Billing and Payments
Credit Card Surcharge Processing: What CPAs and Accountants Need to Know

CPAs and accountants are all too familiar with the fact that it costs money to move money within our financial systems. Credit cards are no exception to this rule—if you accept credit card payments from your clients, you'll inevitably have to pay processing fees with each transaction. Of course, as a business owner, you're also looking for ways to offset your costs and operate more efficiently.
Many businesses that accept credit cards use surcharges to account for this, but you may be wondering how to effectively implement one into your billing, or if it's even legal for you to do so in your state.
Below, we’ll break down exactly what surcharging means, including its legal status under each state’s law and what you can do to implement them.
In this article:
- What is a surcharge?
- Legal status of surcharging in U.S. (listed by state)
- Credit card surcharging rules
What is a surcharge?
In the context of credit cards, surcharging is defined as adding a percentage-based fee (generally up to 3%) on credit card transactions to recoup payment processing costs. The practice became permissible to merchants in 2013 in the wake of a class action lawsuit against Visa and MasterCard.
It’s important to note that a surcharge is distinct from a convenience fee, which is a relatively older but similar term in the credit card lexicon.
The legal status of surcharging in the U.S. (by state)
Surcharging has been outlawed as an anti-consumer practice in three states (Connecticut, Massachusetts, and Maine) and Puerto Rico. However, these laws were challenged in such states as New York and California, and other states have indicated they may be unenforceable.
Note: Surcharges are governed by both state law and card brand rules (like those published by Visa and Mastercard), each of which are subject to change. The following list, updated as of December 2023, provides CPAs with updated information on the legal status of credit card surcharges specifically based on state law.
Alabama:
- Surcharge Prohibited: No
- Resources: Alabama Attorney General
Alaska:
- Surcharge Prohibited: No
- Resources: State of Alaska Department of Law
Arizona:
- Surcharge Prohibited: No
- Resources: Arizona Attorney General
Arkansas:
- Surcharge Prohibited: No
- Resources: Arkansas Attorney General
California:
- Surcharge Prohibited: No
- Resources: California Attorney General
Colorado:
- Surcharge Prohibited: No
- Resources: Colorado Attorney General
Connecticut:
- Surcharge Prohibited: Yes
- Resources: Connecticut Attorney General
Delaware:
- Surcharge Prohibited: No
- Resources: Delaware Attorney General
Florida:
- Surcharge Prohibited: No
- Resources: Florida Attorney General
Georgia:
- Surcharge Prohibited: No
- Resources: Georgia Attorney General
Hawaii:
- Surcharge Prohibited: No
- Resources: Hawaii Attorney General
Idaho:
- Surcharge Prohibited: No
- Resources: Idaho Attorney General
Illinois:
- Surcharge Prohibited: No
- Resources: Illinois Attorney General
Indiana:
- Surcharge Prohibited: No
- Resources: Indiana Attorney General
Iowa:
- Surcharge Prohibited: No
- Resources: Iowa Attorney General
Kansas:
- Surcharge Prohibited: No
- Resources: Kansas Attorney General
Kentucky:
- Surcharge Prohibited: No
- Resources: Kentucky Attorney General
Louisiana:
- Surcharge Prohibited: No
- Resources: Louisiana Attorney General
Maine:
- Surcharge Prohibited: Yes
- Resources: Maine Attorney General
Maryland:
- Surcharge Prohibited: No
- Resources: Maryland Attorney General
Massachusetts:
- Surcharge Prohibited: Yes
- Resources: Massachusetts Attorney General
Michigan:
- Surcharge Prohibited: No
- Resources: Michigan Attorney General
Minnesota:
- Surcharge Prohibited: No
- Resources: Minnesota Attorney General
Mississippi:
- Surcharge Prohibited: No
- Resources: Mississippi Attorney General
Missouri:
- Surcharge Prohibited: No
- Resources: Missouri Attorney General
Montana:
- Surcharge Prohibited: No
- Resources: Montana Attorney General
Nebraska:
- Surcharge Prohibited: No
- Resources: Nebraska Attorney General
Nevada:
- Surcharge Prohibited: No
- Resources: Nevada Attorney General
New Hampshire:
- Surcharge Prohibited: No
- Resources: New Hampshire Attorney General
New Jersey:
- Surcharge Prohibited: No
- Resources: New Jersey Attorney General
New Mexico:
- Surcharge Prohibited: No
- Resources: New Mexico Attorney General
New York:
- Surcharge Prohibited: No
- Resources: New York Attorney General
North Carolina:
- Surcharge Prohibited: No
- Resources: North Carolina Attorney General
North Dakota:
- Surcharge Prohibited: No
- Resources: North Dakota Attorney General
Ohio:
- Surcharge Prohibited: No
- Resources: Ohio Attorney General
Oklahoma:
- Surcharge Prohibited: No
- Resources: Oklahoma Attorney General
Oregon:
- Surcharge Prohibited: No
- Resources: Oregon Attorney General
Pennsylvania:
- Surcharge Prohibited: No
- Resources: Pennsylvania Attorney General
Rhode Island:
- Surcharge Prohibited: No
- Resources: Rhode Island Attorney General
South Carolina:
- Surcharge Prohibited: No
- Resources: South Carolina Attorney General
South Dakota:
- Surcharge Prohibited: No
- Resources: South Dakota Attorney General
Tennessee:
- Surcharge Prohibited: No
- Resources: Tennessee Attorney General
Texas:
- Surcharge Prohibited: No
- Resources: Texas Attorney General
Utah:
- Surcharge Prohibited: No
- Resources: Utah Attorney General
Vermont:
- Surcharge Prohibited: No
- Resources: Vermont Attorney General
Virginia:
- Surcharge Prohibited: No
- Resources: Virginia Attorney General
Washington:
- Surcharge Prohibited: No
- Resources: Washington Attorney General
West Virginia:
- Surcharge Prohibited: No
- Resources: West Virginia Attorney General
Wisconsin:
- Surcharge Prohibited: No
- Resources: Wisconsin Attorney General
Wyoming:
- Surcharge Prohibited: No
- Resources: Wyoming Attorney General
Credit card surcharging rules
If you choose to surcharge, you’re required to follow rules put in place by each credit card brand. We’ll discuss the most common rules below:
Note: this is not a complete list.
Notify the card brand of your intent to surcharge
Almost every major card brand requires you to notify them of your intention to surcharge. Most brands have a form you can fill out available on their website. Otherwise, you must provide a written letter to your account representative.
Notify your clients of your intention to surcharge
You are also required to notify your customers or clients of your intention to surcharge (as soon as you are eligible to do so). For example, if using an online payments solution, you would have to include language on your payment page that clearly identifies the credit card surcharge before payment is submitted.
Do not surcharge more than the cost of your processing fee
This rule essentially means that you cannot use surcharging as a means to profit. In general, brand rules limit surcharges to 3 percent in the U.S.
Surcharges must be listed as separate line items
You cannot simply lump your surcharges into each transaction total. Whenever a surcharge occurs, it must be listed separately on each invoice or payment confirmation page.
Payment processing may be one of the costs of doing business in today’s economy. However, your clients will appreciate being able to pay with a more convenient payment option, which increases the speed and the frequency that you’ll get paid for your services. And with surcharging, you can benefit from the efficiency and popularity of online payment solutions while still offsetting the fees associated with credit cards.