lower price for one method rather than charging extra for another.

Merchants also cannot disguise a surcharge as a "convenience fee," "processing fee," or "service charge" if the surcharge ban applies in your state. The name does not matter; if the fee exists because you chose to pay with a credit card, it violates the law.

What Happens in States Without Surcharge Bans

In the 40 states and Washington, D.C. that do not ban credit card surcharges, merchants are allowed to charge you a fee for using a credit card. The fee must be disclosed before you complete the transaction — meaning you have to see it and agree to it before your payment is processed. A merchant cannot surprise you with a fee after the fact.

The fee can be a percentage of your purchase (often 2% to 3%) or a flat amount per transaction. Some merchants charge different fees for different card types — for example, a higher fee for American Express than for Visa. As long as the fee is clearly stated at the point of sale, it is legal.

Online merchants in non-ban states must disclose the surcharge before you enter your payment information or confirm your order. If you see the fee and decide not to proceed, you should not be charged. If you complete the transaction, you have accepted the fee.

How to Dispute a Surcharge in a Ban State

If a merchant charged you a surcharge in one of the ten ban states, you have two main options. First, contact your credit card issuer and dispute the charge. Explain that the merchant charged a surcharge in a state where surcharges are illegal. Most card issuers will reverse the surcharge and may investigate the merchant. Provide the merchant's name, location, and the date of the transaction.

Second, report the merchant to your state's attorney general office. Most state AGs have a consumer protection division that investigates illegal surcharge practices. You can file a complaint online or by phone. Include the merchant's name, address, the date of the transaction, and the amount of the surcharge. If multiple consumers report the same merchant, the AG may take enforcement action.

You can also contact the merchant directly and ask them to refund the surcharge, citing your state's law. Provide the statute number (listed in the section above). Many merchants are simply unaware of the law and will refund the charge when informed.

Surcharges on Debit Cards and Other Payment Methods

Some states ban surcharges on credit cards but allow them on debit cards. This is the case in Colorado, Connecticut, Kansas, Oklahoma, and Vermont. In these states, a merchant can charge you a fee for using a debit card but not a credit card.

A few states also regulate surcharges on other payment methods. Maine, for example, restricts surcharges on checks and electronic funds transfers in certain situations. New York's law covers both credit and debit cards. Check your state's specific statute if you want to know whether surcharges on non-credit payment methods are allowed.

If you are charged a surcharge on a debit card in a state that bans debit card surcharges, the same dispute process applies: contact your card issuer or report the merchant to your state's attorney general.

Frequently Asked Questions

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

No. In the ten ban states, a surcharge is illegal regardless of whether the merchant posted a sign. The sign does not make an illegal practice legal. If you see a sign advertising a credit card surcharge in California, Florida, New York, or another ban state, the merchant is breaking the law.

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

In ban states, yes. A convenience fee, processing fee, or service charge that exists because you used a credit card is a surcharge by another name and is illegal. In non-ban states, merchants can charge these fees as long as they disclose them before you pay.

What if I paid with a debit card and was charged a surcharge in a state that bans them?

It depends on the state. California, Florida, New York, and Texas ban surcharges on debit cards. Colorado, Connecticut, Kansas, Oklahoma, and Vermont allow debit card surcharges. Check your state's law. If your state bans debit surcharges, dispute the charge with your card issuer.

Can I get a refund if I already paid a surcharge in a ban state?

Yes. Contact your credit card issuer and dispute the charge, or ask the merchant directly for a refund. Explain that the surcharge violates your state's law. Most merchants will refund the surcharge rather than face a complaint to the state attorney general.

Do surcharge bans apply to online purchases?

Yes. If you live in a surcharge-ban state, the ban applies to online transactions as well as in-person purchases. An online merchant cannot charge you a credit card surcharge even if they are located in a different state.