Are Debit Card Surcharges Legal? What Businesses Need To Know

In the complicated world of payment processing, understanding the nuances of debit card and credit card payments, along with associated processing fees, is essential for businesses. After all, there are many more payment options available than ever before, and each comes with differing costs and technology needs.

This article explores the legal landscape surrounding surcharges, shedding light on the intricacies of state and federal laws and strategies for small businesses to manage processing costs.


  • Card brands such as Visa and MasterCard along with state and federal laws prohibit debit card surcharging.
  • Businesses can encourage cash transactions or use credit card surcharging as an additional fee to offset payment processing costs.
  • Choosing a cost-effective payment processor and implementing credit card surcharging are two top ways to minimize payment processing costs.

Learn More

Are Debit Card Surcharges Legal?

Let’s start with the elephant in the room: are debit card surcharges legal? The short answer is no, it’s not legal to surcharge debit card transactions. But let’s delve deeper into why this is the case. 

Major card issuers, including Visa and Mastercard, expressly forbid surcharging debit card transactions. The legality of surcharges is further influenced by state laws. For example, Texas law specifically bans debit card surcharging altogether and Connecticut bans surcharging for both debit and credit card transactions.

On a federal level, the Durbin Amendment, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act was introduced in 2010 and limits transaction fees. Part of this act limits the transaction fees for merchants imposed by card issuers, but it also goes further to limit transaction fees in general for debit and credit card transactions.

How much do debit card transactions cost?

As part of the Durbin Amendment, the interchange fee for debit card transactions cannot exceed $0.21 plus 0.05% of the transaction fee, plus a $0.01 fraud prevention fee (when eligible). On average, debit card processing fees amount to about $0.34 per transaction according to the Federal Reserve.

What About Credit Card Surcharging?

Credit card processing fees, both those charged by card networks and by payment processors impact your bottom line. Choosing the right payment processor that will charge a fair rate will help ensure your business is not paying more than it should for transaction processing. To further navigate these costs, businesses can also explore the option of implementing credit card surcharging to offset costs.

Provided businesses adhere to surcharging rules and regulations, credit card purchases can be subject to surcharging as a sustainable way to minimize payment processing costs. CardX by Stax is a trusted leader in helping your business seamlessly and easily implement credit card surcharging, ensuring you stay compliant and save on transaction fees. However, there are a few important things to know before diving into credit card surcharging.

Offsetting Costs: Strategies for Small Businesses

Because debit card surcharging is illegal for the most part, you may be wondering, “How can I offset costs in another way?” There are a couple of tried and tested ways for merchants to offset the cost of transaction processing fees outside of implementing surcharging. 

Encourage cash payments

To encourage cash payments and stay within the bounds of legality, businesses can offer cash discounts for this payment method as an alternative to surcharging. It is important to note that if there is a difference between the card and cash price, it is essential to clearly communicate through proper signage at the point of sale.

Set a minimum dollar amount for card transactions

Another method to offset transaction fees is to set a minimum dollar amount for credit and debit card transactions, encouraging customers to spend more and also covering the cost of payment processing fees. Best practices include ensuring the limit is reasonable for your price point and clearly listed at checkout.

Work with the right payment partners

Dealing with debit card and credit card processing fees (along with state-specific regulations for surcharging) may seem daunting—especially if you don’t have the right partner in place. However, for many, surcharging credit card transactions may be the ideal solution. 

Small businesses can navigate the complex world of surcharging and processing fees in two significant ways: by selecting cost-effective payment processors and services to compliantly implement surcharging. 

Since you’re reading this, you’re in the right place for solutions that can do both. CardX by Stax helps businesses optimize costs and ensure compliance with surcharge laws. And paired with Stax’s subscription-based pricing model, you can easily navigate the world of surcharging while reducing overall payment processing costs at the same time.

Final words

By staying informed about the rules set by major card brands and exploring legal alternatives such as credit card surcharging and cash discounts, you can effectively manage your costs while providing various forms of payment to their customers. 

Ready to learn how CardX by Stax can help your business seamlessly and compliantly implement credit card surcharging? Get in touch!

Request a Quote

FAQs about debit card surcharges

Q: Are debit card surcharges legal?

No, surcharging for debit card transactions is prohibited under the Durbin Amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This applies to all types of debit cards, including prepaid cards.

Q: How much are debit card processing fees?

The average interchange fee for debit card transactions is about 2.2%. However, interchange fees can vary depending on the type of card, the card network, and the merchant’s category.

Q: How can merchants lower debit card processing fees?

While you can’t technically lower the fees set by card networks and banks (i.e., interchange and assessment fees), there are steps you can take to offset the costs of accepting debit cards. A common method is to implement cash discounts, where shoppers pay a lower price when they pay by cash. 

And if you do decide to accept credit cards, you can set a minimum amount in order to offset the higher processing costs associated with these transactions.

Q: Why isn’t debit card surcharging legal?

The Durbin Amendment was enacted in 2010 to protect consumers from hidden fees. The amendment capped the interchange fees that merchants can charge for debit card transactions. As a result, merchants are not allowed to pass on these fees to consumers in the form of surcharges.

Q. What is a debit card?

A debit card is a payment card that allows cardholders to make transactions by drawing on funds they have deposited at a bank. It is directly linked to the cardholder’s bank account, and when a purchase is made, the money is immediately transferred from that account to the merchant’s account.