New Jersey’s credit card surcharge law lets a merchant add a fee when a customer pays by credit card, but the surcharge cannot exceed what the merchant actually pays to process that transaction, and the customer has to be told about it before paying. The rule comes from P.L. 2023, c. 146, signed in August 2023, and it works through the New Jersey Consumer Fraud Act rather than as a standalone ban.1New Jersey Legislature. P.L. 2023, c.146 (A4284 5R) Businesses that surcharge past their cost, or without proper disclosure, face civil penalties and private lawsuits.
The Actual-Cost Cap
Under N.J.S.A. 56:8-156.2, a seller may impose a surcharge on a customer who pays by credit card for a transaction occurring in New Jersey, but only up to the seller’s actual cost of processing that credit card payment.2Justia Law. New Jersey Revised Statutes Section 56-8-156.2 If your blended processing rate is 2.8%, the surcharge tops out at 2.8%. If your rate is 1.9%, you cannot round up to a higher number for simplicity.
Actual cost means everything your payment processor charges you on a given transaction: the interchange fee, the network assessment, and any processor markup. Together these make up your effective processing cost, sometimes called the merchant discount rate.
A merchant can charge a flat surcharge percentage across all credit card transactions, but the flat rate still cannot exceed the actual processing cost on any individual transaction. If you charge a flat 2.5% but some transactions cost only 2.1% to process, you have a compliance problem on those cheaper transactions. Businesses with wide variation in transaction sizes or card types need to watch this carefully.
Card networks impose their own caps on top of state law. Visa limits surcharges to the lesser of your merchant discount rate or 3%.3Visa. U.S. Merchant Surcharge Q and A Mastercard caps it at the lesser of your average effective merchant discount rate or 4%.4Mastercard. What Merchant Surcharge Rules Mean to You In practice, the state’s actual-cost rule will almost always bind first, since most processing costs sit well below 3%.
What the Law Does Not Cover
The surcharge law applies only to credit card transactions. The statute defines “surcharge” as an additional amount imposed during a credit card transaction, and the definitions section covers only credit cards.5Justia Law. New Jersey Revised Statutes Section 56-8-156.1 – Definitions Debit cards and prepaid cards fall outside its scope. Both Visa and Mastercard also prohibit surcharges on debit and prepaid transactions under their network rules. A debit card processed through a credit network at checkout is still a debit transaction and cannot be surcharged.
Motor fuel is also excluded. The statute defines motor fuel as any combustible liquid or gaseous substance used to propel motor vehicles and removes it from the definition of “goods.”5Justia Law. New Jersey Revised Statutes Section 56-8-156.1 – Definitions Gas stations posting separate cash and credit prices are governed by existing fuel regulations, not P.L. 2023, c. 146.
Disclosure: In-Person Sales
The core obligation is simple. Tell the customer the surcharge before they owe anything. How you tell them depends on the setting.
Most in-person businesses, including retail stores, salons, and repair shops, must post clear and conspicuous signage in two places: at the point of entry and at the point of sale.1New Jersey Legislature. P.L. 2023, c.146 (A4284 5R) A small notice hidden behind the counter does not satisfy the rule. Entry signage gives customers a chance to decide before they commit; register signage reinforces it at payment.
Restaurants follow a different rule. Instead of entry and point-of-sale signage, restaurants must post a sign in the customer service area and include the surcharge notice on the menu.1New Jersey Legislature. P.L. 2023, c.146 (A4284 5R) The statute says “the menu” without distinguishing print, digital, or on-screen. A restaurant using QR-code menus should include the notice there.
Disclosure: Online, Kiosk, and Phone Sales
For website, mobile app, or electronic kiosk transactions, the seller must give clear and conspicuous electronic notice on the checkout page before the transaction processes.1New Jersey Legislature. P.L. 2023, c.146 (A4284 5R) Burying the surcharge in terms and conditions does not count. The notice belongs on the checkout page itself, before the customer enters payment information.
For phone transactions, the seller must give verbal notice before processing the card.1New Jersey Legislature. P.L. 2023, c.146 (A4284 5R) Charging first and disclosing after violates the statute regardless of channel.
Receipt Itemization
The state statute focuses on pre-transaction disclosure and does not explicitly require surcharge itemization on receipts. Visa’s merchant rules, however, require the surcharge amount to appear as a separate line item on the receipt.6Visa. Merchant Surcharging Considerations and Requirements Mastercard has a similar requirement. Because nearly every credit card transaction in New Jersey runs through one of these networks, itemization is a practical requirement even though it comes from network rules. Folding the surcharge into the total risks both a network violation and a consumer fraud complaint.
Surcharge, Cash Discount, or Convenience Fee
These three pricing structures often get treated as interchangeable. They are not.
A credit card surcharge adds a fee when a customer pays by credit card. The posted price is the base, and the surcharge increases the total. New Jersey’s disclosure and cost-of-acceptance rules apply.
A cash discount works in reverse. The posted price is the credit card price, and customers paying cash, check, or debit get a reduction. Federal law protects the right of merchants to offer discounts for using lower-cost payment methods.7Office of the Law Revision Counsel. 15 USC 1693o-2 Cash discounts do not trigger the surcharge disclosure rules. The distinction: with a cash discount, no customer ever pays more than the posted price.
A convenience fee is a flat charge for using an alternative payment channel, like paying a bill online or by phone rather than in person. These fees attach to the channel, not the card type, and card networks generally restrict them to narrow situations like government payments or tuition. A convenience fee is not a workaround for the surcharge rules on standard retail transactions.
Records You Must Keep
A merchant who surcharges must be able to prove the surcharge matches actual processing cost. The statute requires sellers to make available for inspection by the Director of the Division of Consumer Affairs any account books, papers, documents, and other records necessary to determine compliance.2Justia Law. New Jersey Revised Statutes Section 56-8-156.2
That means keeping monthly merchant processing statements, which show your effective rate broken down by interchange, network fees, and processor markup. Without documentation, you have no defense in an investigation. Flat-rate processors make this easy. Interchange-plus pricing, where rates vary by card type, calls for closer tracking.
Network Rules Layered on Top
Visa and Mastercard have their own surcharging rules independent of state law. Visa requires merchants to notify their acquirer at least 30 days before they start surcharging.6Visa. Merchant Surcharging Considerations and Requirements Skipping that notice can bring fines or loss of card acceptance, even if every other rule is followed.
Both networks prohibit surcharging on debit and prepaid cards, require receipt itemization, and cap the surcharge amount. The New Jersey actual-cost rule will usually be the binding constraint, but for merchants with unusually high processing costs, the network cap becomes the ceiling.
Penalties
Violations are enforced as violations of the Consumer Fraud Act. A first offense carries a civil penalty of up to $10,000, and each subsequent offense can reach $20,000.8New Jersey Division of Consumer Affairs. Consumer Fraud Act – N.J.S.A. 56:8-13 Penalties run per violation, so systematic overcharging of many customers multiplies exposure quickly.
The Attorney General can also issue cease-and-desist orders and require refunds to overcharged consumers. In enforcement actions announced in December 2023, penalties against individual businesses ranged from $500 to $4,000, depending on the number and nature of violations.9New Jersey Division of Consumer Affairs. Press Release
Consumers can sue on their own. Under N.J.S.A. 56:8-19, any person who suffers an ascertainable loss from a Consumer Fraud Act violation can recover three times their actual damages, plus reasonable attorney fees and costs.10New Jersey Division of Consumer Affairs. Consumer Fraud Act – N.J.S.A. 56:8-19 Treble damages make even small individual overcharges worth pursuing, and class actions are possible where a merchant overcharges customers systematically. Separately, Visa and Mastercard can fine merchants or revoke card acceptance for network violations.
Filing a Complaint
A consumer who believes a New Jersey business charged an improper credit card surcharge can file with the Division of Consumer Affairs’ Office of Consumer Protection. Complaints go by mail to P.O. Box 45025, Newark, NJ 07101, by phone at 800-242-5846 (toll-free within New Jersey) or 973-504-6200, or through a complaint form on the Division’s website.11New Jersey Division of Consumer Affairs. Credit Card Surcharges – Frequently Asked Questions Save the receipt and note whether the business posted surcharge signage. Both pieces strengthen the complaint.