Credit Card Surcharging Laws by State: What Auto Dealers Need to Know

"Can we surcharge in our state?"

It's the first question every dealership asks when considering a surcharge program. And the answer isn't always simple.

Surcharging is legal at the federal level, but states can and do restrict it. Some states ban it outright. Others allow it with conditions. A few have recently changed their laws, creating confusion about what's currently permitted.

This guide provides a state-by-state breakdown of surcharging laws as they apply to auto dealerships. But fair warning: laws change, and this isn't legal advice. Always verify current regulations with qualified counsel before implementing a surcharge program.

States Where Surcharging Is Prohibited

As of January 2026, these states prohibit credit card surcharges:

Connecticut

Status: Surcharging banned
Alternative: Cash discount programs are permitted
Notes: Long-standing prohibition, no indication of change

Massachusetts

Status: Surcharging banned
Alternative: Cash discount programs are permitted
Notes: Strong consumer protection stance

Puerto Rico

Status: Surcharging banned
Alternative: Cash discount programs are permitted
Notes: Territorial law mirrors strict mainland states

If you operate in these jurisdictions: Surcharging is not an option. Consider cash discount programs instead, but ensure proper implementation and disclosure.

States With Restrictions or Special Rules

Colorado

Status: Surcharging permitted with restrictions
Key restriction: Surcharge cannot exceed merchant's actual cost of acceptance
Notes: Ban was lifted in 2022; actual-cost limitation is strictly enforced
Dealership impact: You must calculate your actual effective rate and surcharge at or below that amount

Maine

Status: Surcharging permitted with cap
Key restriction: Surcharge cannot exceed 5% of transaction
Notes: The 5% cap is higher than card network limits (3%), so effectively you're limited by network rules
Dealership impact: Standard surcharging rules apply; Maine's cap is rarely the limiting factor

New York

Status: Complex — effectively permitted with specific disclosure
Key requirement: Must display the total credit card price, not a base price plus surcharge
Notes: Result of litigation; framing matters more than substance
Dealership impact: Price displays and signage need careful attention; consult NY-specific guidance

Oklahoma

Status: Surcharging permitted (ban recently lifted)
Notes: 2023 change; some older restrictions may still apply to certain transaction types
Dealership impact: Verify current regulations; recent change means less established practice

States Where Surcharging Is Permitted

The remaining 45+ states allow credit card surcharging under standard card network rules:

Full list of permitting states: Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, Washington D.C.

In these states, you must still comply with:

Visa and Mastercard surcharge rules
Maximum 3% surcharge (or actual cost if lower)
Credit cards only (not debit)
Proper disclosure requirements
Registration with card networks

Card Network Rules Apply Everywhere

Even in states where surcharging is legal, Visa and Mastercard card network rules create additional requirements:

Maximum Surcharge Amount

Cannot exceed 3% of transaction
Cannot exceed your actual cost of acceptance (if lower)
Must be same percentage across card brands

Card Type Restrictions

Credit cards only — never debit
Cannot surcharge prepaid cards
Must correctly identify card type before applying surcharge

Disclosure Requirements

Signage at store entrance
Signage at point of sale
Surcharge shown as separate line on receipt
Verbal disclosure before transaction completion

Registration

Must notify Visa and Mastercard 30 days before implementing
Must re-register if program changes

How Anchorbase Handles This

Anchorbase tracks surcharging laws across all 50 states and automatically adjusts your program for compliance. Operating in multiple states? We apply the right rules for each location. When laws change, we update automatically — no manual tracking required.

Never worry about surcharging compliance again.

See how it works

Multi-State Dealership Considerations

If you operate in multiple states:

Scenario: All Locations in Permitting States

Implement consistent surcharge program across locations
Ensure all locations have proper signage and training
Single compliance framework

Scenario: Mix of Permitting and Prohibiting States

Surcharge only at locations in permitting states
No surcharging in CT, MA, or PR locations
Consider cash discount at prohibited locations
Train staff on which rules apply where

Scenario: Locations in States with Special Rules

Colorado: Ensure surcharge ≤ actual cost
New York: Implement proper price display format
Customize compliance for each jurisdiction

Recent Changes and Trends

States That Recently Lifted Bans

Colorado: 2022
Kansas: Recent change
Oklahoma: 2023

States Considering Changes

Several states have proposed legislation either way:

Some considering bans or restrictions
Others considering lifting restrictions

Stay current: The landscape shifts. Work with a processor or counsel who monitors legislative changes.

Legal Challenges

Surcharging laws have faced constitutional challenges in several states. Courts have sometimes struck down bans as violating free speech (the argument being that surcharges are a form of price information).

This creates ongoing uncertainty in some jurisdictions.

Compliance Checklist by State Category

In Prohibited States (CT, MA, PR)

[ ] Do NOT implement surcharging
[ ] Consider cash discount program instead
[ ] Ensure staff knows surcharging is not permitted
[ ] Monitor for law changes

In Restricted States (CO, NY, etc.)

[ ] Verify current specific requirements
[ ] Implement state-specific compliance measures
[ ] Colorado: Calculate actual cost, surcharge at or below
[ ] New York: Display credit card price properly
[ ] Document compliance approach

In Permitting States

[ ] Register with card networks 30 days before launch
[ ] Install compliant signage
[ ] Configure terminal for credit-only surcharging
[ ] Train staff on disclosure scripts
[ ] Generate compliant receipts
[ ] Set surcharge ≤ 3% and ≤ actual cost

What This Means for Your Dealership

If You're in a Prohibited State

Surcharging isn't available to you. Options:

Cash discount program (different legal framework)
Accept processing costs as business expense
Negotiate best possible processing rates

If You're in a Permitting State

Surcharging can recover 60-80% of processing costs. Worth implementing if:

Properly compliant
Staff is trained
Customer communication is solid

If You're in Multiple States

Complexity increases but is manageable:

Location-by-location compliance
Staff training by location
Reporting separated by jurisdiction

Why Law Tracking Matters

Getting surcharging wrong has consequences:

Card network fines
Chargebacks
Potential legal exposure
Customer complaints
Reputation damage

The rules aren't optional. If you surcharge, you must comply with both state law and card network rules.

Our Approach at Anchorbase

We built state-by-state compliance into Anchorbase because we saw dealerships struggle with:

Tracking changing laws
Configuring location-specific rules
Training staff on jurisdictional differences
Staying compliant as regulations evolve

Our platform handles this automatically. You tell us where your locations are; we apply the right rules. When laws change, we update. You focus on running your dealership.

Check Your State's Status →

We'll confirm current surcharging rules for your locations and show you how compliance works in practice.