Credit card surcharges have become a familiar sight at restaurants, service businesses, and retail counters. For merchants facing rising costs and processing fees, it’s easy to see why: instead of absorbing the entire credit card swipe fee, pass some of it to the customer who chooses to use one.
Simple enough, until the lawyers get involved. As we’ve discussed in the past, surcharges on different payment types are one of the trickiest things that merchants have to navigate. The legal environment and consumer pushback vary from state to state, while the landscape continues to evolve.
Surcharging sits at the intersection of state consumer-protection laws, card-network rules, antitrust litigation, and the growing crackdown on so-called “junk fees.” To avoid any issues, merchants need to know when, how, and on which transactions they can add that fee.
Let’s dive into the current landscape, how we got here, and a few key rules that merchants (and their POS providers) should play by.
From Surcharge Bans to Legal Battles
A major turning point in the surcharge debate came with Expressions Hair Design v. Schneiderman. In 2017, the U.S. Supreme Court considered a New York law that allowed cash discounts while restricting merchants from describing the same price difference as a credit-card “surcharge.” The Court held that the law regulated how merchants communicated prices and therefore implicated the First Amendment.
Since then, the fight has shifted from banning surcharges to regulating how they are disclosed. New York now permits merchants to charge more for credit-card purchases, but requires customers to see the total credit-card price before checkout. Simply posting “3% credit card fee” is not enough.
That reflects the broader legal shift, from banning the charge to requiring total transparency.
The Court of Public Opinion
Meanwhile, the economics behind surcharges is front-of-mind on both sides of the register.
J.D. Power’s 2025 Merchant Services Study found that 34% of small businesses now add surcharges to credit-card transactions. At the same time, 41% of credit-card users said they had decided not to pay by card at a business because of a surcharge.
Merchants are looking for ways to offset processing costs as they expand a growing suite of payment options and POS systems, just as customers are becoming more sensitive to how those costs are passed along.
J.D. Power also found that small businesses increasingly want more guidance from their merchant-services providers as their payment systems become more complex. That includes support not just for surcharging decisions, but for navigating an expanding ecosystem of POS platforms, payment methods, and checkout experiences.
It puts the burden on providers to do more than simply enable a fee—they need to help merchants weigh compliance, customer experience, payment flexibility, and the economics of each transaction.
Swipe Fees: Starting at the Source
Swipe Fees Keep Climbing
Source: Nilson Report
Merchants aren’t passing along these surcharges because their customers love them. Swipe fees have increased over time, from about 2% in 2010 to 2.36% in 2025. When more customers pay with a card than 15 years ago, and the fees per swipe are higher than ever before, it puts pressure on merchants to pass along the expense.
Congress has taken notice.
The legal and political pressure on swipe fees is building at the federal level. In January 2026, Senators Dick Durbin, Roger Marshall, and Peter Welch reintroduced the bipartisan Credit Card Competition Act, which would require the largest card-issuing banks to enable at least one alternative payment network besides Visa or Mastercard on their cards.
President Donald Trump has now endorsed the legislation twice on Truth Social, most recently in August, referring to an “out of control Swipe Fee ripoff.”
In the meantime, swipe fees will likely remain elevated. Merchants and their POS providers need to know how to manage them while protecting their bottom line, customer relationships, and legal standing.
5 Things Merchants Should Know About Surcharging
1. Credit and Debit Are Not the Same Thing
This is probably the easiest mistake to make—and one of the most dangerous.
Visa and Mastercard permit qualifying surcharges on certain credit-card transactions but prohibit them on their debit products. Mastercard explicitly states that surcharges are not permitted on Debit Mastercard or prepaid cards.
States can add another layer. As of August 1, 2026, Louisiana expressly prohibits retail businesses from imposing a surcharge because a customer uses a debit card.
A compliant system therefore needs to recognize what type of card is actually being presented—not simply add a fee because the plastic says Visa.
2. State Law Is Only Half the Rulebook
A surcharge can be permissible under state law and still violate card-network rules.
Visa requires merchants to notify their acquirer at least 30 days before beginning to surcharge. Visa’s current U.S. rules cap applicable credit surcharges at 3%, while Mastercard lists a maximum surcharge cap of 4% and further limits the surcharge based on the merchant’s actual cost of credit-card acceptance.
3. Don’t Let the Customer Discover it on the Receipt
The main regulatory theme is transparency.
A tiny sign behind the register, or a surprise fee on the final bill, is a risky way to operate. New York requires merchants to show consumers the credit-card-inclusive price before checkout. Minnesota requires specific disclosures depending on whether the transaction occurs in person, online, or over the telephone.
The safest surcharge is one the customer already understands before presenting a card.
4. The Problem with One-Size-Fits-All
When it comes to surcharges, a merchant operating in several states probably isn’t dealing with one legal landscape.
Disclosure standards, caps, prohibitions, and enforcement mechanisms differ—and they continue to change. Even payment-network requirements differ between Visa, Mastercard, and other brands.
That makes manually maintaining a nationwide surcharge program increasingly difficult.
5. Your Payments Provider Should Be Doing Some Heavy Lifting
Surcharging shouldn’t require the cashier to become a payments attorney.
A well-designed payments system can help distinguish credit from debit, apply the appropriate surcharge, produce compliant receipts, configure checkout disclosures, and adapt when applicable rules change.
Importantly, there should be a knowledgeable human at the ready when merchants aren’t sure how to proceed.
Here’s an important question to ask any provider offering a “surcharge program”: Is the system merely adding a percentage—or is it actually designed around compliance?
COCARD: Elite POS Without the Guesswork
For some businesses, absorbing every dollar of card-processing expense no longer makes sense. Surcharging can provide a legitimate way to recover part of that cost.
Adding a surcharge button to the POS is the easy part. The hard part is knowing which transactions can pass along the fee, how much to charge, how to tell the customer, and how that story changes one jurisdiction to another.
COCARD helps merchants build payment solutions around the way they actually do business—including strategies for controlling processing costs while keeping checkout clear, reliable, and compliant.
Get in touch today for a POS partner who keeps you safe as you scale.