A frequently asked question by retailers is whether it is legal to charge a customer a processing fee for the convenience of using a credit card. And the flip side – it is legal for our vendors to add a surcharge to their invoices when we pay by credit card?

We all know that accepting payment via credit card costs money. Depending on the processor you use, the percentage taken from your sale can be between 2% and 4%. That is no small amount against your probably slim profit margin, and of course more and more consumers are using credit cards for their purchases. Some stores are even attempting to go cashless, although there has been pushback against this idea because it discriminates against those who for economic or other reasons don’t have access to plastic.

The answer to the question about charging for the convenience of using a credit card is complicated. First you need to understand the different between a surcharge and a convenience fee. A surcharge is a fee that covers the processing fee. A convenience fee is usually charged to use a form of payment not usually accepted by a retailer, such as payment with the card not present, or for added services. Of course one of the most common (and disliked) uses of convenience fees is for the sale of entertainment tickets online or by phone.

Credit card surcharges are not prohibited by federal law, however they are currently not permissible in ten states: Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas. (California and New York’s rulings are being contested, however.) It is good to note that surcharges are not allowed on debit cards anywhere in the U.S.

You may find that your credit card processor does not allow you to add a surcharge to your sales. These companies are of course trying to encourage the use of credit cards, and therefore any action that makes cash or check more attractive goes against their purposes.

Consumers are generally not happy about paying additional fees, so it would be best to avoid charging them if you can possibly can. And to our vendors who add a surcharge: we would hope that the convenience of receiving payment right away would make it worth absorbing the processing fee for your customers, just as we absorb it for ours.

Happy Retailing,


Carol “Orange” Schroeder