What the law says about credit card fees
Businesses can charge you a fee for paying with a credit card in most situations, but the rules depend on the card type and what the fee is called. Visa and Mastercard allow merchants to charge a surcharge — an extra percentage added to your bill — as long as they disclose it clearly before you pay. American Express and Discover have stricter rules in their merchant agreements and generally prohibit surcharges, though this varies by state. The key legal distinction is between a surcharge (which is allowed in most places) and a convenience fee (which is also allowed, but only in specific situations).
Federal law does not ban credit card surcharges outright. Instead, it requires that merchants tell you about the fee upfront and that the fee does not exceed the merchant's actual cost to accept the card. Some states — including California, New York, Texas, and Florida — have their own laws that either ban surcharges entirely or require specific notice. A few states allow surcharges only if you are paying by phone or online, not in person. Because the rules shift by state and card brand, what is legal in one place may not be in another.
Key Takeaways
- Visa and Mastercard permit surcharges in most states, but American Express and Discover typically do not allow them under their merchant agreements.
- A surcharge must be disclosed before you complete the purchase and cannot exceed the merchant's actual cost to process the card.
- Some states ban surcharges entirely or allow them only for phone and online payments, not in-store transactions.
- A convenience fee is legal only when you choose a payment method that costs the merchant more, such as paying by phone instead of in person.
The difference between a surcharge and a convenience fee
A surcharge is a percentage or flat fee added to your total bill because you chose to pay with a credit card instead of cash or debit. A merchant can charge a surcharge on Visa or Mastercard in most states, but only if they post the surcharge amount or percentage at the point of sale — on the register, on the pump, or on the website before checkout. The surcharge cannot be hidden in fine print or revealed only after you have entered your card number.
A convenience fee is different. It applies when you choose a payment method that genuinely costs the merchant more money. For example, a utility company can charge a convenience fee if you pay your bill by phone with a representative instead of mailing a check or paying online. The fee must reflect the actual extra cost — not a markup. Many merchants use "convenience fee" as a label for what is actually a surcharge, which can create confusion and legal risk for them.
The practical difference matters to you because convenience fees are legal in more situations and in more states than surcharges are. If a business calls something a convenience fee but is really just charging extra for credit card use, you may have grounds to dispute the charge depending on where you live.
State-by-state rules that affect you
Several large states have laws that restrict or ban credit card surcharges. California, New York, Texas, and Florida all have rules that either prohibit surcharges or require specific conditions. California bans surcharges on credit cards entirely. New York allows surcharges only if they do not exceed the merchant's actual cost and are disclosed in advance. Texas and Florida have similar restrictions. If you live in or are buying from a merchant in one of these states, surcharges may be illegal even if they would be legal elsewhere.
Other states allow surcharges but only for certain payment channels. Some permit surcharges for online and phone payments but not for in-person card swipes. A few states require that the surcharge be disclosed on a separate line of the receipt, not bundled into the total price. Because state law changes and merchants do not always know their own state's rules, you may encounter an illegal surcharge. If you do, you can dispute it with your credit card company or file a complaint with your state's attorney general.
What merchants are actually allowed to charge
A merchant's cost to accept a credit card typically ranges from 2 to 3 percent of the transaction, depending on the card type and the merchant's processing agreement. This is called the interchange rate or processing fee. In states where surcharges are legal, a merchant can charge you a surcharge up to that amount — but not more. If a business charges a 5 percent surcharge on a $100 purchase when their actual processing cost is 2.5 percent, the extra 2.5 percent is profit, not a legitimate fee recovery.
Merchants cannot charge a surcharge on debit cards in most cases, even in states where credit card surcharges are legal. Federal law (the Durbin Amendment) caps debit card fees at a much lower rate and generally prohibits merchants from charging customers extra for using debit. You also cannot be charged a surcharge for using a prepaid card or gift card in most states.
How to spot an illegal or unfair surcharge
An illegal or unfair surcharge usually shows up in one of these ways: it is not disclosed until after you have entered your payment information, it is labeled vaguely as a "processing fee" or "service fee" without explanation, it appears only on your receipt and not at the point of sale, or it is charged on a debit card or prepaid card. Some merchants also hide surcharges by raising the advertised price and calling the difference a "credit card fee" — this is still a surcharge and must follow the same rules.
If you believe you have been charged an illegal surcharge, your first step is to contact the merchant and ask for an explanation. If they cannot justify it under your state's law, ask for a refund. If they refuse, you can dispute the charge with your credit card company. Most card issuers will reverse a surcharge that violates state law or their own merchant agreement. You can also file a complaint with your state's attorney general or your state's consumer protection agency.
Why merchants charge these fees
Merchants charge surcharges because credit card processing costs money, and those costs have risen over time. A small business that processes thousands of transactions per month can spend thousands of dollars on fees. Rather than absorb the cost or raise prices for everyone, some merchants pass the fee directly to credit card users. This is especially common in industries with thin profit margins, like gas stations, restaurants, and medical offices.
However, surcharges are controversial because they shift the cost burden to customers who use credit cards — often the customers with the least ability to pay cash or use other methods. Some economists argue that surcharges create transparency (you see the true cost of card processing), while others argue they are a form of price discrimination. Regardless, the law in your state determines what is allowed, not what is fair.
What you can do if you are charged a surcharge
Before you pay, look for surcharge disclosures at the point of sale. At a gas pump, check the screen. At a store, ask the cashier or look at the register display. On a website, the surcharge should appear before you enter your payment information — usually in the order summary or checkout page. If you do not see a disclosure and a surcharge appears on your receipt, note the amount, the merchant name, the date, and the location.
If the surcharge violates your state's law or was not disclosed in advance, contact your credit card company and report it. Provide your receipt and explain why you believe the charge is illegal. The card issuer will investigate and typically reverse the charge within 5 to 10 business days. You can also file a complaint with your state's attorney general or consumer protection office, which can take action against merchants who repeatedly violate surcharge laws.
Frequently Asked Questions
Can a gas station charge me extra for using a credit card?
Yes, in most states. Gas stations are among the most common places to see surcharges. The surcharge must be posted on the pump or at the entrance before you start pumping. If your state bans surcharges (like California), the station cannot charge you extra. Check your receipt — if a surcharge appears and was not disclosed, dispute it with your card issuer.
Is a "convenience fee" the same as a surcharge?
No. A convenience fee is legal only when you choose a payment method that costs the merchant more — like paying a utility bill by phone instead of online. A surcharge is charged straightforward for using a credit card instead of cash. Many merchants mislabel surcharges as convenience fees, which can violate state law.
Can a restaurant charge me a surcharge if I pay with a credit card?
It depends on your state. In states that allow surcharges, yes — but the restaurant must disclose it before you order or pay. The surcharge cannot exceed the restaurant's actual processing cost, usually 2 to 3 percent. If your state bans surcharges, the restaurant cannot charge you extra for using a card.
What should I do if I see a surcharge on my receipt that was not disclosed?
Contact your credit card company and dispute the charge. Explain that the surcharge was not disclosed at the point of sale. Provide your receipt as proof. The card issuer will investigate and usually reverse the charge. You can also file a complaint with your state's attorney general if the merchant repeatedly violates surcharge laws.
Can a doctor's office charge a surcharge for credit card payments?
In most states, yes — but only if the surcharge is disclosed before you pay and does not exceed the office's actual processing cost. Some states allow surcharges only for phone payments, not in-person. Check your state's rules and ask the office to disclose the surcharge upfront.