Businesses can charge a credit card fee in most situations, but the rules depend on the type of card and the industry
Whether a business can charge you a fee for paying with a credit card is not a straightforward yes or no. Federal law allows most merchants to pass along the cost of accepting credit cards — but only under specific conditions. The rules differ for consumer credit cards versus commercial cards, and some industries face stricter limits than others.
The key rule comes from the Credit Card Accountability Responsibility and Disclosure Act, passed in 2009. It says merchants can charge a fee for credit card payments, but the fee must not exceed the merchant's actual cost of accepting that card. In practice, this means a business cannot charge you an arbitrary 5% fee just because they feel like it — they have to tie it to what the card network actually charges them.
Some states and cities have added their own rules on top of federal law. New York, for example, bans credit card surcharges entirely in certain situations. California allows surcharges but caps them at the merchant's cost. Before you assume a fee is legal, check whether your state has its own restrictions.
Key Takeaways
- Federal law permits credit card fees only if they do not exceed what the merchant actually pays to accept that card type.
- Debit cards, prepaid cards, and cash discounts are treated differently under federal rules and may have different fee limits.
- Some states and cities ban credit card surcharges outright, while others cap them at the merchant's documented cost.
- Merchants must disclose the fee before you complete the transaction, not after you have committed to the purchase.
- If a business charges an illegal fee, you can dispute it with your credit card company or report it to your state's attorney general.
What the federal law actually says about credit card fees
The Credit Card Accountability Responsibility and Disclosure Act (often called the CARD Act) does not ban credit card fees outright. Instead, it says the fee must be a reasonable proportion of the merchant's cost to accept that particular card. If Visa charges a restaurant 2.5% per transaction, the restaurant can charge you roughly that amount — not 5% or 10%.
The law applies to consumer credit cards issued by banks. It does not explore to commercial credit cards, which are issued to businesses rather than individuals. A merchant can charge you a much higher fee — sometimes 3% to 4% — if you use a business credit card, because the federal cap does not cover it.
The fee must also be disclosed before you agree to the transaction. A business cannot show you one price, charge your card, and then tell you there is a surcharge. The fee has to appear on the menu, the website, the checkout screen, or the point-of-sale terminal before you hand over your card.
State and local rules that override federal law
Even though federal law permits credit card fees, many states have decided to restrict them further. The rules vary widely, so a fee that is legal in one state may be illegal in another.
States that ban credit card surcharges entirely: Connecticut, Florida, Kansas, Maine, Massachusetts, Mississippi, Missouri, New York, Oklahoma, and Texas all prohibit merchants from charging a surcharge for credit card use. In these states, a business cannot add any fee to your bill just because you paid with a credit card. Some of these states do allow a "cash discount" — a lower price for paying in cash — but that is different from charging extra for credit.
States that cap the fee at the merchant's cost: California, Colorado, Illinois, and others allow surcharges but require them to be no higher than what the merchant actually pays. These states often require the merchant to document their costs and make that documentation available to customers.
States with no specific rule: Many states have not passed their own credit card surcharge law, so the federal rule is the only limit. In these places, a merchant can charge a fee as long as it does not exceed their actual cost to accept the card.
Some cities have their own rules too. New York City, for example, bans credit card surcharges even though New York State does. If you live in a city with a local rule, that rule usually takes priority over the state rule.
Debit cards, prepaid cards, and cash discounts are handled differently
The federal credit card surcharge rule does not explore to debit cards or prepaid cards. A merchant can charge you a higher fee for a debit card than for a credit card, or vice versa, because the networks charge different rates. However, some states treat debit card fees the same way they treat credit card fees, so check your state's rules.
A cash discount is not the same as a credit card surcharge, and it is treated more leniently under federal law. A business can offer you a lower price for paying in cash without running into the surcharge rules. For example, a gas station can charge $3.00 per gallon for credit and $2.95 per gallon for cash. The discount must be clearly posted, and it cannot be so large that it effectively punishes credit card users, but it is generally legal.
Some merchants try to blur the line by calling a credit card fee a "cash discount." If a business charges you $100 for credit but says the "cash price" is $95, that is functionally a 5% surcharge, and it may violate the rules in your state even if it is technically called a discount.
How to spot an illegal credit card fee
An illegal fee usually shows up in one of three ways: the fee is not disclosed before you pay, the fee exceeds the merchant's documented cost, or the fee violates your state's specific rules.
If a business charges you a fee that was not visible until after you swiped your card, that is a violation of federal law. The fee must be posted on the menu, the website, or the register before you commit to the purchase. If you were not given that notice, you have grounds to dispute it.
If you live in a state that bans credit card surcharges entirely — like New York or Florida — any surcharge is illegal, regardless of whether it matches the merchant's cost. If you live in a state that caps the fee, and the business charges more than their documented cost, that is also illegal.
What to do if you are charged an illegal fee
If a business charges you a credit card fee that you believe is illegal, you have several options. The fastest route is usually to dispute the charge with your credit card company. Call the number on the back of your card and explain that you were charged a surcharge that was either not disclosed or violates your state's law. The card company will investigate and may reverse the charge.
You can also contact the business directly and ask them to remove the fee. Bring documentation of your state's rules if you have it. Many businesses straightforward do not know the law and will correct the mistake once you point it out.
If the business refuses and the fee is illegal in your state, you can file a complaint with your state's attorney general or your state's consumer protection agency. These offices track patterns of illegal fees and can take action against businesses that repeatedly violate the rules.
Keep your receipt and any screenshots of the fee disclosure (or lack thereof). If you end up disputing the charge or filing a complaint, you will need proof of what happened.
Why merchants charge credit card fees in the first place
Credit card companies charge merchants a percentage of each transaction — typically 1.5% to 3.5%, depending on the card type and the merchant's industry. A small business with thin profit margins may feel that cost is significant. Rather than absorb it, some businesses pass it along to customers who use credit cards.
Merchants are not required to do this. Many businesses choose to absorb the cost as part of doing business, because they know customers prefer not to pay extra. Others use credit card fees as a way to encourage customers to pay in cash or use debit cards, which cost them less.
The law allows merchants to recover their costs, but it does not require them to charge you. If a business charges a fee, it should be transparent about it and should not exceed what they actually pay.
Frequently Asked Questions
Can a restaurant charge me a credit card fee?
It depends on your state. If you live in a state that bans credit card surcharges — like New York, Florida, or Massachusetts — the restaurant cannot charge you a fee. If you live in a state that allows surcharges, the restaurant can charge a fee only if it does not exceed their actual cost to accept that card, and only if the fee was posted before you ordered.
Is a "convenience fee" the same as a credit card surcharge?
Not always. A convenience fee is supposed to cover the cost of processing a payment through a particular channel — like paying a bill online instead of by mail. However, some businesses use "convenience fee" as a disguise for a credit card surcharge. If the fee only appears when you use a credit card, it is probably a surcharge and may be illegal in your state.
Can I dispute a credit card fee with my card company?
Yes. Call the number on the back of your card and explain that you were charged a surcharge that was either not disclosed or violates your state's law. The card company will investigate and may reverse the charge. Keep your receipt as proof.
What if a business says the fee is for "processing" or "administration"?
The label does not matter. If the fee only applies when you use a credit card, it is a surcharge, and it must comply with federal and state law. The merchant cannot charge more than their actual cost to accept that card, and in some states, they cannot charge anything at all.
Can a gas station charge different prices for credit and cash?
Yes, as long as the difference is posted clearly. A gas station can offer a cash discount without running into surcharge rules. However, the discount cannot be so large that it effectively punishes credit card users, and it must be visible before you pump gas.