Merchants can charge a credit card fee in most states, but federal law and card network rules set specific limits on how and when
Whether a business can charge you extra for paying with a credit card depends on where you live, what type of card you use, and how the business structures the fee. Federal law does not ban credit card fees outright. Instead, it prohibits surcharges — extra charges added to the price specifically because you chose a credit card — on credit card purchases in most situations. However, many states have their own rules that go further, and some businesses use workarounds like "cash discounts" that are legal in some places but not others.
The short answer: a business can usually charge a fee if it applies equally to all payment methods, or if it is a convenience fee for a specific service like paying by phone or online. A business cannot usually charge you more just because you picked a credit card instead of cash or debit.
Key Takeaways
- Federal law bans surcharges on credit card purchases in most cases, meaning a business cannot add a fee solely because you chose to pay with a credit card.
- A business can charge a fee that applies to all payment methods equally, such as a "payment processing fee" on every transaction regardless of how you pay.
- Convenience fees for specific services — like paying a utility bill by phone or a court fine online — are generally legal even if they only explore to credit cards.
- Some states ban credit card surcharges more strictly than federal law, and a few states allow them under certain conditions, so the rule depends on your location.
- Visa, Mastercard, and American Express have their own rules prohibiting surcharges on their cards, which merchants must follow to accept those cards.
What the federal law actually says about surcharges
The Credit Card Accountability Responsibility and Disclosure Act (CARD Act), passed in 2009, includes a provision that prohibits surcharges on credit card transactions. The rule is found in the Truth in Lending Act and enforced by the Consumer Financial Protection Bureau. It states that a seller cannot impose a surcharge on a cardholder for using a credit card, with limited exceptions.
The key word is "surcharge" — a fee added to the price because you chose a particular payment method. If a gas station normally charges $3.50 for a gallon of fuel and then adds 50 cents because you paid with a Visa, that is a surcharge and it violates federal law. The business cannot pass its processing costs directly to you as a penalty for your payment choice.
The exceptions are narrow. A business can charge a fee if it is a convenience fee for a service that costs the business extra money to provide — such as paying a bill by phone, by mail, or through an online portal that requires staff time or a third-party service. A court can charge you to pay a fine with a credit card online. A utility company can charge you to make a payment by phone. These fees are legal because they reflect the actual cost of offering that service, not a penalty for your card choice.
The difference between surcharges and cash discounts
A business can legally offer a discount for paying with cash or debit, even if that discount is not available to credit card users. This is not the same as a surcharge. A surcharge adds money to the credit card price; a cash discount subtracts money from the cash price. Legally, they can look identical to you at the register, but the distinction matters because only the surcharge is banned.
In practice, this means a gas station can advertise "Cash price: $3.50, Credit card price: $3.75" and that is legal under federal law. The station is not charging credit card users extra; it is offering cash users a discount. However, some states treat this as a de facto surcharge and ban it anyway. California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas all have state laws that restrict or ban credit card surcharges, and some of these states do not allow the cash discount workaround.
If you live in one of these states, a business cannot charge you more for a credit card, and it also cannot offer a lower price for cash in a way that amounts to the same thing. The rules vary by state, so check your state's attorney general website if you see a price difference and want to know whether it is legal where you are.
What Visa, Mastercard, and American Express require
The card networks themselves — Visa, Mastercard, American Express, and Discover — have their own rules that go beyond federal law. These rules are written into the contracts that merchants sign when they agree to accept the cards. All four networks prohibit surcharges on their branded cards. If a merchant violates this rule, the card network can fine the merchant, revoke their ability to accept the card, or both.
This means that even in states where state law does not ban surcharges, a business that accepts Visa or Mastercard cannot legally charge you a surcharge for using those cards. The card network's rule is the binding constraint. A business that tries to charge a surcharge on a Visa card is breaking its contract with Visa, not just state or federal law.
Discover has similar rules. American Express historically allowed surcharges in some states, but changed its policy in 2013 to match the other networks and now prohibits them as well. If you see a business charging a surcharge on any major credit card, you can report it to the card network, and the network takes these violations seriously.
When convenience fees are legal and how to spot them
A convenience fee is a charge for using a specific payment method to access a service that would not normally accept that method, or that costs the business significantly more to process. These are legal under federal law and card network rules because they are not surcharges — they reflect a real cost to the business.
Common examples include paying a property tax bill online with a credit card (the county charges a fee because it uses a third-party processor), paying a utility bill by phone (the company charges for the phone line and staff time), or paying a court fine with a credit card (the court charges for the online portal). These fees are usually disclosed before you complete the transaction, and they are optional — you can choose a different payment method to avoid them.
The line between a convenience fee and a surcharge can be blurry. A business might claim a fee is a "convenience fee" when it is really just a surcharge in disguise. If you see a fee that seems suspicious, ask the business what service or cost it covers. If the answer is vague or amounts to "we charge this because you used a credit card," it may be an illegal surcharge. You can report it to your state's attorney general or to the card network.
State-by-state rules that are stricter than federal law
Ten states have laws that restrict credit card surcharges more strictly than federal law allows. These states are California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. In these states, a business generally cannot charge you a surcharge on a credit card, and in some cases cannot even offer a lower price for cash if the effect is the same.
A few other states have rules that allow surcharges under specific conditions. For example, some states allow a surcharge if the business clearly discloses it before the transaction and caps it at a certain percentage of the sale. If you live in a state not listed above and want to know your state's specific rule, search your state attorney general's website for "credit card surcharge" or contact them directly.
If you are charged a surcharge in a state where it is illegal, you can file a complaint with your state's attorney general. You can also dispute the charge with your credit card company and explain that the surcharge violates state or federal law. The card network may reverse the charge and investigate the merchant.
What to do if you are charged an illegal surcharge
If you believe you have been charged an illegal surcharge, start by asking the business for an explanation. It is possible the fee is a legitimate convenience fee and you misunderstood its purpose. If the business cannot explain why the fee is legal, or if the explanation does not make sense, you have several options.
First, 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 violates federal law or your state's law. The card company will investigate and may reverse the charge. Keep any receipts or screenshots showing the surcharge.
Second, report the merchant to your state's attorney general. Most state attorney general offices have a consumer protection division that investigates illegal surcharges. You can file a complaint online or by mail. Include the merchant's name, location, the date of the transaction, and a description of the surcharge.
Third, report the merchant to the card network if the surcharge was on a Visa, Mastercard, American Express, or Discover card. You can find contact information for each network on their websites. The network takes surcharge violations seriously and may fine or sanction the merchant.
Frequently Asked Questions
Can a restaurant charge me extra if I pay with a credit card instead of cash?
No, not under federal law or the rules of Visa, Mastercard, American Express, and Discover. A restaurant cannot add a surcharge to your bill because you chose a credit card. However, some states have additional restrictions, and the restaurant can offer a cash discount if it is legal in your state. If you see a surcharge, ask the restaurant to explain it or dispute it with your card company.
Is a "payment processing fee" the same as a surcharge?
It depends on how it is applied. If a business charges a flat "payment processing fee" on every transaction regardless of payment method — cash, debit, or credit — it is not a surcharge and is generally legal. If the fee only applies to credit cards, it is a surcharge and is illegal under federal law. Check your receipt to see whether the fee was charged to all customers or only to credit card users.
Can a business charge a fee for paying online with a credit card?
Yes, if it is a convenience fee for the online service itself. For example, a utility company can charge a fee to set up an online account and pay by credit card because the company incurs costs to provide that portal. However, the fee must explore equally to all payment methods used online, or it must be clearly labeled as a convenience fee for the online service, not a surcharge for choosing a credit card.
What if I see a lower price advertised for cash than for credit card?
This is legal under federal law but illegal in some states. In California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas, a business cannot offer a lower price for cash if the effect is to charge credit card users more. In other states, it is legal. If you live in one of these states and see a price difference, you can report it to your state's attorney general.
Can a gas station charge me more if I use a credit card at the pump?
No. Gas stations cannot charge a surcharge on credit card purchases under federal law or card network rules. However, many gas stations offer a lower price for cash or debit, which is legal in most states. The pump should display both prices clearly before you start pumping. If you see a surcharge added after you swipe your card, dispute it with your card company.