When Merchants Can Charge You Extra for Using a Credit Card
What merchants are allowed to charge for credit cards
Merchants can charge you a fee for using a credit card, but only under specific conditions that vary by card type and by state. The rules are different for credit cards versus debit cards, and they differ again for American Express, Discover, Visa, and Mastercard.
For Visa, Mastercard, and Discover, federal law allows merchants to charge a fee as long as the fee is the same for all customers and the merchant discloses it before you pay. For American Express, the merchant agreement typically prohibits charging cardholders a fee at all — though this rule has been loosening in recent years. Some states add their own restrictions on top of federal rules, so what is allowed in one state may not be allowed in another.
The fee cannot exceed what the merchant actually pays to process the card. If a merchant pays 2.9% to their payment processor, they cannot charge you 5%. The fee must be a pass-through of their real cost, not a markup.
Key Takeaways
- Merchants can charge a credit card fee for Visa, Mastercard, and Discover if they tell you the amount before you complete the purchase and charge all customers the same fee.
- American Express merchant agreements typically prohibit charging cardholders a fee, though some exceptions exist for certain business types.
- The fee cannot be higher than what the merchant pays their payment processor, and it must be clearly labeled as a credit card fee, not hidden in the price.
- Some states restrict or ban credit card fees entirely, so the rules depend on where the merchant is located and sometimes where you are located.
- Debit card fees are treated differently and are more restricted than credit card fees in most cases.
How the rules differ by card network
Visa, Mastercard, and Discover allow merchants to charge a fee under what is called a "surcharge." The merchant can add a percentage or flat dollar amount to your bill if they disclose it beforehand. The disclosure must happen before you enter your card information — not after. If you are paying in person, the fee should be posted at the register or on the menu. If you are paying online, it should appear before the final checkout step.
American Express has historically prohibited merchants from charging cardholders a fee. The American Express merchant agreement states that the merchant cannot impose a surcharge on American Express transactions. However, this rule has faced legal challenges, and some merchants now charge fees for all cards including American Express. If a merchant charges you an American Express fee, you can report it to American Express, though enforcement varies.
The practical difference: if you see a credit card fee at checkout, it is most likely legal for Visa, Mastercard, or Discover. For American Express, the merchant may be violating their agreement with American Express, but that is a dispute between the merchant and the card company, not between you and the merchant.
State-by-state restrictions on credit card fees
Several states ban or restrict credit card surcharges entirely. California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Mississippi, Missouri, New York, Oklahoma, and Texas have laws that prohibit merchants from charging a surcharge on credit card purchases. If you live in one of these states or are making a purchase from a merchant in one of these states, the merchant cannot legally charge you a credit card fee.
Other states allow surcharges but require specific disclosures. Some require the merchant to give you written notice before you make the purchase. Others require the merchant to register with the card networks before charging fees. The rules are complex and change, so if you are charged a fee and believe it is illegal in your state, contact your state's attorney general office or consumer protection agency.
The safest approach: if a merchant charges you a credit card fee and you believe it violates your state's law, dispute the charge with your credit card company. Most card companies will reverse the fee if it was charged in violation of state law or their own merchant agreement.
The difference between surcharges and convenience fees
A surcharge is a fee the merchant charges specifically because you are using a credit card. A convenience fee is a fee the merchant charges for using a particular payment method that costs them more to process — like paying by phone, by mail, or through a third-party payment service. Convenience fees are treated more leniently by regulators and card networks than surcharges.
For example, a utility company can charge you a convenience fee if you pay by phone or online, because those payment methods cost them more than receiving a check by mail. But the same utility company cannot charge you a surcharge just for using a Visa card instead of a Mastercard. The distinction matters because convenience fees are allowed in more states and situations than surcharges.
In practice, merchants sometimes blur this line. They may call a credit card fee a "convenience fee" to make it sound more legitimate. Read the label carefully. If the fee is triggered by your choice of card, it is a surcharge. If it is triggered by your choice of payment channel (phone, online, in-person), it is a convenience fee.
What to do if you are charged an illegal fee
If a merchant charges you a credit card fee that you believe is illegal, your first step is to contact the merchant directly. Explain that the fee violates your state's law or the card network's rules. Many merchants simply do not know the rules and will reverse the fee if you point out the violation.
If the merchant refuses, contact your credit card company. Call the number on the back of your card and explain that you were charged a surcharge that violates state law or the merchant agreement. Most card companies will reverse the charge and may investigate the merchant. Visa, Mastercard, and Discover take violations of their merchant agreements seriously and can fine or terminate merchants who break the rules.
You can also file a complaint with your state's attorney general or consumer protection agency. Many states have online complaint forms. If enough consumers report the same merchant, the state may investigate and take action.
Why merchants charge credit card fees
Merchants pay a percentage of every credit card transaction to the card network and the bank that issued your card. This is called the interchange rate or processing fee. For most credit cards, this fee ranges from 1.5% to 3.5% of the transaction amount, depending on the card type and the merchant's industry. For a $100 purchase, the merchant might pay $2 to $3.50 just to accept the card.
Merchants who operate on thin profit margins — like gas stations, restaurants, or medical offices — sometimes pass this cost to customers by charging a credit card fee. They argue this is fairer than raising prices for everyone, including customers who pay cash. However, this argument is controversial, and many states have decided that the practice is unfair to credit card users and have banned it.
How credit card fees affect your rewards
If you are charged a credit card fee, you still earn rewards on the full transaction amount, including the fee. If you use a card that earns 2% cash back and you are charged a $2 credit card fee on a $100 purchase, you earn $2.04 in cash back (2% of $102). The fee itself is not excluded from the rewards calculation.
This means the fee reduces your net benefit from the card, but it does not eliminate it entirely. If your card earns enough rewards, the rewards may offset the fee. However, this is not a reason to accept an illegal fee. If the fee is prohibited in your state, you should dispute it regardless of whether your rewards offset it.
Frequently Asked Questions
Can a gas station charge me extra for using a credit card?
Yes, if the gas station is not in a state that bans credit card surcharges. The station must disclose the fee before you pump gas — usually with a sign at the pump or at the register. If you live in California, Florida, New York, or another state that bans surcharges, the gas station cannot charge you a fee.
What if a restaurant charges a credit card fee but does not tell me until after I order?
The fee must be disclosed before you complete the transaction. If the restaurant only tells you about the fee after you have ordered, you can refuse to pay it. If you already paid, dispute the charge with your credit card company and explain that the fee was not disclosed in advance.
Can a doctor's office charge me a fee to pay by credit card instead of cash?
Yes, in most states. Medical offices often charge a convenience fee for credit card payments because they prefer cash or checks. This is usually allowed even in states that ban surcharges, because it is framed as a fee for a particular payment method, not a fee for using a particular card.
Does American Express allow merchants to charge a fee?
American Express merchant agreements typically prohibit surcharges on American Express cards. However, some merchants charge fees anyway, and enforcement is inconsistent. If you are charged an American Express fee, report it to American Express and they may investigate the merchant.
If I am charged a credit card fee, can I get it back?
If the fee was illegal in your state or violated the card network's rules, yes. Contact your credit card company and explain the situation. Most card companies will reverse the fee. If the fee was legal, you cannot dispute it through your card company, but you can try negotiating with the merchant directly.