Surcharging legally
in 2026

Surcharging — adding a fee when a customer pays with a credit card to recover your processing cost — is one of the most misunderstood tools in payments. It is broadly legal today, the result of a 2013 settlement that ended Visa and Mastercard's old no-surcharge rules. But "legal" is not "do whatever you want." Surcharging lives at the intersection of network rules, state law, and disclosure mechanics, and all three change. This piece maps the structure so you can implement it cleanly — and tells you exactly where to go confirm the current rules before you flip the switch.

Surcharging is not the same as cash discounting

The two get used interchangeably, and that confusion is where compliance problems start. They are different programs with different rules.

• Surcharging adds a fee on top of the listed price when a customer chooses to pay by credit card. The card price is the base price plus the surcharge. This is the program governed by the network caps, debit rules, and disclosure requirements below.
• Cash discounting works the other way: you post a single price that already assumes a card payment, then take money off for customers who pay with cash or check. Structured correctly, a true cash discount is generally treated differently from a surcharge — but only if it is genuinely framed as a discount, not a surcharge wearing a disguise.

Regulators and the networks look at substance, not labels. Calling a credit-card add-on a "cash discount" while charging the same base price to everyone does not make it one. Decide which program you are actually running, then follow that program's rules.

The network rules: caps, debit, disclosure, registration

Even where state law permits surcharging, you still answer to Visa and Mastercard. Their rules are national, they apply regardless of where you operate, and they are the part most merchants get wrong. The core constraints have historically included the following — but treat each as something to verify against the current network manuals, because the networks revise them:

• A cap on the surcharge — 3% in practice. Visa lowered its U.S. brand-level cap from 4% to 3% on April 15, 2023, and Visa's Core Rules update published October 18, 2025 kept it there. Mastercard's cap is 4%. Because almost every merchant accepts both, 3% is the effective ceiling — the lower cap binds. And the cap is only the outer limit: the surcharge may never exceed your actual cost of acceptance, whichever number is smaller. You cannot turn surcharging into a profit center — it is cost recovery, not revenue. (Source: Visa, Regulations & Fees.)
• Debit and prepaid cannot be surcharged. Period. This is the single most common violation. You may surcharge credit cards only. Surcharging a debit or prepaid card — even a debit card run as "credit" at the terminal — is not allowed. Your system has to distinguish card types correctly.
• Disclosure at the door and online. Customers must be told about the surcharge before they pay — at the point of entry or store entrance, at the point of sale, and on any e-commerce checkout page.
• Disclosure on the receipt. The surcharge must appear as a separate, clearly labeled line item on the transaction receipt — not folded into the total.
• Registration with the networks — 30 days' notice. Before you start, you must notify the networks and your acquirer or processor of your intent to surcharge. Visa's requirement is 30 days' advance written notice to your acquirer. Skipping this step is what gets programs shut down.

Surcharging is cost recovery, not a revenue line. The moment your fee exceeds your cost of acceptance, you are out of bounds.

The state landscape: it varies, and it moves

Here is the part that demands the most caution, so we will be direct about the limits of any general guidance: state law on surcharging varies, and it has changed repeatedly. Surcharging is permitted in most states, but a handful of states and jurisdictions have historically restricted, prohibited, or litigated it, and several of those restrictions have been challenged in court — sometimes successfully, sometimes leaving the law in flux.

Because of that history, no blog — including this one — is a substitute for confirming your own state's current posture with counsel. A state's position can turn on a single court ruling, and what was true last year may not be true today. With that caveat stated plainly, here is the shape of the map as of mid-2026, so you at least know where to look hard:

• Enforced prohibitions: Connecticut, Massachusetts, Maine, and Puerto Rico are the jurisdictions where surcharge bans are generally described as active and enforced.
• Lower state cap: Colorado caps surcharges at 2% — below both network caps. Where a state cap is lower, the state cap wins.
• Disclosure-shaped rules: New York permits surcharging but requires that the posted price be the cash price, with the surcharge disclosed as an addition rather than the card price being posted as the default.
• Genuinely unsettled — do not guess: California and Texas both have surcharge bans on the books that federal courts have ruled unconstitutional, leaving enforcement inconsistent. If you operate in either, this is a conversation with an attorney, not a blog post. We are not going to tell you it is legal, and we are not going to tell you it is illegal, because the honest answer is that it is contested.
• Everywhere else: generally permitted up to the binding card-brand limit.

A note on sourcing, because it matters here: the state-by-state surcharge tables circulating online — including the ones we checked while updating this piece — are almost entirely published by payments vendors, not by legislatures or courts. They are useful orientation and nothing more. We have not been able to verify a primary statutory source for every entry above, so treat the list as a map of where to investigate, not as legal conclusions. Your attorney and your state's actual statutes are the authority.

The interchange settlement: what actually happened in June 2026

There is a second thing worth knowing, because it may widen what you are permitted to do — and because a lot of coverage has gotten it wrong.

On June 9, 2026, U.S. District Judge Brian Cogan in the Eastern District of New York granted preliminary approval to the long-running Visa/Mastercard interchange settlement. Preliminary. Not final. This is the same litigation whose earlier proposed settlement Judge Margo Brodie rejected in June 2024 before the case moved to Judge Cogan in September 2025.

If it survives to final approval, the headline terms include roughly $38 billion in projected merchant savings, a 10-basis-point reduction in credit interchange held for five years, a 1.25% cap on standard consumer cards for eight years, the ability for merchants to decline certain premium and commercial credit cards (a partial unwinding of "honor all cards"), and expanded rights to surcharge and discount at the brand or product level — which is the part that touches this article directly.

Now the sober part. It is not in effect. The class notice-and-comment period has to run, final-approval review follows, and the National Association of Convenience Stores has already signaled it will appeal to the Second Circuit if final approval is granted. Some analysts do not expect full finalization before roughly 2029. Do not rebuild your pricing around it yet. If a processor or consultant tells you the settlement "took effect" and your rates are about to drop, they are either misinformed or selling you something. (Sources: Payments Dive, June 2026; case background.)

What is durable is the workflow:

• Confirm current law for every state you operate in. Verify with your state's statutes, your attorney, or your processor's compliance team before launching — and re-check periodically, not just once.
• Treat the strictest rule as the binding one. If you operate across state lines, your program has to satisfy the network rules and the most restrictive applicable state law.
• Document your basis. Keep a record of the cap you applied, the disclosures you posted, and the date you confirmed the law. If anyone ever questions the program, that paper trail is your defense.

How to implement it cleanly

Done right, surcharging is unremarkable — customers see a clearly disclosed fee, choose how to pay, and move on. Done sloppily, it generates chargebacks, complaints, and exposure. The difference is process.

• Confirm eligibility first. Check current network rules and current state law for your locations before you build anything.
• Register and notify. Give the networks and your processor the required advance notice. Make sure your processor's surcharging product is actually enabled on your account.
• Configure card-type detection. Your terminal or gateway must reliably separate credit from debit and prepaid so the fee never touches an ineligible card.
• Cap to cost. Set the surcharge at or below your cost of acceptance, within the network maximum — never above it.
• Disclose everywhere. Signage at entry and point of sale, a notice at online checkout, and a separate line item on every receipt.
• Review on a schedule. Re-verify state law and network rules at least annually, and any time you expand into a new state.

None of this is exotic. It is the same discipline that separates a clean payments program from a messy one: know the rule, configure to it, disclose it, and keep a record.

Frequently asked questions

Is surcharging legal?

Surcharging is broadly legal across most of the country, the result of a 2013 card-network settlement that ended Visa and Mastercard's no-surcharge rules. But legal does not mean unrestricted — it sits at the intersection of network rules, state law, and disclosure mechanics, and all three can change.

Can you surcharge a debit or prepaid card?

No. You may surcharge credit cards only. Surcharging a debit or prepaid card is not allowed — even a debit card run as credit at the terminal. This is the single most common violation, so your system must reliably distinguish card types before any fee is applied.

What is the difference between surcharging and cash discounting?

Surcharging adds a fee on top of the listed price when a customer pays by credit card. Cash discounting posts one card-assumed price and takes money off for cash payers. They are different programs with different rules, and regulators judge substance over labels — not the name you give it.

How do you implement surcharging cleanly?

Confirm current network rules and state law first, register and give the networks advance notice, configure card-type detection so debit and prepaid are excluded, cap the fee to your cost of acceptance, disclose at entry, checkout, and on every receipt, and re-review on a schedule.