Network Rules on Surcharging Are Loosening. State Law Is Not. Here Is Where a Surcharge or Cash Discount Program Breaks, State by State.

Most of the recent news about card surcharging has been about the networks. The amended Visa and Mastercard rules settlement received preliminary approval on 9 June 2026, and if it is finally approved a merchant will be able to surcharge one brand without surcharging another. As of September 2026 that final approval is still pending, and nothing in the agreement touches state law. A state that bans or caps surcharges keeps doing so whatever the network rules say.

That matters to anyone who sells a surcharge or cash discount program across a portfolio, because the program is usually configured once and deployed everywhere. Here is the network baseline, and five states where one configuration breaks, as of September 2026.

The Network Baseline

Visa's merchant surcharging Q&A, in its version dated 15 February 2024, sets out what a U.S. merchant that surcharges must do. It must notify its acquirer at least 30 days before it starts, carry the surcharge amount in a dedicated field of the transaction message, limit the surcharge to credit cards, and cap it at the lesser of its merchant discount rate for that card or 3%. It must disclose the surcharge at the point of entry, at the point of sale and on every receipt. Debit and prepaid cards cannot be surcharged, and Visa says in terms that a debit cardholder who presses "credit" on the terminal is still using a debit card.

Enforcement lands on the acquirer. Visa says it runs yearly mystery shopping through outside auditors, and that the acquirer of a merchant found surcharging improperly may be assessed an immediate $1,000 fine.

The same document draws the line that most programs sold as cash discounting sit on. A merchant may offer a discount for paying by other means, but only if it displays either the card price alone or the card and cash prices side by side for each item. The card total must come from the prices as displayed, not from a fee added when the customer pays by card; otherwise, Visa says, it may be treated as a surcharge and fall under the surcharge rules.

Visa also says the merchant outlet's location decides which state's law applies, so a multi-state merchant may surcharge in some stores and not others.

New York: The Price on the Shelf Has to Be the Card Price

New York's General Business Law section 518, as amended with effect from 11 February 2024, lets a seller surcharge credit card customers only if it clearly and conspicuously posts the total price for using a credit card, surcharge included. The surcharge cannot exceed what the card company charges the business, and a two-tier display of credit and cash prices is permitted. Civil penalties run to $500 per violation, and section 518 lets municipal consumer affairs offices and local government attorneys enforce it as well as the state.

The Department of State's one-page guidance is blunter than the statute. It lists as illegal a sign at the register announcing a fee on all credit card sales; a surcharge warning on the price tag; advertising that all prices include a cash discount that does not apply to card purchases; and charging a separate line item on the receipt, whether it is called a convenience fee, service fee, technology fee, processing fee or non-cash adjustment, without clearly posting the total price before the purchase. The legal options it shows are the card price and cash price side by side, a higher card price with an advertised cash discount, or one price for both.

"Non-cash adjustment" is the label many terminal-based programs print. In New York, the receipt line is not the problem; a shelf price that is not the card price is.

Connecticut: No Surcharge on Any Transaction

Connecticut General Statutes section 42-133ff(b) is one sentence: no person may impose a surcharge on any transaction. The statute defines a surcharge as any additional charge or fee that increases the total amount of a transaction for the privilege of using a particular method of payment, so a fee does not escape the ban by being given another name.

Discounts remain lawful under section 42-133ff(c), for paying by cash, check, debit card or similar means rather than by credit or charge card, but only with notice: posted on the premises for in-person sales, displayed on the website or app before an online transaction completes, and given verbally before a telephone or other oral transaction. A violation is an unfair or deceptive trade practice under the state's Unfair Trade Practices Act, and the Commissioner of Consumer Protection may add a civil penalty of up to $500 per violation.

Massachusetts: A Ban, and Now a Total-Price Rule

Massachusetts General Laws chapter 140D, section 28A, says that no seller in any sales transaction may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means. A discount for paying by those means is permitted if it is offered to all prospective buyers and its availability is disclosed clearly and conspicuously.

Since 2 September 2025 the Attorney General has enforced regulations at 940 CMR 38.00 that add a general rule on fees: whenever pricing information is presented, a business must disclose the total price, including any mandatory charges, and display it more prominently than any other pricing information. For card acceptance the statute had already settled the substance; the regulations raise the stakes on how a discount program is presented.

Colorado: Two Percent, Prescribed Signage, and No Debit

Colorado permitted surcharging from 1 July 2022, when Senate Bill 21-091 amended section 5-2-212 of the Revised Statutes, but on its own terms. A seller may surcharge either up to 2% of the transaction total or up to the merchant discount fee it actually pays to process the transaction, which the seller or its service provider must calculate from the actual amount paid. Either way it must post signage in wording the statute prescribes, on the premises or before an online customer completes the purchase, show the surcharge as a separate line on the receipt, and impose only one surcharge per transaction.

The statute also lists where a surcharge may not be imposed: cash, check, a debit card whether or not a PIN is used, a payment processed as debit, and a gift card redemption. A seller that violates the section violates the Uniform Consumer Credit Code and is liable as a creditor under it.

Colorado added a general pricing law on 1 January 2026. House Bill 25-1090 requires the total price to be shown as a single number, more prominently than any other pricing information, and defines the total price to include amounts that are not reasonably avoidable. It does not mention card surcharges, and we found no published guidance from the Attorney General on how the two provisions interact, so treat the question as open.

California: Mostly a Disclosure Question, With One Trap

California's SB 478 made it unlawful from 1 July 2024 to advertise or display a price that leaves out mandatory fees, under Civil Code section 1770(a)(29). The Attorney General's guidance addresses card fees directly: a credit card processing fee is generally not a mandatory fee, because the customer can avoid it by paying another way. But if a business accepts only credit cards, the fee is mandatory and has to be included in the advertised price.

That is the trap for a card-only merchant, such as a cashless counter or an online-only store, running a surcharge program built for a business that takes cash.

Civil Code section 1748.1 separately prohibits retailers from surcharging customers who pay by credit card. In Italian Colors Restaurant v. Becerra, decided on 3 January 2018, the Ninth Circuit held that the statute violated the First Amendment as applied to the plaintiff merchants and narrowed the relief to those plaintiffs. The statute was not struck down for everyone else, so a California surcharge program rests on a ruling that covered five merchants.

Beyond These Five

Visa's own Q&A lists the states where it understands surcharging to be prohibited as of February 2024, which are Connecticut, Maine, Massachusetts and Oklahoma, plus Puerto Rico, and the states with requirements as Colorado, Minnesota, New Jersey and New York. Visa says that list may contain errors and should not be relied on as legal advice, and it is two and a half years old. Use it as a list of places to check, not as the check.

What to Put in Place

• Record the state of every merchant outlet, not just the legal entity's address. Visa's rule and every statute above apply by location, and a multi-state merchant can be compliant in one store and not in the next.
• Confirm the program can tell debit and prepaid from credit at the BIN level. Visa and Colorado both forbid surcharging debit, and a debit card run as "credit" is still debit.
• Set the cap per state. Visa's ceiling is the lesser of the merchant discount rate and 3%; Colorado's flat option is 2%; New York caps the surcharge at what the card company charges the business.
• Audit how "cash discount" deployments actually price. If the card total comes from a fee added at the terminal rather than from posted card prices, Visa may treat it as a surcharge, New York's guidance calls it illegal without a posted total price, and Connecticut's definition of a surcharge, any added fee for using a particular payment method, puts it inside a ban.
• Keep the Visa 30-day notice on file, with the date received, and make sure it reached the acquirer.
• Give Colorado merchants the statutory sign wording for their chosen option, and ask California card-only merchants whether the fee is built into the advertised price.
• Flag the portfolio for review when the settlement is finally approved. The network rules will change; none of the state rules above will.

None of this needs a new system. It needs a state field on the location, a card-type check in the program, and a record of which variant each merchant was given. A surcharge that is legal under the network rules can still be unlawful at the store, and under Visa's own Q&A the $1,000 fine for getting it wrong may be assessed on the acquirer, not the merchant.