Surcharging Laws by State: What Merchants Need to Know in 2025

Credit card surcharging — the practice of adding a fee to credit card transactions to offset processing costs — became broadly legal after the 2013 settlement in the Durbin v. Visa class action lawsuit. However, individual states have enacted their own laws governing surcharges, creating a patchwork of regulations that merchants must navigate carefully.

States Where Surcharging Is Prohibited or Restricted

As of 2025, the following states have laws that restrict or complicate credit card surcharging:

• Connecticut: Prohibits surcharges on credit card transactions.
• Massachusetts: Surcharging is prohibited under state law.
• Puerto Rico: Surcharges are not permitted.

Several other states have had surcharging bans struck down by courts in recent years, including New York, California, Texas, Florida, and Kansas. However, disclosure requirements in these states are strict, and merchants should consult legal counsel before implementing surcharges.

Card Network Rules for Surcharging

Even in states where surcharging is legal, Visa and Mastercard impose their own rules:

• The surcharge cannot exceed 3% of the transaction amount (Visa) or 4% (Mastercard), or your actual cost of acceptance, whichever is lower.
• You must notify Visa and Mastercard at least 30 days before you begin surcharging.
• Surcharges can only be applied to credit card transactions — not debit card transactions, even if the customer selects "credit" at the terminal.
• The surcharge amount must be disclosed before the transaction is completed and printed on the receipt.

Why Many Merchants Choose Dual Pricing Instead

Because of the complexity and state-by-state variability of surcharging laws, many merchants prefer dual pricing as an alternative. Dual pricing is legal in all 50 states, avoids the negative customer perception of "adding a fee," and achieves the same cost-shifting objective without the same regulatory burden.

Compliance Checklist for Surcharging

1. Verify surcharging is legal in your state
2. Notify Visa and Mastercard 30 days before implementation
3. Ensure your surcharge does not exceed the lesser of 3% or your actual processing cost
4. Post clear signage at your entrance and point of sale
5. Program your POS system to exclude debit cards from surcharges
6. Print the surcharge amount as a separate line item on receipts

Mogil Partners helps merchants evaluate whether surcharging or dual pricing is the better fit for their business, state, and customer base. Contact us for a personalized consultation.