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Is Surcharging Legal in Your State?

Surcharging is trending across the nation, as merchants, businesses, and government entities realize its multiple benefits. They can enhance consumer fairness, while they totally eliminate credit card processing costs paid to companies like VISA and MasterCard. That’s an instant way to recoup as much as four cents on the dollar on every credit card transaction.

Recent Updates

No wonder so many businesses are asking if surcharging is legal in their state. Chances are, it is. A few years ago about a dozen states still banned the practice. In the fall of 2019, the number was trimmed to only six. Those were Maine,  Kansas, Massachusetts, Oklahoma, Colorado, and Connecticut. But in the few short months since then, at least two of those states have reconsidered their positions.

Oklahoma Ends its Ban

Last December, the Oklahoma Office of the Attorney General responded to a request for clarification regarding surcharging. The Attorney General explained that, in his opinion, Oklahoma’s ban on surcharging for purchases using credit cards would not survive legal scrutiny. In February of 2020, a major newspaper in Oklahoma published this conclusion: “As of this year, Oklahoma businesses are allowed to include a credit card surcharge at the point of sale, as long as they make the required disclosures to their customers.”

Massachusetts Responded Next

The Massachusetts  Office of Consumer Affairs and Business Regulation quickly took notice of the Oklahoma Attorney General’s interpretation of surcharging legality. They recommended that Massachusetts authorities consult legal counsel, to determine whether the surcharge ban in Massachusetts could stand up to a legal challenge. Merchants operating in that state  can contact the Massachusetts  Office of Consumer Affairs and Business Regulation to clarify whether it is still enforcing its surcharging ban. Even if the law is still on the books, it may be that the state no longer considers it enforceable. Should the ban continue, business groups going to court would likely win their case based on many other court decisions, including federal rulings that deemed surcharging bans unconstitutional.

Interested in Surcharging?

Download our frequently asked questions for answers and links to card association guidelines.

Does Kansas Enforce a Double Standard?

Kansas TV station KWCH 12 reported this year that state authorities fined a café owner for illegally adding a surcharge to debit and credit card transactions. That news shined a light on the state’s legal statutes, which many believe set a double standard that is unfair. Two Kansas laws are applicable to surcharging. One bans private businesses from surcharging. But the other says that it is legal for municipalities in Kansas to set an additional fee, to cover processing costs, for those using credit cards. In other words, government agencies in Kansas can pass their credit card processing fees along to the cardholder. But private businesses cannot.

The Bottom Line

Time will tell how long that Kansas double standard persists, but it will probably not survive for long. Credit card surcharging is increasing by leaps and bounds, at a time when it represents a huge win for merchants. Not only is the practice fair and transparent, offering consumers more control and choice, but it can help curb price inflation while saving businesses massive amounts of money. Experts predict that the last few hold-outs, such as Kansas, Maine, and Colorado, will soon join the rest of the states and embrace surcharging as a long-overdue solution.

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