Can You Surcharge in Texas? Card Fee Rules for Texas Merchants

What does Texas law actually say about surcharges?

On paper, Texas is an anti-surcharge state. Texas Finance Code §339.001 provides that a seller "may not impose a surcharge" on a buyer who uses a credit card instead of cash, check, or a similar means of payment. Violations fall under the state's deceptive trade practices enforcement, historically through the Attorney General's office. Texas passed the provision in an era when roughly a dozen states had similar bans on the books.

Two things about the statute are worth noticing before we get to what happened to it:

• It targets the label, not the price. The statute prohibits adding a "surcharge" to a posted price. It has never prohibited a merchant from simply charging different prices — Texas law, like the federal Cash Discount Act framework, has always tolerated discounts for cash. The entire legal fight ended up being about whether the state can punish the framing ("3% card fee") while permitting the arithmetic-identical framing ("discount for cash").
• It covers credit cards. The debit-card question barely matters here, because — as you'll see below — card-network rules and federal law prohibit debit surcharging everywhere, regardless of state law.

So can you surcharge in Texas right now?

Here's why you'll see surcharges at Texas restaurants and shops today despite the statute above.

In the Rowell v. Paxton litigation, Texas merchants challenged §339.001 on First Amendment grounds, arguing the ban regulated speech rather than prices: it let them charge card users more via a "cash discount" but criminalized describing the identical price difference as a "surcharge." That argument had already succeeded against similar statutes elsewhere — the U.S. Supreme Court's Expressions Hair Design v. Schneiderman decision (2017) held New York's ban regulated speech, and courts applying that framework struck down or enjoined comparable bans in several states.

The upshot for Texas: a federal court held the Texas ban unconstitutional as applied to merchants who truthfully disclose their card fee, and the Attorney General's office agreed not to enforce the statute against the challengers, with the case resolving on that basis. The statute remains on the books — the Legislature never repealed it — but as of this writing the practical enforcement posture is that disclosed, truthful credit-card surcharging proceeds in Texas without state interference.

Three honest caveats, because this is law, not physics:

• "Unenforced" is not the same as "repealed." A future AG could test the boundaries, or the Legislature could rewrite the statute. Courts have held the ban unconstitutional as applied to disclosed surcharges — a deceptive, undisclosed fee would get no such protection and would invite trouble under the Deceptive Trade Practices Act besides.
• The constitutional ruling protects disclosure, not greed. Every court in this line of cases assumed the merchant was telling customers the truth about the fee. Hide it, misstate it, or inflate it, and you're outside the protected zone entirely.
• State law was never the only rulebook. Which brings us to the layer that actually governs day-to-day surcharging in Texas: the card brands.

What do the card brands require regardless of state law?

A surcharge is a fee added to the transaction amount because the customer pays with a credit card. Whatever the state-law posture, every merchant agreement binds you to the card networks' surcharge rules, and they apply in Dallas exactly as they do in Denver:

• Credit cards only — never debit or prepaid. This is the bright line. Debit and prepaid cards cannot be surcharged anywhere in the U.S., under network rules and the federal Durbin framework. And it's the card that matters, not the button: a debit card run "as credit" with a signature is still a debit card. Your terminal must read the BIN and suppress the surcharge automatically — a human cashier cannot reliably do this.
• Capped at your actual cost, up to the network maximum. You may not profit from a surcharge. The ceiling is your actual cost of credit acceptance, and in no event more than the network cap — Visa lowered its maximum to 3%. If your effective credit cost is 2.6%, your cap is 2.6%.
• Advance notification. Network rules require notifying the card brands, via your processor, before you begin surcharging — commonly with roughly 30 days' notice. A merchant surcharging on a program the processor doesn't know about is non-compliant by default.
• Disclosure at the point of entry and point of sale. Clear signage at the store entrance and at the register (or on the checkout page online) stating that a surcharge applies to credit cards, the percentage, and that it doesn't exceed your cost of acceptance.
• Receipt line item. The surcharge must appear as its own labeled line on the receipt, included in the transaction amount sent to the network — not collected as a separate side transaction.
• Refunds include the surcharge. Refund the sale, refund its surcharge.

Run all of that correctly — BIN-aware terminal, registered program, capped rate, signage, receipt line — and credit surcharging in Texas is workable. Miss the debit exclusion or the cap, and you're exposed on two fronts at once: network enforcement and the consumer-deception angle that the courts' First Amendment holdings never protected.

Why does dual pricing sidestep the whole mess?

Dual pricing posts two prices for every item — a cash price and a card price — and the customer simply pays the price that matches how they pay. Nothing is added at the register. There is no "fee." There are two prices, both displayed before the customer decides.

That one structural difference dissolves nearly every issue above:

• The state statute doesn't reach it. §339.001 prohibits imposing a surcharge on a posted price. Posting two prices is ordinary pricing — what every Texas gas station has done for decades. You're not relying on a court's enforcement posture; you're simply not doing the thing the statute describes.
• The card-brand surcharge rulebook mostly doesn't apply. No surcharge means no surcharge registration, no credit-only carve-out gymnastics, no cap arithmetic. The networks' own materials treat properly displayed two-tier pricing as pricing. (Honest disclosure rules still apply — the card price must be what the shelf says it is.)
• Debit stops being a landmine. A debit customer simply pays the displayed card price. There's no surcharge at all, so the most dangerous compliance failure in surcharging can't happen.
• Customers see the price before they choose. This is why dual pricing generates far fewer complaints than register-added fees: nobody feels ambushed by a number they watched on the shelf and the screen.

The catch — and it's real — is that dual pricing is a display obligation. Both prices need to appear on shelf tags or menus (or the terminal must present both clearly before payment), and your POS has to be configured to charge exactly the posted card price and show the cash price honestly. This is technology and setup, not paperwork, which is why it should be deployed by your processor rather than improvised. We compare the three structures in depth in Dual Pricing vs. Surcharging vs. Cash Discounts.

Cash discounting done right — and the "non-cash adjustment" trap

A true cash discount starts from the posted card price and discounts down for cash. Federal law has protected this structure since the Cash Discount Act era, and no state — Texas included — prohibits it. Post $103, ring $103, and take $3 off when someone pays cash: compliant everywhere, no registration, no caps.

The trap is the program sold under names like "non-cash adjustment": the shelf says $100, and the register adds 3.99% when a card comes out, while the paperwork insists the $100 was really a "discounted cash price" all along. Look at the arithmetic: a fee was added to the posted price because the customer used a card. That is a surcharge wearing a costume — the card networks have said so explicitly in merchant bulletins — and because these programs are typically run without surcharge registration, without the credit-only restriction (they add the fee to debit too), and sometimes above the cap, they manage to be non-compliant on three axes simultaneously.

These programs are marketed hard in Texas because "the fee ban isn't enforced" makes the state feel like open season. But the exposure was never mainly the state — it's the networks, and the customer who reads their receipt, feels deceived, and disputes the charge. If a rep pitches you a program where the posted price is the cash price and the machine adds a percentage, ask one question: "Is this registered as a surcharge program, and does it suppress the fee on debit?" The pause tells you everything.

What do signs and receipts need to show?

Whatever structure you run, compliance lives or dies at the shelf, the door, and the receipt. What good looks like:

• Surcharge program — entrance sign: "We apply a 3% surcharge to credit card payments, which does not exceed our cost of acceptance. Debit cards are not surcharged." Same message at the register or on the checkout page.
• Surcharge program — receipt: a distinct line — Credit Card Surcharge (3%): $2.79 — inside the transaction total.
• Dual pricing — shelf/menu: both prices visible before selection: "Brisket plate — $18.99 cash / $19.55 card," or a clearly posted notice that all listed prices are cash prices with the card price displayed alongside and confirmed on the terminal screen before payment.
• Dual pricing — receipt: the receipt shows the card price as the item price (with the cash price reference if your POS supports it). Nothing is "added."
• Cash discount — shelf: the card price is the posted price; signage says "Save 3% when you pay cash." The receipt shows the discount as a reduction.

One universal rule ties all three together: the customer should never discover the price difference for the first time on the receipt. Every structure that survives scrutiny — legal, network, and reputational — discloses before the payment decision, not after.

Surcharge vs. dual pricing vs. cash discount in Texas

What we deploy for DFW merchants

Across the Dallas–Fort Worth merchants we work with — restaurants in Deep Ellum, auto shops in Garland, boutiques in Bishop Arts, contractors from Frisco to Mansfield — the pattern is consistent: merchants who tried register-added fees field complaints and compliance questions; merchants on properly displayed dual pricing mostly hear nothing at all. Texans have pumped gas under two-tier pricing their whole lives. Two honest prices on a shelf tag read as normal; a surprise line on a receipt reads as a gotcha.

Our standard deployment is a dual pricing program configured end to end: terminals and POS programmed to present both prices on screen before payment, receipt formatting handled, shelf and menu signage supplied, and staff given a one-paragraph script for the three customers a month who ask about it. Typical result: 85%–95% of processing cost moves off the merchant's P&L, with no registration filings and no debit-card landmines. Prefer to absorb card costs the traditional way? Then make sure the rate itself is right — start with what processing should actually cost.

Setting up compliant dual pricing in a specific Texas market? See our city guides for Houston, Dallas, San Antonio, Austin, and Fort Worth — or browse all 25 Texas service areas.

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