What states is it illegal to charge a credit card fee?

Depending on where you live, you may have noticed that some businesses add a surcharge to your bill if you use a credit card for payment. While this practice is perfectly legal in some states, it is banned in others.

So, which states prohibit credit card surcharges? And what are the implications of violating this ban? Keep reading to find out.

What states is it illegal to charge credit card fee
What states is it illegal to charge credit card fee?

Is Surcharging Legal?

The answer to this question depends on the state in which you live. Currently, 10 states—Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, Texas, and Wyoming—prohibit businesses from adding a fee for credit card payments. These bans typically apply to both brick-and-mortar and online retailers. If you live in one of these 10 states and have been charged a credit card fee, you may be entitled to a refund.

There are a few exceptions to these bans, however. For example, government entities—such as courts or public colleges and universities—are typically exempt from these laws. Additionally, some businesses are allowed to surcharge if they obtain prior approval from their credit card processor or the state attorney general’s office.

Is it legal to pass credit card fees onto customers?

Ever since the pandemic began, small businesses have been struggling to stay afloat. With so many people out of work or working from home, there’s just less money circulating overall.

That’s why many small business owners have started charging credit card fees as a way to offset their losses. But is this legal? Can businesses pass credit card fees onto their customers? Let’s take a look.

First, let’s start with the basics. Credit card companies typically charge businesses a processing fee of 2-4% for each transaction. So, if you’re a business owner and you’re looking at your statement and seeing fees that are higher than that, it’s possible that you’re being overcharged.

Of course, it’s also possible that your business carries a higher risk factor (for example, businesses in the travel industry typically pay higher fees than other businesses because there’s more potential for fraud).

As for whether or not you can pass credit card fees onto your customers, the answer is a little bit complicated. In some states, like Florida, it is explicitly against the law to do so.

In other states, like New York, there are no laws against it but businesses are not allowed to advertise that they’re doing so.

And then in other states, like California, businesses are allowed to pass on credit card fees but they must disclose it to customers beforehand.

The bottom line is that it depends on what state you’re in and how you go about it. If you’re thinking about passing credit card fees onto your customers, your best bet is to check with your local laws first and then make sure you’re being upfront and transparent about it if you do decide to go ahead with it.

What Are the Penalties for Violating the Ban?

If you live in a state that prohibits credit card surcharges and is found to violate the ban, you could face significant penalties. In Colorado, for instance, the first offense carries a fine of up to $500; subsequent offenses can result in fines of up to $1,000. Similarly, in Kansas, violators can be fined up to $500 per offense. And in Connecticut, first-time offenders face fines of up to $300; subsequent offenses can result in fines of up to $500.

Given the potentially high cost of violating these bans, businesses need to familiarize themselves with the laws of their state before adding any kind of surcharge to credit card payments.


If you own a business that accepts credit cards as payment, it’s important to know whether your state bans surcharges on these transactions. Currently, 10 states have such bans in place; violations of these bans can result in significant fines. Familiarizing yourself with your state’s laws on this matter can help you avoid potential penalties down the road.

Author’s Disclosures: The author is not a lawyer and this article should not be taken as legal advice. Please consult your state’s laws to determine if credit card surcharges are allowed. The author will not be held liable for any damages resulting from the use of this information.

About Author

Dhiraj Jha
Dhiraj Jha
As a personal finance and credit cards expert, I provide valuable insights and advice on budgeting, saving, investing, and debt management. I am also an expert on credit card rewards programs and help readers make informed decisions about which cards are right for them. My goal is to help people improve their financial literacy and make better financial choices.