Is It Legal To Charge Extra For Credit Card Use?  Has this happened to you before?  You just had some work done at your home (Landscaping, Painting, Roofing, etc.), and you’ve approved the work.  The next step in the process is payment for the services rendered.  At this point you whip out your credit card to process payment only to have the merchant inform you that they will have to add a 3% surcharge to the invoice to process the credit card.  Sound familiar?  We thought so.

We know – this is not a typical article for a painter to write.  We are an advocate for our community and feel it’s our duty to educate on matters that impact everyone.

Is It Legal To Charge Extra For Credit Card Use?

The answer is NO.  To be honest, when we first started our business 3 years ago we charged to process credit cards as well.  We’re from Idaho where it’s legal to charge for credit card processing so it never crossed our mind.  It wasn’t until we were fortunate enough to have one of our clients, who was a small business owner as well, inform us that charging for credit card processing was not legal in Texas.  Say what?!

We see this happening a lot in our industry as well as others.  Often times our competitors state on their quotes that the use of a credit card may result in a 3% charge for credit card processing.  If we see this we educate our clients on the Texas finance code that prohibits it.  Although this does happen often, many businesses (and consumers) that have this policy likely aren’t aware that they’re violating a state law – they simply do not know.

Is It Legal To Charge Extra For Credit Card Use?:   Dallas Morning News

In fact there are 11 states that forbid a vendor from placing a surcharge on credit card processing.  CaliforniaColoradoConnecticutFloridaKansasMaineMassachusettsNew YorkOklahoma and Texas — and Puerto Rico have laws that prohibit merchants from charging consumers with surcharges on credit card transactions.  In Texas they refer to this as “discrimination” or a “penalty” to a paying consumer who wishes to use a credit card for payment.

Why Would A Vendor Charge For Credit Card Processing?

Most people understand that the vendor or a business you’re purchasing from has to pay the processing charges for each transaction.  In 40 states it’s legal to charge patrons for this charge.  Credit card processing can be anywhere from 2-5%.

Who Can Charge Credit Card Processing Fees?

Credit Card fees can only be charged by government entities, such as for the payment of property taxes or other fees required by government agencies.  See Texas Attorney General Website

What Are The Alternatives to Credit Card Transactions?

State law states merchants “can discount the regular retail price of an item for consumers who pay cash”.  In short, if you plan to pay with cash or check so as to avoid processing charges for the vendor, they may have a “cash discount” policy that could benefit both parties.

The merchant may decide to not accept credit cards for the simple fact that it does cost quite a bit of money to process them, and they have no mechanism to recoup that cost.

The next time a merchant, other than a government agency, wants to charge you for credit card processing please refer them to this article.