When Businesses Can Legally Charge You for Paying With a Credit Card
Yes, businesses can charge credit card fees in most situations, but the rules depend on your card type and where you live
A business can legally add a fee when you pay with a credit card — but not always. The answer hinges on three things: what kind of card you're using, what state you live in, and what the card network (Visa, Mastercard, American Express, Discover) allows. Debit cards have different rules than credit cards. Some states cap or ban the fees entirely. And the card networks themselves set limits on what merchants can charge.
The core rule comes from the card networks' own contracts with merchants. Visa and Mastercard, for example, prohibit merchants from charging different prices based on which card you use — but they allow a flat fee for credit card payments specifically. American Express and Discover have their own policies, which are often stricter. A merchant who violates these rules can face fines or lose the ability to accept that card.
Beyond the card networks, state law can override what's allowed. California, New York, and a handful of other states either ban credit card surcharges entirely or cap them at a specific percentage. If you live in one of those states, a business cannot legally charge you extra for using a credit card, even if the card network's contract would otherwise permit it.
Key Takeaways
- Visa and Mastercard allow merchants to charge a fee for credit card payments, but the fee cannot be higher than the merchant's actual cost to accept that card.
- American Express and Discover typically do not allow merchants to charge surcharges at all, though they may permit a "convenience fee" for certain payment methods like online transactions.
- Several states, including California, New York, Texas, and Florida, ban or severely limit credit card surcharges regardless of what the card network permits.
- Debit card fees are treated differently than credit card fees and are often prohibited or more tightly restricted by both card networks and state law.
- A merchant who charges a fee must disclose it clearly before you complete the transaction, not after.
What Visa and Mastercard Allow
Visa and Mastercard permit merchants to charge a surcharge — an extra fee added to your bill when you pay with their card. The surcharge cannot exceed the merchant's actual cost to process the card. For most small businesses, that cost is between 2 and 3 percent of the transaction, though it varies by the type of card and the merchant's processing agreement.
The merchant must also disclose the surcharge before you agree to pay. This means the fee has to show up on the receipt or the checkout screen before you swipe, tap, or enter your card number. If a business charges the fee after you've already committed to the purchase, that violates the card network's rules.
Visa and Mastercard also require that the surcharge be the same percentage or amount for all cards within that network. A merchant cannot charge 3 percent for one Visa card and 2 percent for another. The fee must be uniform.
American Express and Discover's Stricter Rules
American Express and Discover generally do not allow merchants to charge a surcharge for using their cards at all. This is one reason some small businesses refuse American Express — the card network's rules are more restrictive than Visa or Mastercard.
However, both networks do allow a convenience fee in certain situations. A convenience fee is charged for using a payment method that is more expensive or less common for that business — for example, paying a utility bill online instead of by mail, or paying a property tax bill by credit card instead of check. The convenience fee is meant to cover the extra cost of processing that specific method, not to penalize you for using a particular card brand.
The distinction matters. A convenience fee is tied to the payment method (online, phone, in-person), not to the card type. A surcharge is tied to the card brand (Visa, Mastercard, Amex). American Express and Discover allow the former but not the latter.
State Laws That Ban or Cap Credit Card Fees
Ten states have laws that restrict or ban credit card surcharges: California, Colorado, Connecticut, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Puerto Rico. The rules vary by state.
California and New York ban surcharges entirely — a business cannot charge you extra for using a credit card, period. Colorado, Connecticut, Florida, Kansas, Maine, Oklahoma, and Texas allow surcharges but cap them at a specific percentage, usually around 2 to 4 percent. Puerto Rico bans surcharges on most transactions but allows them for certain business-to-business payments.
If you live in one of these states, a merchant's claim that "Visa allows it" is not a legal defense. State law overrides the card network's contract. If a business charges you a surcharge in violation of your state's law, you can report it to your state's attorney general or consumer protection office.
How Debit Card Fees Differ
Debit cards are treated more strictly than credit cards. Visa and Mastercard generally prohibit merchants from charging a surcharge for debit card payments at all. The reasoning is that debit cards are closer to cash or checks — they represent money already in your account — so charging extra for them is seen as unfair.
A merchant can charge a convenience fee for debit cards in limited situations, such as paying a bill online, but cannot charge a flat surcharge the way they might for a credit card. If you see a business charging a debit card fee at the register or in a store, that is likely a violation of the card network's rules.
State laws that ban credit card surcharges often extend to debit cards as well, making the restriction even stronger in those states.
What You Should Do If Charged an Illegal Fee
If you believe a business charged you an illegal credit card fee, start by asking the merchant directly. Sometimes the fee is a mistake, or the business owner may not realize it violates state law or the card network's rules. Keep your receipt and note the date, time, and amount of the fee.
If the merchant refuses to remove the fee or claims it is legal when you know it is not, contact your state's attorney general or consumer protection division. Most states have an online complaint form. You can also report the violation to the card network itself — Visa, Mastercard, American Express, and Discover all have merchant compliance teams that investigate complaints.
Your credit card company can also help. Call the number on the back of your card and describe the fee. The card issuer may dispute the charge on your behalf or provide guidance on how to report the merchant.
Why Businesses Charge These Fees
Merchants charge credit card fees because processing credit cards costs them money. Every time you swipe or tap a card, the merchant pays a percentage of the sale to the card network, the card issuer, and the payment processor. For a business with thin profit margins — like a small restaurant or a medical office — these fees add up quickly.
By passing the fee to the customer, the merchant shifts that cost. Some businesses see it as fair: if you choose to pay with a card instead of cash, you should bear the cost of that choice. Others use it as a nudge to encourage customers to pay with cash or check instead.
Large retailers rarely charge credit card fees because they have enough volume to negotiate lower processing rates and can absorb the cost. Small businesses and service providers — plumbers, dentists, contractors — are more likely to charge them because their processing costs are higher relative to their revenue.
Frequently Asked Questions
Can a business charge a fee for credit cards but not debit cards?
No. Visa and Mastercard prohibit merchants from charging a surcharge for debit cards. If a business charges a fee for credit cards, it cannot charge a different fee for debit cards. Some merchants try to work around this by offering a discount for cash or debit, which is technically allowed, but charging a surcharge for debit is not.
Is a "convenience fee" the same as a surcharge?
No. A convenience fee is tied to the payment method (online, phone, by mail), while a surcharge is tied to the card brand (Visa, Amex). Convenience fees are allowed by all card networks in certain situations. Surcharges are allowed by Visa and Mastercard but not by American Express or Discover. If you live in a state that bans surcharges, convenience fees may still be legal.
What if I did not see the fee before I paid?
The merchant violated the card network's rules by not disclosing the fee upfront. Contact your card issuer and dispute the charge. You can also report the merchant to your state's attorney general. The merchant is required to show the fee before you complete the transaction, not after.
Can a business charge a fee for online credit card payments but not in-store payments?
Yes, if the fee is framed as a convenience fee for online payments rather than a surcharge for the card type. However, if the business is charging the fee specifically because you used a credit card online, it may violate state law or card network rules depending on where you live and how the fee is labeled. The safest approach for the merchant is to charge the same fee for all credit card payments, regardless of where the transaction happens.
Do gift cards and prepaid cards have the same fee rules as credit cards?
It depends on how the card is branded. If a gift card or prepaid card runs on the Visa or Mastercard network, the same surcharge rules apply. If it is a closed-loop card (only usable at one store), the merchant has more flexibility. Check your state's law and the card network's rules for specifics.