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All You Need to Know About Credit Card Merchant Fees


If you pay with credit cards, you may have noticed that you often get a little fee tacked onto the price of what you’re buying. You may be notified about this fee in advance, or it may be an unpleasant surprise. Let’s take a closer look at these credit card surcharges and what you, as the consumer, need to know.

Why merchants charge “swipe fees”

Credit card issuers, like Visa, bill the retailer for the payment service they provide, and the retailers often pass a portion of this charge on to their customers. Swipe fees generally range from 1.5% to 3% of the purchase. Some merchants pass the entire credit card processing cost on to the customer. Others require a minimum sale amount for all credit card purchases.

Are credit card surcharges legal?

According to a 2017 U.S. Supreme Court ruling, surcharges are protected as a form of free speech. However, there are restrictions on how they can be applied. Merchants are required to:

  • Clearly disclose the fact that there is a surcharge prior to the transaction.

  • Display the credit card surcharge on the receipt.

  • Keep surcharges below 4% of the transaction, or the fee the merchant pays to the credit card companies, whichever is less.

Also, the minimum purchase requirement cannot exceed $10. It’s also important to note that credit card surcharges are legally protected, but debit card surcharges are not.

States on credit card surcharges

While it’s legal under federal law to add a surcharge to purchases made with credit cards, some states forbid this practice. As of Nov. 1, 2022, the following states, and Puerto Rico, have laws prohibiting merchants from charging these fees:

  • California

  • Colorado

  • Connecticut

  • Florida

  • Kansas

  • Maine

  • Massachusetts

  • New York

  • Oklahoma

  • Texas

What happens when a merchant breaks the rules?

Often, the merchant is simply unaware of, or does not understand, the latest version of the law. If you find yourself on the consumer end of a broken credit card surcharge law, you can politely let the merchant know. 

Sometimes, though, the merchant is well aware of the law and consciously chooses to disregard it. You can report violations to the credit card network by calling the number on the back of your card or submitting an online complaint.

Credit card surcharges are usually legal, but you need to know your rights as the consumer. Let this guide keep you in the know on credit card merchant fees.

Your Turn: Have you ever been charged an illegal swipe fee? Tell us about it in the comments.

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