What Credit Card Surcharges Are and When You'll Pay Them
A surcharge is an extra fee a business adds to your bill when you pay with a credit card
A surcharge is a charge the merchant adds on top of the purchase price specifically because you chose to pay with a credit card. It is separate from sales tax. If you buy something for $100 and the store adds a 3% surcharge, you pay $103 plus tax — the surcharge itself is not taxed, but it is part of what you owe before tax is calculated.
The surcharge exists because the business pays a fee to the credit card company every time you swipe or tap your card. That fee is usually 2% to 3% of the transaction. Some businesses pass that cost to you instead of absorbing it themselves. Others do not allow surcharges at all and build the cost into their regular prices for everyone.
Surcharges are different from convenience fees. A convenience fee is what you pay for using a payment method that costs the business extra to process — like paying a utility bill by phone or credit card instead of by check. A surcharge is specifically tied to using a credit card, not to the convenience of the payment channel.
Key Takeaways
- Surcharges are legal in most states but banned in a few, and the rules vary by card type and business type.
- You will most often see surcharges at gas stations, restaurants, and small retailers, though they are becoming more common across all types of businesses.
- Surcharges must be disclosed before you complete the purchase, either on a sign, on the register, or on the receipt.
- American Express, Discover, and some Visa and Mastercard agreements prohibit surcharges even in states where they are otherwise legal.
Where surcharges are legal and where they are not
Surcharges are legal in most of the United States, but a handful of states ban them outright. Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas prohibit credit card surcharges. If you live in one of these states, a business cannot add a surcharge to your credit card purchase, even if the business is a small retailer with high processing costs.
Even in states where surcharges are legal, card networks have their own rules. American Express and Discover do not allow their merchants to surcharge at all. Visa and Mastercard permit surcharges in most cases, but the rules are stricter for certain card types — for example, some Visa and Mastercard agreements prohibit surcharges on debit cards or on certain premium credit cards.
The business is responsible for knowing the rules in its state and for following its card network agreements. If a business violates these rules, the card network can fine the merchant or revoke their ability to accept that card. You are not breaking any rule by paying with a card in a state where surcharges are banned — the business is.
When you will encounter a surcharge
Surcharges are most common at gas stations, restaurants, and small independent retailers. You might see them at a local coffee shop, a family-owned restaurant, a gas pump, or a small grocery store. They are less common at large chain retailers and online merchants, partly because those businesses have the scale to absorb processing fees and partly because their card network agreements often prohibit surcharges.
Surcharges have become more visible in recent years as small businesses have faced rising processing costs. During the pandemic, many businesses that had never used surcharges began adding them. Some have kept them even as their costs stabilized. You may also see surcharges at businesses that operate on very thin margins — a small restaurant or a gas station that competes on price and cannot afford to absorb the card processing fee.
The surcharge amount varies. Gas stations often charge 10 cents per gallon or a flat 35 cents per transaction. Restaurants might add 2% to 4% to your bill. A small retailer might add a flat $1 or a percentage of the total. There is no legal cap on how much a business can surcharge in most states — the only requirement is that the surcharge be disclosed before you pay.
How to spot a surcharge before you pay
Businesses must tell you about a surcharge before you complete the transaction. This disclosure usually appears in one of three places: on a sign at the register, on the menu or price list, or on the payment terminal screen before you enter your card information.
At a gas pump, the surcharge is often shown on a sticker on the pump itself or on a sign near the pumps. At a restaurant, it might be printed on the menu or on a separate notice on the table. At a small retail counter, you might see it on a sign behind the register or on the terminal screen after you say you want to pay with a card.
If you do not see a surcharge disclosed before you pay, ask the cashier or look at your receipt after the transaction. If a surcharge appears on your receipt that was not disclosed beforehand, you can dispute it with your credit card company. The card network may side with you and reverse the charge, especially if the business violated state law or its card network agreement.
Surcharges versus other fees you might see
A surcharge is not the same as a service charge or a tip. A service charge is a mandatory fee the business adds for a service — like a delivery fee or a service charge for a large party at a restaurant. A tip is optional and goes to the employee, while a surcharge goes to the business to cover processing costs. Some businesses add both a service charge and a surcharge, so your bill might have multiple line items.
A convenience fee is also different. If you pay a utility bill by credit card over the phone, the utility company might charge you a convenience fee because processing a credit card payment costs them more than processing a check or automatic bank transfer. That fee is for the convenience of the payment method, not specifically because you used a credit card — though in practice, convenience fees are almost always charged only when you use a credit card.
Cash discounts are the opposite of surcharges. A business might offer you a discount if you pay in cash instead of with a card. This is legal in all states and is not considered a surcharge. The business is rewarding you for paying in a way that costs them less, rather than penalizing you for paying in a way that costs them more.
What to do if you think a surcharge is unfair or illegal
If you believe a surcharge violates your state's law or the card network's rules, you have a few options. First, you can contact your credit card company and dispute the charge. Explain that the surcharge was not disclosed, or that it violates your state's law, or that it violates the card network's merchant agreement. The card company will investigate and may reverse the charge.
You can also contact the business directly and ask them to remove the surcharge. Explain that you believe it is illegal in your state or that it was not properly disclosed. Many small businesses are not aware of the rules and will remove the charge if you point out the violation.
If the business refuses and you believe the surcharge is illegal, you can file a complaint with your state's attorney general or consumer protection office. You can also report the violation to the card network — Visa, Mastercard, American Express, or Discover — through their merchant complaint process. The card network may fine the merchant or revoke their ability to accept that card.
How surcharges affect your credit card rewards
A surcharge is treated as part of the purchase price for the purpose of credit card rewards. If you earn 1% cash back on all purchases and you buy something for $100 with a 3% surcharge, you earn cash back on the full $103. The surcharge counts toward your spending total and toward any minimum spending requirements for sign-up bonuses.
This means surcharges can actually work in your favor if you are trying to meet a minimum spending requirement for a bonus. However, the extra cost to you usually outweighs the small amount of rewards you earn back. If a business charges a 3% surcharge and your card earns 1% cash back, you are paying 2% extra out of pocket.
Frequently Asked Questions
Can a business charge a surcharge on a debit card?
In most states, yes, though some card network agreements prohibit it. Visa and Mastercard have stricter rules for debit card surcharges than for credit card surcharges. American Express and Discover do not allow surcharges on any card type. Check your state's law and ask the business before you pay.
Is a surcharge the same as a tip?
No. A tip is optional and goes to the employee. A surcharge is mandatory and goes to the business to cover processing costs. Some payment terminals ask for a tip after you have already paid a surcharge, so you might see both on your receipt.
Can I refuse to pay a surcharge?
You can choose not to make the purchase, or you can ask to pay with a different method if the business accepts cash or another card type that is not subject to a surcharge. You cannot force the business to remove a surcharge that is legal in your state and complies with the card network's rules.
Do surcharges apply to online purchases?
Surcharges are rare online because most online retailers have agreements with card networks that prohibit them. You might see a surcharge at a small online retailer or a business that operates both online and in person, but it is uncommon. If you see one, check whether it is legal in your state before you complete the purchase.
What should I do if a surcharge was not disclosed?
Contact your credit card company and dispute the charge. Explain that the surcharge was not disclosed before you completed the transaction. The card company will investigate and may reverse the charge if the business violated the disclosure requirement.