Credit Card Surcharges

Why It Can Cost More to Use Credit

Customer uses a credit card to pay for a purchase in a retail store

Betsie Van Der Meer / Taxi / Getty Images

If you like paying with plastic, you’ve probably noticed that some merchants charge an extra fee for credit card purchases. What are these credit card surcharges? Why do some merchants charge them while others don't?

Even though it is annoying to have an extra fee tacked onto your purchase, you will likely continue to encounter these surcharges. Here's what you need to know about these fees.

Are Credit Card Surcharges Legal?

The short answer is yes, it is legal for a merchant to impose a surcharge. A U.S. Supreme Court ruling in 2017 protected surcharges as a form of free speech from merchants. Retailers can also require a minimum purchase amount when you use credit cards. Before the Supreme Court ruling, merchants won the right to add surcharges or “checkout” fees in a 2013 class action lawsuit against card issuers and banks.

Part of the reason why surcharges have been allowed is that businesses themselves are charged when they accept credit cards. These fees on businesses generally range from 1% to 3% of every transaction. (Fees for debit cards may be lower than credit card fees.) Businesses may also pay per-transaction costs. In some industries, such as those that rely on small purchases, it’s hard to make a profit when customers pay with a credit card.

However, there are limitations to how merchants impose these fees. If merchants decide to use credit card surcharges, they must:

  • Clearly disclose the fact that there is a surcharge before the transaction
  • Display the credit card surcharge on the receipt.
  • Keep surcharges below 4% of the transaction, or the amount of the fees the merchant pays to the credit card companies, whichever is less.


Surcharges are only allowed for credit card purchases—not debit card transactions. Even if you sign for the debit transaction (which means it could technically be processed as a "credit" transaction), it still shouldn't come with a surcharge as long as you used a debit card.

Minimum Purchase Requirements

The financial crisis-era Dodd-Frank Wall Street Reform and Consumer Protection Act allowed retailers to set minimum purchase requirements for credit cards. These minimums can't be more than $10, and the minimum can't be set higher than what other merchants in the same card network use.

In the past, retailers weren’t allowed to set minimums or add surcharges. But some merchants were “unofficially” setting minimum purchase amounts. Those practices were not necessarily illegal at the time, but they were a violation of the merchant’s agreement with their payment-processing services.

While it's entirely legal for merchants to impose credit card surcharges, many are slow to adopt them. That could be because:

  • Some merchants, like many consumers, may not know the legality of surcharges.
  • Merchants are hesitant to annoy customers or create the perception that they’re nickel-and-diming customers.
  • Surcharging in some industries might be more complicated than it's worth. For example, when accepting payments from clients who use health insurance, a surcharge could complicate the billing process.

States on Credit Card Surcharges

While it’s legal under federal law to add a surcharge to credit card transactions, some states prohibit the practice. Some of these states had addressed this issue even before the 2013 law addressed it on a national level.

As of Sept. 14, 2020, 10 states and Puerto Rico have laws prohibiting merchants from charging these fees. These states are California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. Minnesota prohibits merchants from imposing surcharges on credit cards they themselves issue to customers (for example, Target couldn't impose a surcharge on RedCard transactions).

What Happens When a Merchant Breaks the Rules?

Merchants regularly break the rules. Regulations are confusing for everybody, and some merchants innocently break the rules because they don't understand them. Others intentionally choose not to follow them.


If a small business or mom-and-pop shop charges unauthorized fees, they may simply be unaware of the law. You may consider telling them that you think they may be breaking the rules. Mom-and-pop shops may be less likely to have malicious intentions, and it's in their best interest to avoid problems with credit card companies and regulators.

Large companies should be well aware of the rules, and they likely receive ongoing guidance from legal and corporate teams. Any business with a loyal following can notify customers that they prefer not to take credit cards, and the business might even be able to offer discounts for cash purchases (though it may depend on state law).

If a business is blatantly breaking the rules and you want to take meaningful action, you can report the business to credit card companies. Those payment networks have signed agreements with merchants that prohibit such activity. Report violations by calling your card issuer (using the number on the back of your card) or submit a complaint online.

Depending on the state laws in your area, you may also be able to report the merchant to your state’s attorney general.

Key Takeaways

  • Merchants are allowed to impose surcharges on credit card transactions, but there are limits to these charges.
  • It costs a retailer to accept a credit card transaction, so if you want to help out a retailer, consider using another form of payment like cash.
  • While surcharges are federally legal, some states have laws that prohibit them.

Frequently Asked Questions (FAQs)

How do I know if I am being charged a credit card surcharge?

Charges should be detailed to you while checking out. If you aren't clear on whether there's a surcharge, ask for an itemized receipt, or simply ask about the surcharge. Surcharges are legal, but businesses can't hide them from you.

How much does Visa charge merchants?

Visa charges a combination of flat fees and percentages of sales that vary by industry and merchant. Percentages range from 0.05% to more than 2%, and the flat fees are typically less than $0.25. Check Visa's full guide to fees for more on how these fees vary by industry.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Visa. "Surcharging Credit Cards–Q&A for Merchants."

  2. Mastercard. "U.S. Merchant Class Settlement MasterCard Frequently Asked Questions."

  3. Visa. "Merchant Surcharge Q and A."

  4. Federal Trade Commission. "New Rules on Electronic Payments Lower Costs for Retailers."

  5. National Conference of State Legislatures. "Credit or Debit Card Surcharges Statutes."

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