Is it Legal to Surcharge Credit Card Transactions in California? Effective July 1, 2024, it's illegal to surcharge credit card transactions in California.
The No-Surcharge Rule (NSR). The NSR means that a merchant charges at most the same amount for a payment card1 transaction as for cash. If the merchant decides to apply a discount for payments in cash that discount cannot be extended to any specific card brand.
Section 1748.1 - Surcharge for use of credit card in lieu of payment by cash or check; discounts for payment by cash or check (a) No retailer in any sales, service, or lease transaction with a consumer may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check, or similar ...
Surcharging is widely accepted in the US except in Maine, Massachusetts, Connecticut, and Puerto Rico. Illinois, Colorado, Georgia, Kansas, Texas, Nevada, New York, South Dakota, New Jersey, Minnesota, California, Florida, Oklahoma, Michigan, and Montana allow surcharging with certain contingencies.
Use cash where you can
The easiest way to avoid card surcharges is to pay by cash. While businesses can charge a surcharge for paying by debit or credit cards, they can't charge a surcharge for paying by cash. BCU Bank customers have fee-free access to hundreds of ATMs across Australia through the atmx network.
No. The ability to surcharge only applies to credit card purchases, and only under certain conditions. U.S. merchants cannot surcharge debit card or prepaid card purchases.
On July 1, 2024, California banned hidden fees and deceptive “drip pricing” practices. The law applies to businesses selling or leasing goods and services for personal use in California, as well as resellers of goods and services like event tickets and online platforms.
Technically, it's illegal to surcharge credit card transactions in Florida. But federal courts have overruled this law, allowing merchants to surcharge credit card transactions without penalty. Let's go through this step-by-step to ensure you fully understand what this means.
To avoid a credit card surcharge, you can pay with alternative methods such as cash, debit cards, or mobile payment apps. Some businesses also offer discounts for non-credit card payments, providing an incentive to choose other payment options that help avoid credit card surcharge.
Consumer Financial Protection Bureau Releases Final Rule on Credit Card Late Fees, with Overdraft Fees on Deck. On March 5, 2024, the Consumer Financial Protection Bureau (Bureau) announced the final rule governing late fees for consumer credit card payments, likely cutting the average fee from $32 to just $8.
You can contact the seller directly to try to fix the issue, or you can “dispute the charge” with the company that issued your credit card. For example, you can dispute a charge that you did not authorize, that is for the wrong amount, or that is for something that the seller didn't provide as agreed upon.
Do Not Surcharge More Than the Cost of Your Processing Fee. This rule stipulates that you cannot use surcharging as a means to make a profit. In general, a surcharge cannot exceed 3% in the U.S.
The court issues a judgment, which allows the state to collect unpaid surcharges through involuntary means. The judgment amount (surcharge debt) must be paid before personal property can be transferred or sold. Judgments include a collection cost and interest charges calculated on the judgment balance.
A surcharge is not a convenience fee. A convenience fee is levied by a merchant for offering customers the privilege of paying with an alternative non-standard payment method. Merchants can process convenience fees in all 50 states. A surcharge is levied by a merchant for customer purchases made with a credit card.
While the California Civil Code Section 1748.1 prohibits retailers, including service providers, from imposing surcharges on customers who choose to pay with a credit card, it also allows retailers to offer discounts to encourage payment by cash, check, or other means.
Some states, like Connecticut and Massachusetts, have outright bans on surcharges, while others, such as California and Texas, have undergone legal challenges that leave enforcement uncertain.
A federal judge ruled March 26 that a California law banning retailers from charging customers a surcharge on credit card purchases is unconstitutional because it is too vague and violates the First Amendment right of free speech, PYMNTS.com has reported.
However, the cardholders who have paid these fees before were more willing to pay the surcharge without issue. Additionally, many customers are taking the option to use alternative payment methods to avoid surcharges. In the same study by PYMENTS, 71% of total consumers used cash to avoid the extra fees.
There is no prohibition for credit card surcharges and no statute on discounts for different payment methods. Merchants can impose a surcharge as long as it doesn't exceed the cost of the merchant's processing fee. Merchants may offer discounts for payment by cash, check or other methods unrelated to credit cards.
Under a new California law, California restaurants will no longer be able to charge customers surcharges, or service fees. Starting July 1, Senate Bill 478, or the “Consumer Legal Remedies Act: advertisements,” will ban “junk” fees on purchases made across California.
Tap-to-pay is less vulnerable to credit card skimming and other types of fraud since the card itself never touches the payment terminal for a transaction. “Skimming” involves using a hidden device to read and translate credit card data when a credit card is swiped to make a purchase.
Businesses incur costs for processing certain card payment types. Some businesses include these costs in the prices they charge for their products. Others pass the costs on as a surcharge for paying with the card.
U.S. merchants have the option to add a surcharge at the “brand level” to all transactions on Visa credit cards, or to transactions on particular types of Visa credit cards at the “product level” (e.g. Visa Traditional, Visa Traditional Rewards, Visa Signature) but not both.