Credit card swipe fees have been a point of contention for merchants for many years. These are the fees that credit card payment networks, such as Visa and Mastercard, charge retailers for the service they provide of enabling credit card payments.

Credit card sales enable merchants to enjoy higher sales volumes, and they have to pay the networks for enabling this service. It is quite common for retailers to pass on this fee to consumers via a surcharge. Swipe fees typically range from 1.5 percent to 3 percent, but should not exceed 4 percent or the merchant’s actual credit card processing costs.

Reader Tom wonders: “What can happen if a restaurant does not tell you they are adding a surcharge?”

Rules for credit card surcharges

There are specific rules for retailers to follow when it comes to surcharges on credit cards. In the past, Visa and Mastercard had forbidden merchants from passing on swipe fees to consumers through surcharges. However, after losing a legal battle initiated by retailers, the card payment networks had to allow surcharges.

A few states still prohibit or limit surcharges on credit cards, though, including Connecticut, Maine, Massachusetts and Oklahoma. Colorado is also currently in this minority group, but legislation passed in 2021 would allow credit card surcharges after July 2022.

Before a merchant can start making surcharges on credit card transactions, it will have to notify the card network, as well as the bank that authorizes and settles card payments for the merchant, 30 days in advance.

The credit card surcharge should also not be higher than the cost involved to the merchant of accepting a customer’s credit card. In other words, the merchant cannot profit from the surcharge.

Credit card surcharges require adequate disclosure

In order to surcharge customers for credit card swipe fees, businesses have to make adequate disclosures. Merchants should post notices at their business entrance and point of sale, advising customers about their credit card surcharge policy. The surcharge amount should also be separately itemized on the customer’s receipt. And online sellers have to disclose on their website that a surcharge will apply, where they first mention credit card acceptance.

These sorts of disclosures ensure retailers do not engage in false advertising by citing a lower price and then slapping on a surcharge when the customer pays. Generally, businesses tend to state the higher price, adding on surcharges across the board. They can then advertise a discount for customers who pay in cash.

Restaurants have to abide by such disclosures and cannot quietly tack on a surcharge when you pay your bill. They also cannot just state on their menu that there will be a surcharge for customers paying with a credit card, without making the other required disclosures.

Recourse for inadequate credit card surcharge disclosures

If, like Tom, you’ve had the experience of eating at a restaurant that did not adequately inform customers about its credit card surcharge policy, you do have recourse.

You could put in a complaint with the card network involved. You could also follow up with your state’s attorney general or department of consumer protection. And you could file a complaint with the Consumer Financial Protection Bureau.

To support your case, you should also submit evidence of the restaurant’s noncompliance with the law, which could include pictures of the advertised price and your receipt, as well as details about the merchant’s location.

The bottom line

Most states allow retailers to pass on credit card swipe fees to customers in the form of surcharges. There are specific disclosures they must make, though, and they can’t just add on a surcharge to your bill without notification.

Tom, if a restaurant just added on a surcharge to your bill without following the required protocol, you could put in a complaint with the relevant authorities, with evidence to back up your claim. Hope the issue is settled to your satisfaction.

Contact me at with your credit card-related questions.