Credit card processing fees can take a significant toll on businesses, leading many to explore surcharge payments as a way to offset costs. But before implementing a credit card surcharge, it’s crucial to understand whether it’s legal in your state. This 2025 guide breaks down the latest laws and regulations to help businesses navigate surcharge credit card processing.
What Is a Credit Card Surcharge?
A credit card surcharge is a fee added to a transaction when a customer chooses to pay with a credit card. This charge helps businesses cover credit card processing fees, which typically range from 1.5% to 3.5% per transaction.
However, surcharges are not allowed everywhere, and businesses must follow strict regulations set by card networks (Visa, Mastercard, Amex) and state laws.
States Where Credit Card Surcharges Are Legal in 2025
As of 2025, most U.S. states allow merchants to implement a card payment surcharge. Here’s a breakdown:
States That Allow Surcharges
- Most states, including California, Texas, Florida, and Illinois, permit surcharges as long as businesses comply with regulations.
States Where Surcharges Are Illegal
- Connecticut
- Massachusetts
Businesses in these states cannot impose a surcharge on credit card transactions.
Key Regulations for Surcharge Payment Compliance
If your business operates in a state where credit card surcharges are legal, you must comply with the following regulations:
- State Laws: Even in states where surcharges are allowed, local regulations may impose additional restrictions.
- Card Network Rules: Visa, Mastercard, and American Express require merchants to notify them at least 30 days before applying surcharges.
- Surcharge Limit: The surcharge cannot exceed 4% of the transaction total or the actual cost of processing the payment.
- Consumer Disclosure: Merchants must provide clear signage at the point of sale and on receipts to inform customers about the surcharge.
Are Debit Card Surcharges Allowed?
No. Federal law prohibits businesses from applying a surcharge payment to debit card transactions. Surcharges only apply to credit card transactions.
How to Legally Implement a Credit Card Surcharge
To stay compliant, businesses should follow these steps when adding a surcharge credit card processing system:
- Confirm State Laws: Ensure that surcharges are legal in your state.
- Notify Card Networks: Register with Visa and Mastercard at least 30 days in advance.
- Update Your Payment System: Enable automatic surcharge calculation within your POS or payment gateway.
- Provide Customer Notices: Display signage at checkout and on invoices.
- Limit the Surcharge to 4%: Keep the fee within the legal maximum.
Why Businesses Are Adopting Credit Card Surcharges
Many businesses are turning to surcharges as a way to protect their profits. Key benefits include:
- Offsetting Processing Fees: Reducing the impact of rising credit card processing fees.
- Encouraging Alternative Payments: Promoting debit, ACH, or cash payments to avoid fees.
- Maintaining Competitive Pricing: Keeping base prices lower for all customers.
Why Choose VANX Surcharging Solutions?
VANX Software Solutions simplifies surcharge implementation, ensuring full compliance while maximizing business revenue. Our automated system, powered by Strictly, takes the hassle out of managing credit card surcharge payments.
Benefits of VANX Surcharging Solutions:
- 100% Legal Compliance – We handle state and card network regulations.
- Seamless Integration – Works with your existing POS and online checkout.
- Zero Cost to Business – Customers cover the processing fees.
- Automated Fee Calculation – Ensures accurate and transparent charges.
- Dedicated Support – Assistance with setup, compliance, and troubleshooting.
Should Your Business Implement a Credit Card Surcharge?
If credit card processing fees are impacting your profitability, adding a surcharge may be a smart solution. Just ensure compliance with state laws, card network rules, and transparency guidelines.
For a seamless and compliant way to manage surcharges, consider VANX Surcharging Solutions.
