New York Credit Card Surcharge Law: Caps, Rules, and Penalties

New York’s credit card surcharge law, General Business Law §518, allows a business to charge more when a customer pays by credit card, but only if the business posts the full credit card price up front, keeps the surcharge at or below what its processor actually charges it, and never applies the surcharge to debit or prepaid cards. Violations carry civil penalties of up to $500 per transaction, and both state and local authorities can enforce them. The current version of the statute took effect on February 11, 2024.¹

How Prices Must Be Displayed

The statute recognizes exactly two compliant ways to show prices at a business that surcharges credit card transactions.

Post a single price that already includes the surcharge. The amount rung up at the register cannot be higher than what is posted.
Post two prices side by side, the credit card price and the cash price, so the customer sees both numbers before paying.

Either method satisfies the law’s requirement to “clearly and conspicuously post the total price for using a credit card in such transaction, inclusive of surcharge.”² What the law does not allow is showing only a cash price on the shelf and then adding a percentage at the register. That is the surprise the statute was written to stop.

The same logic applies online. The credit card price has to be visible before the customer reaches checkout, not revealed for the first time on the final confirmation screen.

The Cap on the Surcharge

A business cannot charge a surcharge larger than what its processor charges the business for that credit card transaction. The statute puts it directly: the surcharge “may not exceed the amount of the surcharge charged to the business by the credit card company for such credit card use.”² Most processing fees fall somewhere between roughly 1.5% and 3.5%, depending on the card network, the type of card, and the merchant’s agreement.

Picking a round number like 3% or 4% without checking whether it actually matches the processing cost is a common mistake and a straightforward violation. Keep your merchant agreement and recent statements accessible so you can show your surcharge tracks what you pay.

Debit and Prepaid Cards Are Off Limits

This is where businesses trip up most often. The disclosure rules cover credit cards. Debit cards and prepaid cards cannot be surcharged at all. Both Visa and Mastercard network rules prohibit surcharges on debit and prepaid transactions, and that prohibition holds even when a debit card runs as a signature transaction through the credit network.³

A point-of-sale system that adds a flat surcharge to every card swipe without checking card type is generating a violation on every debit transaction. Modern terminals can identify card type automatically, but the feature often has to be turned on and tested before it works.

Card Network Rules Apply Separately

State law is not the only layer. Visa and Mastercard each impose their own surcharge requirements, and breaking them can bring fines from your processor or termination of your merchant account.

Advance Notification

You have to notify your acquiring bank at least 30 days before you begin surcharging.⁴ Mastercard requires 30 days’ notice to both the acquirer and to Mastercard directly, along with your business name, contact information, number of locations, sales channels, and the type of surcharge you plan to use.³ Starting without doing this can trigger network fines on its own.

Network Surcharge Caps

The networks set their own maximums, which may be lower than your actual processing cost:

Visa: the lesser of your merchant discount rate or 3%.⁵
Mastercard: the lesser of your average effective merchant discount rate for Mastercard credit acceptance or 4%.³

Because state law already caps the surcharge at your actual processing cost, the state and network caps usually produce the same number. If your processing rate on a particular card type exceeds Visa’s 3% cap, the network cap controls and you have to charge the lower amount.

Receipt Requirements

Both networks require the surcharge to appear as a separate line item on the customer’s receipt for every transaction, in-store or online.⁵ A receipt showing only a higher total, without the surcharge broken out, does not comply.

Cash Discounts as an Alternative

Some businesses avoid the surcharge framework by framing their pricing as a cash discount. A surcharge adds a fee for paying with a credit card; a cash discount reduces the price for paying with cash. New York’s statute preserves two-tier pricing, and the Court of Appeals confirmed in 2018 that differential pricing has always been permitted under §518.⁶

In practice the line is thinner than it sounds. A posted price of $100 for credit and $97 for cash can be described either way. What matters under the current law is disclosure. If you call it a surcharge, the credit card price must be posted and the surcharge cannot exceed your processing cost. If you call it a cash discount from a higher base price, both prices still have to be displayed clearly. Either way, the customer sees the real number before the transaction, not after.

Penalties for Getting It Wrong

GBL §518 carries a civil penalty of up to $500 per violation. Municipal consumer affairs offices, town attorneys, and city corporation counsel can all bring enforcement actions, and the fines go to the local government that brings the case.² For a retailer running hundreds of credit transactions a day, per-violation penalties add up quickly.

Consumers have a separate path. New York’s general deceptive practices statute, GBL §349, lets any person injured by a deceptive act sue for actual damages or $50, whichever is greater. If the court finds the violation was willful or knowing, it can treble the damages up to $1,000 and award attorney’s fees.⁷ A pattern of undisclosed surcharges across many customers creates exposure to class action litigation on top of the §518 penalties.

The Attorney General’s office and the Division of Consumer Protection also investigate surcharge complaints. The Division helps consumers recover excess fees paid to merchants, and the Attorney General and local governments handle broader enforcement.¹ Consumers can file through the Attorney General’s online consumer complaint portal.⁸

Compliance Checklist

Getting this right means coordinating state law, network rules, and your point-of-sale configuration. In order:

Pull your merchant agreement and recent processing statements. Your surcharge rate cannot exceed what you actually pay per credit card transaction.
Give your acquirer at least 30 days’ written notice. Notify Mastercard directly with the business details it requires.
Configure your POS to distinguish credit cards from debit and prepaid cards, apply the surcharge only to credit transactions, and print it as a separate line item on the receipt.
Post either the total credit card price or both prices side by side. Do not show a cash price alone and add a percentage at the register.
Update online checkout so the credit card price is visible before the payment screen.
Keep your merchant agreement, fee schedules, and notification confirmations on file. Those documents are what you show if a regulator or customer challenges the surcharge amount.

1
New York State. Governor Hochul Announces New Law to Clarify Disclosure of Credit Card Surcharges Goes Into Effect Sunday, February 11
2
New York State Senate. New York General Business Law GBS 518 – Credit Card Surcharge Notice Requirement
3
Mastercard. What Merchant Surcharge Rules Mean to You
4
Visa. Merchant Surcharging Considerations and Requirements
5
Visa. U.S. Merchant Surcharge Q and A
6
New York State Unified Court System. Expressions Hair Design v Schneiderman (2018 NY Slip Op 07037)
7
New York State Senate. New York General Business Law GBS 349 – Deceptive Acts and Practices Unlawful
8
New York State Attorney General. File a Complaint – Consumer Issues