B2B Credit Card Surcharging in 2025: What to Know

With 48% of small businesses struggling to pay rent, marking the highest rate in three years, B2B merchants must manage their costs. One often overlooked way to reduce costs is to reduce their payment processing costs or credit card fees.

Credit card processing fees are a significant expense for B2B merchants with larger transaction sizes. One strategy that’s worked for many businesses is surcharging—adding a fee to credit card transactions to offset those processing costs. However, the legal and compliance landscape surrounding surcharging is complex and ever-changing. This guide will break down the current state of credit card surcharge laws and rules in 2025, showing how business owners can navigate this tricky terrain.

What is a Credit Card Surcharge?

In its most basic form, a credit card surcharge is an additional fee that a merchant charges a customer for using a credit card to make a purchase. It’s important to distinguish this from a convenience fee, which can only be charged for alternative payment channels outside your customary payment methods. For example, if you only accept credit cards, you cannot charge a convenience fee, and you cannot charge a convenience fee if 100% of your credit card sales are in-person or card present.

The Legal Minefield: States Where Surcharging is Restricted

As of March 2025, several states have laws prohibiting or regulating credit card surcharges. It’s crucial to know these restrictions to avoid potential penalties. Here’s the breakdown:

States with Outright Prohibitions:

Connecticut

Maine

Massachusetts

California

Texas: While federal courts have ruled against Texas’ surcharge laws in the past, the Attorney General has issued an opinion stating that the law is enforceable. Proceed with extreme caution.

States with Surcharging Regulations:

Colorado: Allows credit card surcharging up to 2%.

New York, New Jersey, Nevada, and South Dakota: Surcharges may not exceed the merchant’s actual cost to accept the card. (See also Visa merchant surcharge rules.)

States that Recently Changed

Kansas: Effective January 2025, Kansas now allows surcharging.

It’s important to note that the legislative intent in many states was to protect consumers, not to restrict B2B surcharging. Therefore, B2B companies may have exceptions. Contact an attorney if you are a B2B company and wish to surcharge in every state.

Minnesota: As of January 1, 2025, credit card surcharging is legal if the customer can reasonably avoid the fee (e.g., by paying cash). Mandatory fees must be included in the advertised price unless the consumer can reasonably avoid them.

States that Permit Credit Card Surcharging

Card Brand Rules: Visa, Mastercard, Discover and Amex

Beyond state laws, the card networks (Visa, Mastercard, American Express) have their own rules regarding surcharging. Historically, compliance with Visa’s rules often means compliance with other brands, but it’s essential to understand each network’s specific requirements.

Here’s what the card brands agree on for surcharging:

• The surcharge must be limited to your Merchant Discount Rate (MDR) for the applicable credit card or 3%, whichever is lower. MDR is the fee you pay to your acquirer or service provider for processing a credit card transaction, and it typically includes all the fees on your merchant statement EXCEPT PCI compliance, terminal rental fees, or any other special fee that is not paid via the per-transaction merchant discount fee mechanism.
• The surcharge must be submitted separately from the transaction amount in the authorization and clearing message.
• The receipt must list the surcharge amount as a separate line item.
• If the original transaction is partially or fully refunded, the surcharge amount must be refunded proportionally.
• Surcharging debit or prepaid cards is prohibited for all merchants.
• Any surcharge amount, if allowed, must be included in the Transaction amount and not collected separately.

Important Considerations

Maximum Surcharge Cap: While Mastercard’s cap remains at 4% in 2025, Visa’s maximum surcharge cap is currently 3%, effective April 15, 2023.

Cost-Based Surcharging: Surcharging should cover costs, not generate profit. Charging a flat rate (e.g., 3.5% or 4%), regardless of your actual processing costs, can violate card acceptance rules, especially for B2B companies with lower effective rates.

 Compliance Checklist for Merchants

To implement surcharging compliantly, follow these steps:

Notify your processor/acquirer: You must notify your acquirer (credit card processor) at least 30 days before you begin surcharging. Indicate whether you will surcharge at the brand level or product level.

VISA

https://www.visa.com/merchantsurcharging

Mastercard

https://www.mastercard.us/en-us/business/overview/support/merchant-surcharge-rules.html

Discover and Amex permit credit card surcharging but do not require notification.

Disclose Surcharges: For card-not-present orders (telephone or online), Disclose the surcharge verbally (for telephone orders) or in a clear, conspicuous font (minimum 10-point Arial) for online orders.

 Retail Locations: Display signage at the entrance and point of transaction. The font size must be prominent (minimum 32-point Arial at the main entrance and 16-point Arial at each checkout). Example: “We impose a surcharge on credit cards that is not greater than our cost of acceptance. We do not surcharge debit cards.”

Provide Clear Receipts: Deliver receipts with the surcharge listed as a separate line item.

Transmit Surcharge Data: Ensure your payment processing system sends the surcharge amount with the transaction for authorization.

Use Compliant Technology: Use a payment gateway to identify the card brand and type to ensure surcharges are applied only to eligible cards.

Penalties for Non-Compliance

The consequences of non-compliance can be severe. Acquirers may be fined US $1,000 for each merchant identified as having an improper surcharge, which is typically passed down to the merchant. Furthermore, acquirers’ merchant clients could face fines ranging from $50,000 to $1 million. Visa has intensified enforcement of merchant surcharges, so vigilance is key.

The B2B Angle

While many surcharge laws were initially designed to protect consumers, B2B companies may have more flexibility. However, this isn’t a blanket exemption. You must still comply with card brand rules and ensure your surcharges accurately reflect your processing costs.  Again, consulting with an attorney before starting with surcharging is advisable, especially if you plan to surcharge in more than one state.

 Staying Informed

The legal and regulatory landscape surrounding credit card surcharges is constantly. Stay informed by:

• Consulting with legal counsel to ensure compliance with all applicable laws and regulations.
• Work closely with your acquirer or payment processor to understand their requirements and recommendations.
• Monitoring updates from Visa, Mastercard, and other card networks.
• Checking resources such as the Merchant Alerts & Rules Links

Disclaimer

The information provided in this guide is for general informational purposes only and does not constitute legal or financial advice. Merchants should consult with qualified professionals to determine the best action for their specific circumstances. The information herein is based upon public information available at the time written and may change.

Further Reading

Merchants Are Turning to Credit Card Surcharges J.D. Power Finds

Surcharging Vs Dual Pricng- What Small Business Owners Need to Know Now (2025)

Dale Erling has 15 years of experience in banking, financial services, and payment processing.