Debit card surcharges are not legal in Texas. Under Section 604A.002 of the Texas Business and Commerce Code, a seller cannot impose a surcharge on a buyer who pays with a debit card or stored value card instead of cash, a check, a credit card, or a similar method.1State of Texas. Texas Business and Commerce Code 604A.002 – Imposition of Surcharge for Use of Debit or Stored Value Card The price posted is the price you pay when you swipe, tap, or insert your debit card. This rule still applies even though credit card surcharges are now effectively allowed in the state.
What the Texas Statute Says
Section 604A.002 is short and direct. A merchant may not add a fee because the buyer chose a debit card or a stored value card (a prepaid card) over another accepted payment method.1State of Texas. Texas Business and Commerce Code 604A.002 – Imposition of Surcharge for Use of Debit or Stored Value Card There is no exception for small transactions, high-risk industries, or businesses with thin margins. Processing cost is treated as a normal expense of doing business.
The statute carves out only two situations where a surcharge is allowed:
- Government entities taking debit or stored value cards for fees, taxes, or other charges.
- Private schools taking debit cards for tuition, fees, or similar charges.1State of Texas. Texas Business and Commerce Code 604A.002 – Imposition of Surcharge for Use of Debit or Stored Value Card
Because a debit card pulls funds directly from your bank account rather than extending credit, Texas treats it as the functional equivalent of cash. That is why debit sits on the protected side of the line.
Why Credit Card Surcharges Are a Different Story
Texas has a separate statute prohibiting credit card surcharges, and that one is where the confusion starts. In 2018, a federal court in Rowell v. Paxton ruled that the credit card anti-surcharge law violated merchants’ commercial free-speech rights under the First Amendment and permanently enjoined its enforcement.2FindLaw. Rowell LLC v Paxton The language remains on the books, but the state cannot enforce it. Credit card surcharges in Texas are therefore effectively permitted.
The debit card ban in Section 604A.002 was not part of that case and remains fully enforceable. So when you see a sign reading “3% surcharge on all card payments,” that fee can legally apply to credit transactions but not to debit ones. The problem is that many point-of-sale systems apply a flat surcharge to every card, debit included. That is how illegal debit surcharges end up on receipts across the state. A blanket card surcharge that doesn’t exempt debit cards is a violation.
Card Network Rules Back Up the Statute
Even without state law, the major card networks forbid debit surcharges on their own. Visa’s merchant rules limit surcharging to credit cards and prohibit it on debit and prepaid cards. This holds true even when the customer chooses “credit” at the terminal instead of entering a PIN; the underlying card is still a debit card, and the surcharge ban still applies.3Visa. U.S. Merchant Surcharge Q and A
Mastercard has the same position: no surcharges on Debit Mastercard or Mastercard prepaid cards.4Mastercard. Mastercard Credit Card Surcharge Rules and Fees for Merchants A merchant that breaks these rules risks losing the ability to accept that network’s cards, which for most businesses would be severe. So you have two layers of protection: Texas law and the private contracts the merchant signed with Visa and Mastercard.
Cash Discounts, Dual Pricing, and Relabeled Fees
The debit surcharge ban doesn’t stop merchants from offering a lower cash price. A gas station that posts $3.29 for cash and $3.49 for card is using dual pricing, which federal law allows as a cash discount available to all buyers.5Office of the Law Revision Counsel. 15 USC 1666f – Inducements to Cardholders by Sellers of Cash Discounts The structure matters: Visa’s rules require that posted prices show either the card price alone or both prices side by side. If a merchant instead advertises one price and tacks on a fee at the register for card users, Visa may treat that as a surcharge subject to its surcharging rules.3Visa. U.S. Merchant Surcharge Q and A For a debit transaction, that means the fee is prohibited.
Convenience fees are a separate category. They are fees for using a non-standard payment channel, like paying online or by phone instead of in person. Texas allows them, but only when the merchant also offers at least one way to pay by card without the fee, and only when the fee applies uniformly regardless of payment method.6Office of Consumer Credit Commissioner. OCCC Advisory Bulletin B15-2 – Credit Card Surcharge Alternatives A “convenience fee” that applies only when you pay by card, and not when you pay by check through the same channel, is functionally a surcharge.
Watch for relabeling. Some merchants call their card fee a “service fee,” “processing fee,” or “convenience fee” and assume the different name makes it legal. It does not. What governs is how the fee actually works, not the word printed on the receipt. If the fee only hits card users, and the card is a debit card, the fee is prohibited.
What to Do If You Get Charged One
If a Texas merchant adds a fee because you paid with a debit card, the right place to complain is the Consumer Protection Division of the Texas Attorney General’s office. Enforcement authority for this statute moved from the Office of Consumer Credit Commissioner to the Attorney General under Senate Bill 560 in 2017.7Texas Office of Consumer Credit Commissioner. Consumer FAQs You can file through the Attorney General’s online complaint form.8Office of the Attorney General. File a Consumer Complaint Individual complaints help the office track patterns even when they don’t produce immediate refunds.
You can also report the merchant to the card network. Visa provides an online form where you identify the merchant, describe the surcharge, and note whether the fee was disclosed before the transaction completed.9Visa. Report a Purchase Issue You’ll need the first eight digits of your card number, the merchant’s name and location, and the transaction date. Mastercard has a similar process. Network investigations can result in fines or loss of card acceptance privileges.
One limit worth knowing: Section 604A.002 does not create a private right of action. That means you generally cannot sue the merchant on your own under this statute. Enforcement runs through the Attorney General. If the amount is significant or the merchant is systematically overcharging, talking to a private attorney about other possible claims may be worth your time, but the complaint process is the practical first step.