Navigating the Waters of Surcharging Credit Cards and Cash Discount Programs

Navigating the Waters of Surcharging Credit Cards and Cash Discount Programs

Thursday, February 15, 2024

Understanding Laws and Policies

In the ever-evolving landscape of payment methods, businesses are constantly exploring ways to manage transaction costs and enhance their bottom line. Two popular strategies that have gained attention in recent years are surcharging credit cards and implementing cash discount programs. While both approaches aim to mitigate processing fees, it's crucial for businesses to navigate the legal and policy implications associated with each. In this blog post, we'll delve into the intricacies of surcharging credit cards and cash discount programs, examining the relevant laws and policies to help businesses make informed decisions.

Surcharging Credit Cards:

Surcharging credit cards involves adding an additional fee to the total transaction amount when customers choose to pay with a credit card. However, it's essential to note that surcharging is subject to various legal considerations, and its permissibility varies by jurisdiction.

In the United States, for instance, the legality of credit card surcharging is regulated at the state level. As of my knowledge cutoff in January 2022, ten states—California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas—restrict or outright prohibit credit card surcharging. Businesses operating in these states must adhere to local regulations to avoid potential legal consequences.

On the federal level, the Dodd-Frank Act allows surcharging, but it permits states to override this provision with their own regulations. Therefore, businesses must remain vigilant and stay informed about state-specific laws to ensure compliance.

Cash Discount Programs:

In contrast to surcharging, cash discount programs offer a discount to customers who choose to pay with cash, check, or any other non-credit card payment method. This strategy has gained popularity as a legal alternative to surcharging, as it incentivizes cash transactions without violating payment network rules.

It's important to emphasize that cash discount programs must be carefully implemented to comply with legal standards. Merchants should clearly communicate the pricing structure, ensuring that the discount is prominently displayed as a cash discount rather than a surcharge on credit card payments.

Navigating the Legal Landscape:

To navigate the legal landscape surrounding these payment strategies, businesses must remain up-to-date on relevant laws and policies. Regularly check with legal counsel and payment processing experts to understand the latest developments in your jurisdiction.


Surcharging credit cards and implementing cash discount programs both offer potential advantages for businesses looking to manage transaction costs. However, the key to success lies in understanding and adhering to the laws and policies governing these practices. By staying informed and compliant, businesses can strike the right balance between profitability and customer satisfaction in an ever-changing payment landscape.