Which States Ban Credit Card Fees at the Checkout

Where merchants cannot charge you extra for paying with a credit card

Ten states have laws that prohibit merchants from charging you a fee when you use a credit card to pay. Those states are California, Colorado, Connecticut, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Vermont. In these states, a store, restaurant, or service provider cannot add a surcharge to your bill just because you chose to pay with plastic instead of cash.

The rules in these states apply to in-person transactions at physical locations. Online purchases and phone orders may have different rules depending on the merchant's location and the payment processor they use. If you live in one of these ten states, you have legal protection against credit card surcharges — but the law does not prevent merchants from offering discounts for paying with cash or other methods.

Key Takeaways

• California, Colorado, Connecticut, Florida, Kansas, Maine, New York, Oklahoma, Texas, and Vermont prohibit merchants from charging credit card fees at checkout.
• These laws apply to in-person purchases but may not cover online or phone orders, depending on where the merchant operates.
• A merchant can offer a cash discount without violating these laws — the ban is on surcharges, not discounts for other payment methods.
• If a merchant charges you a credit card fee in one of these states, you can report the violation to your state's attorney general or consumer protection office.
• States without surcharge bans allow merchants to charge fees, though credit card networks have their own rules about how those fees must be disclosed.

How surcharge bans work in practice

A surcharge is a fee added to your total bill because of the payment method you chose. In the ten states with bans, merchants cannot legally add this fee. A gas station cannot charge you 35 cents extra for using a Visa. A doctor's office cannot add 2.5% to your bill for paying with a Mastercard. A restaurant cannot tack on a processing fee when you hand over your credit card.

The ban applies to all credit cards — Visa, Mastercard, American Express, Discover, and any other brand. It does not matter whether the card is personal or business, rewards or basic. The merchant cannot charge the fee, period.

What merchants can do is offer a discount for paying a different way. A gas station can advertise that cash customers save 10 cents per gallon. A store can offer a 3% discount for paying by check or debit card. These discounts are legal because they reward a specific payment method rather than penalizing credit card use. The difference matters legally, even though the effect on your wallet is similar.

States where credit card fees are allowed

In the other 40 states, merchants are permitted to charge you a fee for using a credit card, as long as they disclose it clearly before you complete the purchase. You might see this at a small business, a utility company, a government office, or an online retailer. The fee is usually a percentage of your purchase — often 2% to 3% — though some merchants charge a flat dollar amount instead.

Even in states that allow surcharges, credit card networks like Visa and Mastercard have their own rules about how merchants can charge them. The networks generally require that the fee be disclosed at the point of sale (before you pay), that it not exceed the merchant's actual cost to process the card, and that it be applied equally to all cards of the same type. A merchant cannot charge you 3% for Visa but 2% for Mastercard, for example.

If you see a credit card fee in a state without a surcharge ban, you have the option to pay a different way or shop elsewhere. You can also contact the merchant's payment processor or the credit card network to report the fee if you believe it violates their rules.

What to do if you are charged a fee in a surcharge-ban state

If a merchant charges you a credit card fee in California, Colorado, Connecticut, Florida, Kansas, Maine, New York, Oklahoma, Texas, or Vermont, the transaction was likely illegal. Your first step is to ask the merchant about the charge. Sometimes the fee is applied by mistake, or the merchant may not know the law applies to them.

If the merchant refuses to remove the fee or claims it is legal, you can report the violation to your state's attorney general office or consumer protection division. Most states have an online complaint form on their website. You will need to provide the merchant's name, location, the date of the transaction, and a description of what happened. The state agency can investigate and take action if the merchant is breaking the law.

You can also dispute the charge with your credit card company. Call the number on the back of your card and explain that you were charged an illegal surcharge. The card issuer may reverse the fee or open a dispute on your behalf. Keep your receipt and any documentation of the transaction.

The difference between surcharges and other fees

A surcharge is specifically a fee added because of your payment method. It is different from other charges you might see on your receipt. A convenience fee, for example, is charged for using a particular service — like paying a utility bill online instead of by mail, or buying tickets through a ticketing website instead than at the box office. These fees are generally legal even in surcharge-ban states because they are tied to the service, not the payment method.

A processing fee charged by a government agency — such as a court filing fee or a vehicle registration fee — is also different from a surcharge. Government agencies often charge these fees regardless of how you pay, and they are usually set by law rather than by the agency's choice.

The key question is whether the fee exists because of the payment method you chose. If yes, it is a surcharge and illegal in the ten states listed above. If the fee would exist no matter how you paid, it is something else and may be legal.

How surcharge bans affect small businesses

Small businesses in surcharge-ban states cannot pass credit card processing costs directly to customers through fees. Instead, they absorb these costs as a business expense or build them into their prices. Some small businesses respond by offering cash discounts, which is legal. Others simply accept that credit card processing is a cost of doing business.

Larger merchants often have more negotiating power with credit card networks and can negotiate lower processing rates, which reduces the impact of the surcharge ban. Small businesses may pay higher rates and feel the restriction more acutely. However, the surcharge ban remains the law in these states, and merchants must follow it.

If you own a small business in one of these states and are unsure whether a particular fee structure is legal, you can contact your state's attorney general office or a business attorney for guidance.

Online and phone purchases in surcharge-ban states

The surcharge bans in these ten states typically apply to in-person transactions. When you buy something online or over the phone, the rules become less clear. A merchant located outside a surcharge-ban state may charge a fee to a customer in that state, and enforcement becomes difficult.

If you are charged a credit card fee on an online purchase and you live in a surcharge-ban state, you can still report it to your state's attorney general. However, the merchant may argue that they are located in a state where surcharges are legal, or that the fee is actually a "convenience fee" for using their website. These disputes can be complicated.

Your credit card company is often the easiest route for online disputes. Call the number on the back of your card and explain the charge. The card issuer can investigate and may reverse the fee if it appears to violate the law in your state.

Frequently Asked Questions

Can a merchant charge a credit card fee if they post a sign saying they do?

No. In the ten surcharge-ban states, posting a sign does not make the fee legal. The law prohibits the surcharge itself, not just hidden surcharges. A merchant cannot charge you a credit card fee in California, Colorado, Connecticut, Florida, Kansas, Maine, New York, Oklahoma, Texas, or Vermont, regardless of whether they warn you in advance.

Is a convenience fee the same as a credit card surcharge?

Not legally. A convenience fee is charged for using a particular service or payment channel — like paying online instead of in person — and is generally legal even in surcharge-ban states. A surcharge is charged specifically because you used a credit card. If the fee would not exist if you paid by cash or check, it is a surcharge and illegal in the ten states listed.

What if I live in a state that allows surcharges but the merchant is located in a surcharge-ban state?

The merchant's location typically determines which law applies. If the merchant is located in a surcharge-ban state, they cannot charge you a credit card fee, even if you live somewhere else. If you are charged a fee by a merchant in a surcharge-ban state, you can report it to that state's attorney general.

Can a merchant charge different fees for different credit cards?

In surcharge-ban states, no — merchants cannot charge credit card fees at all. In other states, credit card networks generally prohibit merchants from charging different fees for different card brands. A merchant cannot charge 3% for Visa and 2% for Mastercard. The fee must be the same for all cards of the same type.

What happens if I dispute a credit card surcharge with my card issuer?

Your card issuer can investigate the charge and may reverse it if they determine it violates the law in your state or the card network's rules. The process typically takes 30 to 60 days. You will need to provide documentation of the transaction and explain why you believe the charge was illegal or improper.