Surcharging, dual pricing and cash discounts can cut your processing costs to nearly zero. Done wrong, they bring card brand fines and state penalties. Here is how each one works and the rules for doing it right.
3%
Surcharge cap
Visa limit on credit card surcharges, or your cost if lower.
No cap
Dual pricing & cash discount
No percentage limit. You set the gap between cash and card prices.
0%
Surcharge on debit
Never surcharge debit or prepaid cards, even when run as credit.
30 days
Notice to surcharge
Tell your processor and Mastercard before you start.
All three shift card costs to the customers who pay by card. They follow different rules, so pick the one that fits your state and your customers.
A separate fee added when a customer pays with a credit card.
Your posted price stays the same. Credit card payments get a fee line on the receipt.
Every item shows two prices: one for cash, one for card.
The customer sees both prices up front and pays the one that matches how they pay.
Prices are set at the card price, and cash payers get a discount.
The posted price is the card price. Paying cash lowers the total at checkout.
These come from the Visa and Mastercard rules plus state law. Miss one and you risk fines from the card brands.
Connecticut, Massachusetts and Maine ban surcharges, and several states cap or restrict them. See the state table below.
Never surcharge debit or prepaid cards, even when a debit card is run as credit. Your terminal should detect the card type automatically.
Visa caps surcharges at the lesser of your cost of acceptance or 3%. Mastercard allows up to 4%, but no more than your cost. In practice, 3% or your actual cost, whichever is lower.
Notify your processor at least 30 days before you start. Mastercard also asks for 30 days’ notice through its online form. PayVault handles these notices for you.
Disclose the surcharge at the store entrance and at checkout. Online, show it before the customer submits payment.
The surcharge must appear as its own line, with the dollar amount, on every receipt.
Unlike surcharges, these programs have no percentage cap and work in states that ban surcharges, as long as the prices customers see are the prices they pay.
Pick dual pricing or cash discount and apply it to every price in the store, on every menu, shelf tag, pump and website. Mixing methods, such as two prices on one sign and a card fee on another, is not compliant.
Menus, shelf tags, your website and online ordering all need the cash price and the card price side by side.
The register must charge exactly the advertised price for the way the customer pays.
A separate "non-cash adjustment" or "service fee" that only applies to cards is treated as a surcharge, with all of its rules and caps.
The price on the tag must be the card price. A lower posted price plus a fee at the register counts as a surcharge.
Real-world examples
Whichever method you choose, every price in the store, on the menu and online must follow it.
Gas stations have posted two prices for decades. The same principles apply to any business.
Regular unleaded
Both prices shown with equal prominence on the street sign, every pump and inside. The customer is charged exactly the price for how they pay.
Regular unleaded
Pay cash, save 10¢ a gallon
The posted price is the higher card price. Paying cash takes 10¢ a gallon off. Card customers pay exactly what the sign says.
Regular unleaded
+ 10¢ a gallon for cards
A surcharge in disguise. It breaks the debit ban and disclosure rules and is illegal in states that ban surcharges.
Prices are illustrations using a 3% difference. Dual pricing and cash discounts have no percentage cap, so you set the gap between cash and card prices.
The most common mistake: calling a card-only fee a "non-cash adjustment" or "service fee." If it is added only when a customer pays by card, the card brands treat it as a surcharge, with the 3% cap, the debit ban and every disclosure rule.
Both can exceed $100,000 if the problem remains unfixed. The card brands assess these fines against your processor, which usually passes them to you, and Visa's steps add up month after month.
| First notice of a violationPlus a request for a written plan to fix it | $1,000 |
| Response or fix deadline missed | $25,000 |
| 30 days after the response was due | $50,000 |
| 60 days | $75,000 |
| 90 daysRunning total: $251,000 | $100,000 |
| 120 days | $125,000 |
| 150 days | $150,000 |
| Every month after thatOn top of the previous month, until fixed | +$25,000 |
| First violationMastercard Rules allow up to $20,000 | $5,000 |
| Second violation within 12 months | Up to $30,000 |
| Third violation within 12 months | Up to $60,000 |
| Fourth and each one afterPlus per-transaction assessments while it continues | Up to $100,000 each |
Repeat amounts are Mastercard's published maximums for violations customers can see. Counts reset on a rolling 12 months.
On top of card brand fines, customers can demand refunds, states can add their own penalties, and repeated problems can get your merchant account closed. Set it up correctly once and none of this applies.
Most states follow the card brand rules above. These states ban, cap or restrict surcharges; the caps below apply to surcharges only, not to dual pricing or cash discounts. Last reviewed November 4, 2026; laws change, so confirm with your state attorney general before you start.
| State | Surcharges | What to know |
|---|---|---|
| Connecticut Surcharges prohibited. Cash discounts allowed when the listed price is the card price. | Banned | Surcharges prohibited. Cash discounts allowed when the listed price is the card price. |
| Massachusetts Surcharges prohibited. Cash discounts allowed. | Banned | Surcharges prohibited. Cash discounts allowed. |
| Maine Surcharges prohibited on credit and debit cards. Discounts from the regular price are allowed. | Banned | Surcharges prohibited on credit and debit cards. Discounts from the regular price are allowed. |
| Puerto Rico Listed by Visa as prohibiting surcharges. | Banned | Listed by Visa as prohibiting surcharges. |
| Colorado Surcharges up to 2% or your processing cost, with required sign wording and a separate receipt line. Cash discounts are not capped. | Capped | Surcharges up to 2% or your processing cost, with required sign wording and a separate receipt line. Cash discounts are not capped. |
| Oklahoma Allowed since November 1, 2025, up to the lesser of 2% or your cost. Credit cards only. | Capped | Allowed since November 1, 2025, up to the lesser of 2% or your cost. Credit cards only. |
| New Jersey Up to your actual processing cost, credit only, with signs at entry and checkout. | Capped | Up to your actual processing cost, credit only, with signs at entry and checkout. |
| New York Up to your cost. You must post the total card price, not just a sign about a fee. | Capped | Up to your cost. You must post the total card price, not just a sign about a fee. |
| Minnesota Up to 5%, with a verbal notice at the sale and a posted sign. | Capped | Up to 5%, with a verbal notice at the sale and a posted sign. |
| California An older surcharge ban remains in the code and its enforceability has been litigated. Get advice before surcharging. | Unsettled | An older surcharge ban remains in the code and its enforceability has been litigated. Get advice before surcharging. |
What is changing in 2026
On June 9, 2026, a federal judge gave preliminary approval to a settlement covering about 12 million merchants. If it becomes final, merchants gain more room to surcharge or discount by card type, the right to decline some premium and commercial cards, and lower credit interchange rates. Until final approval and new network rules are published, today’s rules still apply. We will update this page when they change.
This page is general information, not legal advice. Card brand rules and state laws change often; confirm your plan with your processor and, where needed, an attorney. Last reviewed November 4, 2026.
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