Credit card surcharges and dual pricing have become popular strategies for reducing payment processing costs, but are they legal in your state? While dual pricing is legal nationwide, credit card surcharges are subject to state-level laws and restrictions. In this guide, we’ll break down where each option is permitted, what compliance looks like, and how SeeNoFees helps merchants stay legal while saving money.
Dual Pricing: Legal in All 50 States
Dual pricing, often referred to as a cash discount program, involves offering two distinct prices: a lower price for cash payments and a higher price for all card transactions. This method is legal in all 50 U.S. states when implemented correctly.
Key Compliance Requirements for Dual Pricing:
- Transparent Signage: Businesses must clearly display both cash and credit card prices at the point of sale.
- Receipt Clarity: Receipts should reflect the payment method and corresponding price.
- Consistent Application: The pricing structure should be uniformly applied to all customers.
It’s essential to note that while dual pricing is legal nationwide, merchants must adhere to card network rules and state-specific regulations to ensure full compliance.
Credit Card Surcharges: Legal in Most States—But Not All
Surcharging is when a fee is added to credit card transactions to recover processing costs. Federally, this is permitted, but some states have restrictions or outright bans.
States That Prohibit Credit Card Surcharging:
- Connecticut: Prohibits surcharges on credit card transactions.
- Maine: Bans surcharges but allows cash discounts.
- Massachusetts: Disallows credit card surcharges.
- California: Effective July 1, 2024, surcharges are prohibited under Senate Bill 478, which mandates that all fees be included in the advertised price.
States with Specific Restrictions:
- Colorado: Allows surcharges up to 2% or the merchant’s actual cost of processing, whichever is lower.
- New York: Permits surcharges but requires that the total price, including the surcharge, be disclosed upfront.
- Texas: State law prohibits surcharges; however, it’s currently unenforceable due to a 2018 federal court ruling.
- Kansas: Previously banned surcharges, but federal courts have ruled the prohibition unconstitutional.
- Minnesota: Effective January 1, 2025, mandates that any mandatory fees, including surcharges, be included in the advertised price unless the fee can be reasonably avoided by the consumer.
- Florida: While there is a law technically prohibiting credit card surcharges, it’s not enforceable due to a 2015 federal court ruling.
Given the evolving nature of these laws, it’s crucial for merchants to consult with legal counsel or refer to official state resources to ensure compliance.
Federal Guidelines on Surcharging
Under federal law, merchants are allowed to impose a surcharge on credit card transactions, provided they adhere to certain conditions:
- Surcharge Cap: The surcharge must not exceed 4% of the transaction amount or the merchant’s actual cost of processing the credit card payment, whichever is lower.
- Disclosure Requirements: Merchants must clearly disclose the surcharge to customers at the point of entry and point of sale. Additionally, the surcharge must be itemized on the receipt.
- Card Network Notification: Merchants are required to notify the card networks (e.g., Visa, Mastercard) and their acquirer at least 30 days before implementing a surcharge program.
It’s important to note that surcharges are prohibited on debit card transactions, even if the debit card is processed as a credit transaction. However, with dual pricing, the card price is applied to all cards including debit. Please see the state by state list below for laws pertaining to credit card surcharges and dual pricing.
How SeeNoFees Assists Merchants
At SeeNoFees, we specialize in helping businesses navigate the complexities of credit card processing fees while ensuring full compliance with federal and state regulations. Our approach includes:
- Comprehensive Analysis: We begin by reviewing your most recent merchant processing statements to identify potential savings.
- Customized Solutions: Based on our analysis, we develop tailored strategies that may include dual pricing or compliant surcharging, depending on your state’s laws.
- Regulatory Compliance: Our team stays abreast of legal developments to ensure that your payment processing practices remain compliant.
- Transparent Communication: We provide clear guidance on disclosure requirements and assist in implementing necessary signage and receipt modifications.
By partnering with SeeNoFees, you can confidently manage your credit card processing fees while adhering to all applicable laws and regulations.
State-by-State Laws & Resources for Credit Card Surcharges & Dual Pricing Regulations
Alabama
- Surcharging: Legal under federal guidelines.
- Dual Pricing: Legal.
- Resources:
Alaska
- Surcharging: Legal; no state-specific restrictions.
- Dual Pricing: Legal.
- Resources:
Arizona
- Surcharging: Legal; state agencies also apply surcharges.
- Dual Pricing: Legal.
- Resources:
Arkansas
- Surcharging: Legal with posted notice.
- Dual Pricing: Legal.
- Resources:
California
- Surcharging: Illegal as of July 1, 2024, under Senate Bill 478.
- Dual Pricing: Legal.
- Resources:
Colorado
- Surcharging: Legal up to 2% or actual processing cost, whichever is lower.
- Dual Pricing: Legal.
- Resources:
Connecticut
- Surcharging: Illegal.
- Dual Pricing: Legal with clear disclosure.
- Resources:
Delaware
- Surcharging: Legal; no state-specific laws.
- Dual Pricing: Legal.
- Resources:
Florida
- Surcharging: State law prohibits it, but federal courts have ruled the prohibition unconstitutional.
- Dual Pricing: Legal.
- Resources:
Georgia
- Surcharging: Legal if alternative payment methods are offered.
- Dual Pricing: Legal.
- Resources:
Hawaii
- Surcharging: Prohibited when no alternative payment methods are offered.
- Dual Pricing: Legal.
- Resources:
Idaho
- Surcharging: Legal; no state-specific restrictions.
- Dual Pricing: Legal.
- Resources:
Illinois
- Surcharging: Legal with disclosure requirements.
- Dual Pricing: Legal.
- Resources:
Indiana
- Surcharging: Legal; potential future restrictions for government services.
- Dual Pricing: Legal.
- Resources:
Iowa
- Surcharging: Legal.
- Dual Pricing: Legal.
- Resources:
Kansas
- Surcharging: Legal as of January 1, 2025, with notice requirements.
- Dual Pricing: Legal.
- Resources:
Kentucky
- Surcharging: Legal with disclosure requirements.
- Dual Pricing: Legal.
- Resources:
Louisiana
- Surcharging: Legal; state agencies also apply surcharges.
- Dual Pricing: Legal.
- Resources:
Maine
- Surcharging: Illegal.
- Dual Pricing: Legal with clear disclosure.
- Resources:
Maryland
- Surcharging: Legal up to 4%.
- Dual Pricing: Legal.
- Resources:
Massachusetts
- Surcharging: Illegal.
- Dual Pricing: Legal with clear disclosure.
- Resources:
Michigan
- Surcharging: Legal with signage requirements.
- Dual Pricing: Legal.
- Resources:
Minnesota
- Surcharging: Legal with restrictions effective January 1, 2025.
- Dual Pricing: Legal with transparency requirements.
- Resources:
Mississippi
- Surcharging: Legal; specific rules for state agencies.
- Dual Pricing: Legal.
- Resources:
Missouri
- Surcharging: Legal.
- Dual Pricing: Legal.
- Resources:
Montana
- Surcharging: Legal up to 3%.
- Dual Pricing: Legal.
- Resources:
Nebraska
- Surcharging: Legal; no state-specific restrictions.
- Dual Pricing: Legal.
- Resources:
Nevada
- Surcharging: Legal; must not exceed processing costs.
- Dual Pricing: Legal.
- Resources:
New Hampshire
- Surcharging: Legal.
- Dual Pricing: Legal.
- Resources:
New Jersey
- Surcharging: Legal; must not exceed processing costs.
- Dual Pricing: Legal.
- Resources:
New Mexico
- Surcharging: Legal if a cash discount is offered and disclosed.
- Dual Pricing: Legal.
- Resources:
New York
- Surcharging: Legal with strict disclosure requirements.
- Dual Pricing: Legal; highest price must be disclosed.
- Resources:
North Carolina
- Surcharging: Legal.
- Dual Pricing: Legal.
- Resources:
North Dakota
- Surcharging: Legal.
- Dual Pricing: Legal.
- Resources:
Ohio
- Surcharging: Legal; no state-specific restrictions beyond federal regulations.
- Dual Pricing: Legal.
- Resources:
Oklahoma
- Surcharging: Technically prohibited by state law, but federal courts have deemed such laws unenforceable, effectively making surcharging legal.
- Dual Pricing: Legal.
- Resources:
Oregon
- Surcharging: Legal; must not exceed the cost to process the transaction or 4%, whichever is lower.
- Dual Pricing: Legal.
- Resources:
Pennsylvania
- Surcharging: Legal.
- Dual Pricing: Legal.
- Resources:
Rhode Island
- Surcharging: Legal with regulations; must display total price for credit card payments and provide clear notices at the point of sale and online.
- Dual Pricing: Legal.
- Resources:
South Carolina
- Surcharging: Legal; surcharges must not exceed 4% of the actual processing cost, whichever is lower.
- Dual Pricing: Legal.
- Resources:
South Dakota
- Surcharging: Legal; surcharges must not exceed the merchant’s cost to accept credit cards, up to 4%.
- Dual Pricing: Legal.
- Resources:
Tennessee
- Surcharging: Legal; additional fees must be clearly communicated in advance of the transaction.
- Dual Pricing: Legal.
- Resources:
Texas
- Surcharging: Technically prohibited by state law, but a 2018 federal court ruling deemed such laws unenforceable, effectively making surcharging legal.
- Dual Pricing: Legal.
- Resources:
Utah
- Surcharging: Legal; businesses must inform customers of any additional fees prior to the transaction.
- Dual Pricing: Legal.
- Resources:
Vermont
- Surcharging: Legal.
- Dual Pricing: Legal.
- Resources:
Virginia
- Surcharging: Legal.
- Dual Pricing: Legal.
- Resources:
Washington
- Surcharging: Legal.
- Dual Pricing: Legal.
- Resources:
West Virginia
- Surcharging: Legal; state agencies also impose surcharges on credit card transactions.
- Dual Pricing: Legal.
- Resources:
Wisconsin
- Surcharging: Legal.
- Dual Pricing: Legal.
- Resources:
Wyoming
- Surcharging: Legal.
- Dual Pricing: Legal.
- Resources:
Note: While dual pricing is generally legal across all states, it’s crucial for businesses to ensure compliance with both state laws and card network regulations. Surcharging laws can vary significantly by state, and some states have specific requirements or prohibitions. Always consult with legal counsel or your merchant services provider to ensure full compliance.
If you need further assistance or have questions about implementing compliant surcharging or dual pricing strategies, feel free to contact us!
Disclaimer: This information is provided for general informational purposes only and does not constitute legal advice. For specific legal guidance, please consult with a qualified attorney.
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