Yes, it is legal to charge a credit card fee in Texas. A state statute still says merchants can’t add a surcharge, but a federal court struck that ban down as unconstitutional, and the Texas Attorney General has acknowledged the statute no longer holds up in the situations most shoppers encounter. What actually limits the fee are Visa and Mastercard rules, which cap it at 3% to 4% of the purchase and require the merchant to disclose it before you pay.
Why the Texas Surcharge Ban No Longer Stops the Fee
Texas Business and Commerce Code Section 604A.0021 reads like a flat prohibition: a seller “may not impose a surcharge on a buyer who uses a credit card for an extension of credit instead of cash, a check, or a similar means of payment.”1State of Texas. Texas Business and Commerce Code 604A – Surcharges for Credit Card Transactions On paper, surcharges are banned.
A federal court held the statute unconstitutional, following a 2017 U.S. Supreme Court ruling that treated similar state surcharge bans as restrictions on merchant speech rather than pure price regulation. The Texas Attorney General, in Opinion KP-0257, wrote that Section 604A.0021 “remains enforceable in some contexts” but was held unconstitutional as applied.2Office of the Attorney General. KP-0257
The statute has not been repealed, so a narrow enforcement scenario is not impossible. In everyday retail, though, a merchant who labels the fee accurately and follows card network disclosure rules is protected. Expect to see the fee, and expect it to be legal.
How Much a Merchant Can Charge
The real ceiling comes from the card networks. If a merchant exceeds it, they risk their ability to accept cards at all.
- Visa caps the surcharge at 3% of the transaction or the merchant’s actual processing cost, whichever is lower.3Visa. U.S. Merchant Surcharge Q and A
- Mastercard caps the surcharge at 4% of the transaction.4Mastercard. Mastercard Credit Card Surcharge Rules and Fees for Merchants
Most businesses accept both, so the working cap is 3%. A fee higher than that is likely a network rule violation.
What Disclosure You Should See Before Paying
Card network rules require merchants to post notice of the surcharge at the store entrance and again at the point of sale, alert online customers before checkout, and list the fee as a separate line item on the receipt.3Visa. U.S. Merchant Surcharge Q and A The charge cannot be folded into the item price, and it cannot appear only after the transaction is done.
If you didn’t see signage or a checkout notice and the fee showed up later, that’s a red flag. Ask the merchant to point to the disclosure. If they can’t, you have grounds for a complaint.
Debit and Prepaid Cards Cannot Be Surcharged
Even at a business that legitimately surcharges credit cards, your debit and prepaid card purchases are off limits. Visa’s rules state plainly that “U.S. merchants cannot surcharge purchases made using a Visa debit card or prepaid card.”5Visa. Surcharging Credit Cards – Q and A for Merchants
This trips people up because payment terminals often let you press “credit” when swiping a debit card. That choice routes the transaction as a signature-based debit payment, not a credit transaction. It’s still a debit card, and the surcharge ban still applies. Visa has said the bank processing the merchant’s payments faces a $1,000 fine when a debit surcharge slips through.3Visa. U.S. Merchant Surcharge Q and A
If you were charged extra for using a debit card, that is a clear violation regardless of which button you pressed at the keypad.
Government Offices and Convenience Fees Work Differently
Two situations sit outside the ordinary surcharge rules, and it helps to know why the fee looks different.
Government entities are exempt from the Texas surcharge statute by its own terms.1State of Texas. Texas Business and Commerce Code 604A – Surcharges for Credit Card Transactions Courts, tax offices, universities, and similar agencies can charge what the card networks call “service fees,” which are allowed at in-person counters and can be a percentage rather than a flat amount. The extra charge you pay when settling a fine or a property tax bill with a card is legal on both fronts.
Convenience fees follow a separate set of rules. A convenience fee applies when you pay through a non-standard channel, such as paying an ordinarily mail-in bill online. It must be a flat dollar amount, must apply to every payment type accepted in that channel (not just credit cards), cannot be charged in an in-person transaction, cannot be charged by a business that operates only online, and cannot be added to recurring or subscription billing.
What to Do If a Merchant Overcharges You
If the fee was above the network cap, wasn’t disclosed before you paid, was applied to a debit card, or was hidden inside item prices instead of listed separately, you have real avenues.
Start with the card network. Both Visa and Mastercard enforce their surcharging rules directly against merchants and their processors, and the consequences move faster than any state agency. You can also file a consumer complaint with the Texas Attorney General’s office, which handles deceptive trade practice reports. Civil penalties for deceptive practices under state law can reach up to $10,000 per violation in some circumstances.
Before you complain, save the receipt showing the surcharge line, photograph any signage at the store (or the empty spot where it should be), and note the date and location. If the merchant will just refund the fee, that’s the fastest fix. If not, you have what an investigator needs.
One limit worth knowing: Section 604A.0021 does not give consumers a private right to sue a merchant for violating it.1State of Texas. Texas Business and Commerce Code 604A – Surcharges for Credit Card Transactions Enforcement runs through the card networks and state regulators, not through your own lawsuit under that statute.