Credit Card Surcharges and Cash Discounts: State Rules

A merchant searching for a "POS with no processing fees" usually means one of two things: a cheaper processor, or a way to make customers pay the fee. Both exist. The second is governed by card-network rules and, in some states, by statute, and it is the one that gets merchants fined. This page reads Visa's own surcharging documents, New York's statute and the POS vendors' documentation, all on October 27, 2026. It is not legal advice; state law on surcharges has changed often.

For whom: a US merchant that wants customers to cover card costs. Not for: merchants outside the United States.

Two ways to pass on the cost

The states

Visa's own Q&A, dated February 15, 2024, says Visa understands that Connecticut, Maine, Massachusetts, Oklahoma and Puerto Rico prohibit surcharging, and that Colorado, Minnesota, New Jersey and New York regulate it. Visa adds that this understanding may contain errors and is not legal advice, so read it as a list of places to check, not a final answer.

New York is the clearest example of regulation. General Business Law § 518 requires a seller that surcharges to clearly and conspicuously post the total price for paying by credit card, keeps the surcharge at or below what the card company charges the business, still allows two-tier cash and credit pricing, and sets a civil penalty of up to $500 per violation.

A merchant with stores in several states follows each store's state law, according to Visa: you may surcharge in one state and not in another.

What the POS does for you

Our pick

Square's built-in surcharge, for a small merchant who has decided to surcharge. It enforces the 3% ceiling, skips debit and the other excluded payments automatically, and blocks the feature in the states it names, which removes the mistakes Visa fines acquirers for. You still owe the signage and, under Visa's rules, the 30-day notice to your acquirer, and you still need to check your own state.

• Pick Clover's program instead if you are already on Clover: the rate is set by Clover at onboarding rather than by you, which keeps it within the program's rules.
• Look at Helcim instead if your real goal is paying less: its interchange-plus pricing passes the network's cost through with a published markup, which may cost less than a flat rate depending on your card mix and ticket size (check it against a recent statement), and if you still want to surcharge, its Fee Saver does it on the Smart Terminal. Lowering the base rate needs no signage, notice or state check; Fee Saver does. See POS with no monthly fee for the full comparison.
• Who should not surcharge: a merchant in a prohibiting state, a merchant whose customers mostly pay by debit (the surcharge cannot apply), and any business where an itemized fee at checkout would cost more goodwill than it recovers. A cash discount priced at the card price is the simpler alternative.