2025 Credit Card Surcharge Laws Update

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What are 2025 surcharge regulations?

Our primary customer base is business to business (B2B) so this credit card surcharge article includes specifics for companies, not government or education, and in particular for

B2B and automotive, truck, and related dealers. Merchants must consider Federal and state laws as well as merchant account, Visa, MasterCard and other card networks compliance rules.

Since our August 2024 update there have been multiple changes. Most notably, on July 1, 2024, when a new California law called Senate Bill 478 went into effect.

Which states prohibit merchants surcharging?

States with other surcharge regulations

  • Colorado allows credit card surcharging up to 2%. 
  • New York, New Jersey, Nevada, and South Dakota prohibit surcharges from exceeding the cost that the merchant pays to accept the card. (See also Visa merchant surcharge rules.)
  • The legislative intent in many states was to protect consumers, and not to restrict B2B surcharging, therefore, B2B companies may have exceptions. 

Can a B2B company use surcharge to offset fees?

The rules vary across multiple card brands and terms of acceptance. Here’s a 2025 updated review of who can surcharge, what card types, and checklist of how to roll out credit card surcharge at your company. The answers are targeted for business to business merchants, our area of expertise. Historically if a merchant complies with Visa surcharge rules, they’d be compliant with other brands, so we often cite that as the standard. A B2B company that wishes to surcharge in every state should contact an attorney.

What is a credit card surcharge?

Surcharge is any fee charged by a merchant for the use of a card.These disclosure requirements include advance notice to both Mastercard and the merchant’s acquirer of the merchant’s intention to impose a surcharge no less than thirty days before the merchant implements a surcharge.

These disclosure requirements include advance notice to both Mastercard and the merchant’s acquirer of the merchant’s intention to impose a surcharge no less than thirty days before the merchant implements a surcharge.

What’s the difference between a surcharge and convenience fee? Convenience fees can only be charged for a bona fide convenience in the form of an alternative payment channel outside the Merchant’s customary payment channels and not charged solely for the acceptance of a Card. If a merchant only accepts credit cards, it’s prohibited. If a merchant is 100% card absent, merchant cannot charge a convenience fee.

Card brands agree on this for surcharging:

  1. Merchant Discount Rate is the fee, expressed as a percentage of the total transaction amount that a Merchant pays to its Acquirer or Service Provider for transacting on a Credit Card brand. In short, it’s typically all the fees on your merchant statement EXCEPT PCI compliance, terminal rental fees or any other special fee that is not paid via the mechanism of the per-transaction merchant discount fee. Per Visa, merchants must “Limit the amount to your merchant discount rate (MDR) for the applicable credit card or 3% whichever is lowest.” This is the reason merchants can get in trouble if their surcharge solution provider charges a flat amount for every card type.
  2. The Surcharge amount must be submitted separately (in the defined surcharge field) from the Transaction amount in the authorization and clearing message.
  3. The receipt must list the surcharge amount separately.
  4. If the original transaction has a partial or full refund, the surcharge amount must all be refunded proportionally.
  5. Surcharge on debit or prepaid cards is prohibited for all merchants.To ensure compliance use a payment gateway that can identify the card brand and type of card to allow surcharges only on eligible cards.
  6. The fee must be relative to their average cost of card acceptance.
  7. Any surcharge amount, if allowed, must be included in the Transaction amount and not collected separately.

“No automotive dealer client of 3D Merchant Services has ever had an average cost of 3%. Therefore any solution charging 3% would be in non-compliance.”

How much can a merchant surcharge?

In short, surcharging is allowed to cover costs, not to make a profit. Let’s face it, based on the rules above, to simplify implementation, merchants will surcharge at the brand level because they lack the technology to discern between product types on a per transaction basis. Taking all that into account what can you surcharge?

  • Cannot exceed Maximum Surcharge Cap, which for Visa is currently 3%, effective April 15, 2023, and MasterCard remains at 4% in 2025.

Just because somebody offers it doesn’t make it right. Some companies are offering “free merchant accounts” by offsetting fees with surcharge of 3.5% or even 4%, both exceeding current rules. The average B2B company has much lower than 3.5% effective rate so that was always a violation of card acceptance rules, subject to penalty. The companies offering these services are making big money on the spread of actual fees vs what customers are paying. Again, these are card brand rules violations.

Non-compliant merchants could face fines ranging from $50,000 to $1 million according to a memo from a. credit card processor to merchants, 12/2023 ahead of expected increase in Visa enforcement in 2024 and beyond.

Surcharge checklist:

  1. Merchants must notify their acquirer 30 days before they begin surcharging; must state whether will surcharge at the brand level or product level.
    1. https://www.visa.com/merchantsurcharging
    https://www.mastercard.us/en-us/business/overview/support/merchant-surcharge-rules.html
    1. Amex- none required
  2. For card not present orders, disclose verbally if telephone; for online orders minimum 10-point Arial font, but in any case no smaller or less prominent than surrounding text.
  3. Receipt must be delivered with the surcharge as a separate line item.
  4. The surcharge amount must be sent with the transaction for authorization.
  5. Retail Point-of-Entry Disclosure example: “We impose a surcharge on credit cards that is not greater than our cost of acceptance. We do not surcharge debit cards. ” Main entrance(s) of the Merchant Outlet, in a minimum 32-point Arial font, but in any case no smaller or less prominent than surrounding text.
  6. Point of transaction sign: Every customer checkout or payment location, in a minimum 16-point Arial font, but in any case no smaller or less prominent than surrounding text.

What’s the penalty for non-compliance with surcharge rules? Fines. Acquirers of any merchant identified as surcharging improperly may be assessed an immediate US $1,000 fine. They pass those down to their clients. Acquirers (the credit card processor or merchant account provider) merchant clients could face fines ranging from $50,000 to $1 million. This is not all inclusive.

  1. Effective January 2025, Kansas allows surcharging.
  2. In 2015, the 11th U.S. Circuit Court of Appeals, a federal court, overturned Florida state law as being unconstitutional, allowing surcharges to legally continue in Florida and nine other states that had enacted bans against them. The case was a highly contentious 2-1 decision in which the court’s chief judge said the state surcharge bans (like Florida’s) were “being struck down by a federal court for no good reason.”
  3. In December 2019, Oklahoma attorney general official opinion declaring the state’s no-surcharging law unconstitutionally restricts free speech. 

Surcharge Laws Stories:

  • NYS new rules in effect on February 11, 2024. https://www.governor.ny.gov/news/governor-hochul-announces-new-law-clarify-disclosure-credit-card-surcharges-goes-effect-sunday
  • Visa Intensifies Enforcement on Merchant Surcharges https://thefinancialtechnologyreport.com/visa-intensifies-enforcement-on-merchant-surcharges/
  • Visa Revises Rules Governing Surcharge Programs https://www.taftlaw.com/news-events/law-bulletins/visa-revises-rules-governing-surcharge-programs-1/
  • 2/2023 NJ Businesses Fined For Credit Card Surcharge Without Proper Notice https://lakewoodalerts.com/cracking-down-businesses-fined-for-credit-card-surcharge-without-proper-notice/
  • California update
    https://oag.ca.gov/consumers/general/credit-card-surcharges
  • 2018 Florida https://www.nbc-2.com/story/40273084/you-can-legally-be-charged-extra-for-using-a-credit-card
  • 2018 case in California http://delfinomadden.com/credit-card-surcharge-ban/
  • http://fortune.com/2017/03/29/credit-card-charges-supreme-court-freedom-speech/

State statutes on surcharge laws

  • https://oag.ca.gov/hiddenfeeshttps://portal.ct.gov/DCP/Legal/Credit-Card-Surcharge
  • https://m.flsenate.gov/Statutes/501.0117
  • https://portal.ct.gov/dcp/legal/credit-card-surcharge?language=en_US
  • https://sll.texas.gov/faqs/credit-card-surcharge
  • https://statutes.capitol.texas.gov/Docs/BC/htm/BC.604A.htm#604A.0021
  • https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXX/Chapter140d/Section28a Massachusetts statutes.
  • Maine https://legislature.maine.gov/statutes/9-A/title9-Asec8-509.html
  • Minnesota https://www.revisor.mn.gov/statutes/cite/325G.051

For more information, see Surcharge law resources under Merchant Alerts & Rules Links or contact your acquirer for accurate and current information specific to your situation. Neither Christine Speedy nor this web site provide legal advice. Consult an attorney for all your legal questions.

Does your company want to surcharge? Or do you want to reduce fees with payment optimization? Call Christine Speedy right now at 954-942-0483, 9-5 ET for compliant solutions. Please share your surcharge insights for others and ask any questions below. The information herein is based upon public information available at the time written and may change.

3D Merchant Services is rebranding as Greater Good Tech.

Disclaimer: This information is for reference only and is not legal advice. Rules are constantly changing, and you should verify the accuracy of surcharge laws for your business needs and location.

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