Credit Card Surcharge Laws by State: The Complete 2026 Guide
Credit card processing fees cost merchants billions of dollars every year. If you accept credit cards — and of course you do — you’re paying 2% to 3.5% on every transaction. For many Shopify merchants, that’s one of the biggest line items on the P&L.
The good news? In most US states, you can legally pass that cost on to customers as a credit card surcharge. The bad news? The rules vary by state, and getting it wrong can mean fines or legal trouble.
This guide breaks down credit card surcharge laws for every US state as of 2026, plus the key compliance rules you need to follow.
🏔️ Key Takeaways
- Most US states allow credit card surcharges — surcharging has been legal nationwide since a 2013 class-action settlement with Visa and Mastercard
- Connecticut, Massachusetts, and Puerto Rico prohibit or heavily restrict surcharges
- Maine has specific restrictions that limit surcharging practices
- The surcharge cap is 3% of the transaction (Visa/Mastercard rules) — previously 4%, reduced in recent years
- Debit cards cannot be surcharged — this is a federal rule under the Dodd-Frank Act
- Disclosure is required everywhere — signage, verbal notice, and receipt line items
- Surcharges ≠ convenience fees — they’re legally different things with different rules
- For Shopify POS surcharging, use Chargly. For online surcharges, use Canteen.
Surcharge vs. Convenience Fee: What’s the Difference?
Before we dive into state laws, let’s clear up a common point of confusion. These terms are not interchangeable:
| Surcharge | Convenience Fee | |
|---|---|---|
| What it is | A fee added when a customer pays with a credit card | A fee for using an alternative or non-standard payment channel |
| When it applies | At any point of sale when credit card is used | Only when an alternative payment channel is offered (e.g., paying online instead of by mail) |
| Example | 2.5% added to a credit card purchase in-store | $3.00 fee to pay a utility bill online instead of by check |
| Debit cards | Cannot be surcharged | Can have a convenience fee (in some cases) |
| Card brand rules | Capped at 3% | Must be a flat fee, not a percentage |
Getting this distinction right matters. Some merchants try to label a surcharge as a “convenience fee” to sidestep state laws — that’s a compliance risk, not a loophole.
Federal Rules That Apply Everywhere
Before looking at individual states, here are the baseline federal and card brand rules that apply across the US:
Visa/Mastercard Rules
- Maximum surcharge: 3% of the transaction amount (or the merchant’s actual cost of acceptance, whichever is lower)
- Credit cards only — surcharges on debit cards are prohibited
- Brand-level and product-level surcharges — you can surcharge all Visa transactions or specific card types (e.g., only premium/rewards cards), but the rules around this are specific
- Notification required — merchants must notify Visa and Mastercard at least 30 days before implementing surcharges
- Disclosure — surcharge must appear as a separate line item on the receipt
Debit Card Rules (Federal)
Under the Dodd-Frank Act and Regulation II, you cannot surcharge debit card transactions — including debit cards run as credit (signature debit). This is a federal rule that overrides any state law.
Prepaid Cards
Prepaid cards are generally treated like debit cards and should not be surcharged.
Credit Card Surcharge Laws by State (2026)
Here’s the full breakdown. States fall into three categories: prohibited, restricted, and allowed with disclosure.
States That Prohibit or Restrict Surcharges
| State/Territory | Status | Details |
|---|---|---|
| Connecticut | 🚫 Prohibited | Connecticut law (Conn. Gen. Stat. § 42-133ff) prohibits merchants from imposing surcharges on credit card transactions. Cash discounts are allowed as an alternative. |
| Massachusetts | 🚫 Prohibited | Massachusetts law (Mass. Gen. Laws ch. 140D, § 28A) bans credit card surcharges. Like Connecticut, cash discounts are permitted. |
| Puerto Rico | 🚫 Prohibited | Puerto Rico prohibits credit card surcharges under its consumer protection laws. |
| Maine | ⚠️ Restricted | Maine allows surcharges but has specific requirements around disclosure and imposes restrictions that go beyond the standard Visa/Mastercard rules. Merchants must comply with both state and card brand requirements. Review Maine’s regulations carefully before implementing. |
States That Allow Surcharges (With Disclosure Requirements)
All other US states allow credit card surcharges, provided you comply with disclosure requirements and card brand rules. That includes:
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the District of Columbia.
Important notes on specific states:
- California: Surcharges were prohibited until 2014. Now allowed following court decisions, but disclosure requirements are strict.
- New York: Surcharges were prohibited until 2017 when the Supreme Court struck down the ban. Now allowed with disclosure.
- Colorado: Allows surcharges with the standard requirements. Note that Colorado also has a separate retail delivery fee — a different compliance topic entirely.
- Texas: Allows surcharges. The old anti-surcharge law was struck down in court.
- Florida: Allows surcharges following a 2015 court decision. The previous ban was ruled unconstitutional.
Disclosure Requirements: How to Surcharge Compliantly
If your state allows surcharging, you still need to follow these rules:
1. Point-of-Entry Signage
Post a clear sign at your store entrance informing customers that a surcharge applies to credit card transactions. This should be visible before the customer begins shopping.
2. Point-of-Sale Signage
Post signage at the register or checkout area. The sign should state that a surcharge will be applied and the amount (percentage).
3. Verbal Disclosure
Your staff should inform customers of the surcharge before processing the transaction. A simple script:
“Just so you know, we apply a small processing fee to credit card payments. Would you like to proceed with credit, or would you prefer debit or cash?“
4. Receipt Line Item
The surcharge must appear as a separate line item on the customer’s receipt. It cannot be buried in the product price or lumped into a generic fee.
5. Card Brand Notification
You must notify Visa and Mastercard at least 30 days before you start surcharging. Your payment processor can often handle this for you.
The Cash Discount Alternative
If you’re in a state that prohibits surcharges (Connecticut, Massachusetts, Puerto Rico), you have an alternative: cash discounts.
Instead of charging more for credit cards, you offer a discount for cash or debit payments. The practical effect is similar, but legally it’s structured differently:
- Surcharge: Listed price is $100. Credit card price is $103.
- Cash discount: Listed price is $103. Cash/debit price is $100.
Cash discounts are legal in all 50 states. The key is that your posted/advertised prices must reflect the credit card price (the higher amount), and the discount is applied when the customer pays with cash or debit.
Common Mistakes to Avoid
❌ Surcharging Debit Cards
This violates federal law. Period. Your POS system needs to distinguish between credit and debit transactions. Chargly is designed to handle this — it only applies surcharges to eligible credit card transactions.
❌ Exceeding the Cap
Keep your surcharge at or below 3% (or your actual processing cost, whichever is lower). Exceeding this violates card brand rules and can result in fines or losing your ability to accept cards.
❌ Skipping Disclosure
No signage? No verbal notice? No receipt line item? That’s non-compliant. Disclosure isn’t optional — it’s required by both state law and card brand rules in every state that allows surcharging.
❌ Surcharging in Prohibited States
If you sell in Connecticut, Massachusetts, or Puerto Rico — online or in person — you cannot apply a surcharge to those transactions. Your system needs to handle this, especially for online sales where customers may be in any state.
❌ Calling a Surcharge a “Convenience Fee”
If you’re adding a fee because the customer is paying with a credit card, it’s a surcharge — not a convenience fee. Mislabeling it doesn’t change the legal classification.
How to Set Up Compliant Surcharging on Shopify
Shopify doesn’t have built-in surcharging, but Sasquatch Apps has you covered for both channels:
For Shopify POS: Chargly
Chargly was purpose-built for POS surcharging. Your staff taps the Chargly tile at checkout, selects the appropriate fee, and it’s added as a visible line item. Quick, transparent, compliant.
Install Chargly from the Shopify App Store →
For Online Store: Canteen
Canteen handles surcharges on your Shopify online store. Set up a fee rule for credit card transactions and it applies automatically at checkout — with full control over the amount, display name, and tax treatment.
Install Canteen from the Shopify App Store →
What About Both Channels?
If you sell both in-store and online, use both apps. Chargly handles the POS side, Canteen handles the online side. Same surcharge policy, consistent across channels.
How Much Can You Recover?
Here’s what compliant surcharging looks like in practice:
| Monthly Credit Card Sales | Surcharge Rate | Monthly Recovery | Annual Recovery |
|---|---|---|---|
| $10,000 | 2.5% | $250 | $3,000 |
| $25,000 | 2.5% | $625 | $7,500 |
| $50,000 | 2.5% | $1,250 | $15,000 |
| $100,000 | 2.5% | $2,500 | $30,000 |
| $250,000 | 2.5% | $6,250 | $75,000 |
For most merchants, surcharge recovery covers the cost of credit card processing entirely — turning a major expense into a near-zero line item.
Frequently Asked Questions
Can I surcharge American Express differently?
Yes. Amex has its own surcharging rules that may differ from Visa/Mastercard. Many merchants set a higher surcharge for Amex to reflect higher processing costs. Check Amex’s current merchant guidelines.
Do I need to surcharge all credit cards or can I choose?
You can apply surcharges at the brand level (all Visa, all Mastercard) or at the product level (only premium/rewards cards). However, the rules around product-level surcharging are specific — consult the card brand guidelines.
What about online orders from prohibited states?
If a customer’s billing or shipping address is in a state that prohibits surcharges, you should not apply a surcharge to that transaction. Your surcharging solution needs to account for this.
Can I surcharge credit cards in Canada?
Yes, as of October 2022 merchants in Canada can surcharge credit cards up to 2.4%. Canadian rules differ from US rules — contact us if you need guidance.
Is there a minimum transaction amount for surcharges?
Card brand rules prohibit setting minimum transaction amounts for credit card acceptance (this is separate from surcharging). You can surcharge any credit card transaction regardless of amount, provided you follow all other rules.
The Bottom Line
Credit card surcharging is legal in most US states and, when done right, it’s a powerful way to protect your margins. The key is compliance: know your state’s rules, follow disclosure requirements, never surcharge debit cards, and keep your surcharge at or below 3%.
For Shopify merchants, Chargly (POS) and Canteen (online) make compliant surcharging simple. Set it up once, and every credit card transaction starts working in your favor instead of against you.
Ready to start recovering processing fees?
Last updated: March 2026. Surcharging laws change — always verify current regulations for your state. This guide is for informational purposes and is not legal advice. Consult a legal professional for compliance questions specific to your business. Contact us if you need help setting up surcharging on Shopify.
