Who Pays the Credit Card Fee: Surcharging Legality

Can I pass the credit card processing fee to my customer?

In most U.S. states, yes, you can add a card surcharge, but a handful of states and Puerto Rico prohibit it, and card network rules require advance disclosure and a cap on the surcharge amount, so verify current law before enabling one.

Surcharging — adding a fee specifically for paying by credit card — is legal in most of the U.S., but not everywhere, and even where allowed it's governed by both state law and Visa/Mastercard network rules requiring:

• Advance notice to the customer before they pay
• A surcharge capped at your actual processing cost, commonly around 3–4% depending on the card network
• Clear disclosure at checkout, not buried in fine print

A small number of jurisdictions — Connecticut, Massachusetts, Maine, and Puerto Rico — currently prohibit surcharging outright. Confirm current law in your specific state before turning on a surcharge, since this is a legal compliance question that varies by jurisdiction.

BCTM allows you to configure a card surcharge or convenience fee on invoices, but does not determine whether surcharging is legal in your specific state — verify that yourself before enabling it.

Is credit card surcharging legal in my state?

Surcharging is legal in most U.S. states as of 2026, but Connecticut, Massachusetts, and Maine prohibit it, along with Puerto Rico, so you must confirm your specific state's current law before adding a surcharge.

(Source: KwickOS 2026 state guide; Rich The Payment Guy)

Even in permitted states, surcharge rules involve advance disclosure requirements and network-imposed caps (commonly around 3–4%). Because state laws can change, verify current status directly before enabling a surcharge — this list should not be treated as the final word for your state.

BCTM's surcharge settings can be turned on or off per your business, but you are responsible for confirming your state permits it before enabling it.

What states ban credit card surcharges?

As of 2026, Connecticut, Massachusetts, and Maine ban credit card surcharging, along with Puerto Rico, though Maine allows a narrow exception for certain government-entity fees.

(Source: Rich The Payment Guy — surcharge banned states; KwickOS 2026 state guide)

This is a shorter list than many people expect — most states permit surcharging, subject to disclosure and cap requirements from the card networks. Because state legislatures periodically revisit these laws, confirm the current status for your state before assuming this list is exhaustive or unchanged.

What's the difference between a surcharge and a convenience fee?

A surcharge is an extra fee specifically for using a credit card instead of another payment method, while a convenience fee is charged for the convenience of an alternative payment channel (like paying online or by phone) and typically applies regardless of card type.

The distinction matters because some states or card network rules restrict surcharges more tightly than convenience fees, so businesses in surcharge-restricted states sometimes use a properly structured convenience fee model instead — but the legal requirements for each differ and should be confirmed before implementation.

BCTM lets you configure either a surcharge or a convenience fee model on invoices, depending on which structure fits your state's rules.

How much can I legally surcharge a customer?

Card network rules generally cap surcharges at your actual processing cost, commonly cited near a 3–4% ceiling, but the exact allowable amount can also be limited by state law, so confirm both before setting a rate.

Two layers of rules apply to surcharge amounts:

1. 1.Card network rules (Visa, Mastercard) — surcharges must not exceed your actual cost of acceptance, with a commonly cited ceiling around 3–4%
2. 2.State law — some states impose their own caps or additional disclosure requirements on top of network rules, and a handful ban surcharging entirely

Because both sets of rules apply simultaneously and states periodically update their statutes, don't rely on a single percentage figure without checking your card processor's current network-compliance guidance and your state's current law.

BCTM lets you set a surcharge percentage on your invoices, but you're responsible for setting it within your card network's and state's current legal limits.

Do I have to disclose a credit card surcharge before checkout?

Yes — card network rules require merchants to disclose a credit card surcharge clearly before the customer completes payment, not after the fact.

Disclosure requirements typically require the surcharge to be:

• Shown clearly on signage or the payment page before the transaction is completed
• Itemized separately on the receipt or invoice, not folded silently into the total
• Stated as a specific percentage or amount, not a vague reference to "processing fees may apply"

Failing to disclose properly can violate card network rules, potentially exposing you to penalties from your payment processor, separate from any state-law disclosure requirements that may also apply.

When BCTM's surcharge feature is enabled, the fee is itemized as a separate line item shown to the customer before they pay.

Can I charge a lower price for cash and higher for card instead of surcharging?

Yes — offering a cash discount off a standard listed price is treated differently from surcharging in many jurisdictions and is more broadly permitted, but the distinction depends on how the pricing is presented.

The legal distinction generally comes down to how the price is framed:

• Cash discount — you post a standard price and discount it for cash/non-card payment; generally viewed more favorably and permitted more broadly
• Surcharge — you post a standard (cash) price and add an extra fee for card payment; more tightly regulated and banned outright in a few states

Even where this distinction is recognized, the specific rules on how prices must be displayed (e.g., the card price must be the "true" listed price, with cash getting the discount) vary by state. Structure and disclose your pricing carefully, and confirm the approach with your payment processor and, if in doubt, a licensed attorney.

Should I just build the card fee into my prices instead of surcharging?

Building the processing cost into your base pricing avoids surcharge disclosure and state-law complexity entirely, and is a common alternative for contractors who want simplicity over itemizing the fee.

Instead of adding a separate line-item surcharge, some contractors simply raise their base prices slightly to absorb the average card processing cost. Trade-offs:

This approach is entirely a pricing strategy decision, not a compliance workaround — it simply avoids the surcharge-specific rules by not charging a separate fee at all.

BCTM's price book lets you build a margin buffer into your line-item pricing if you'd rather not itemize a separate surcharge.