Please note: Laws are always evolving, so remember this isn't legal advice. For that, it's best to chat with a lawyer.
To read more about Boulevard Offset, see our Boulevard Offset support article.
How does Offset work?
Please note that while Boulevard can help explain how our platform works, this article is not legal advice, and you are solely responsible for ensuring that you meet your obligations under applicable laws. As applicable laws are constantly evolving, you should regularly review that your business is compliant with updated laws and regulations. We recommend consulting with your legal team as needed.
Boulevard Offset is a credit card surcharge product that Customers can choose to enable. We’ve built Offset with compliance in mind. It automatically adds a 3% “credit fee” after gratuity and other fees, but before tax.
Certain card network rules cap the maximum allowable surcharge at 3% on credit card transactions. When you opt into Offset, Boulevard charges a 4% processing rate on credit card transactions, and the client pays a 3% “credit fee” when they use a credit card — which offsets this processing rate. Therefore, your business effectively recoups 99% of the revenue from the products and services that you sell.
Due to card network rules and federal law, a surcharge is never applied to debit cards or any other means of payment — only credit cards.
In general, the rules and regulations regarding surcharge programs focus on making sure your clients are aware of the surcharge fee before they pay. For this reason, we build automation along the way so that the fee is clearly displayed and applied. We recommend additional compliance steps, like posting our templated signage at your front door and point of sale.
Whenever you decide to opt into Offset, our support team guides you with clear compliance steps and recommendations on how to communicate with staff and clients.
Before you decide to enroll in Offset, you should consider whether you comply with all applicable state laws. Only you can make that final decision, but we’ve provided a brief summary of state surcharge law below in order to help with your research. Please see our summary below!
Are surcharges legal in my state?
States with surcharge prohibitions (that permit cash discount programs)
As of April 2023, Connecticut, Maine, Massachusetts, and Oklahoma explicitly prohibit surcharge fees. However, note that in each of these states, a “cash discount program” is permissible, whereby a merchant may raise the price for their products and services in order to “offset” certain expenses (like credit card processing fees) but also offer clients a discount if they use cash.
Connecticut
Surcharge fees are prohibited, but cash discount programs are OK. In Connecticut, surcharge fees are prohibited by state law; however a cash discount program is permitted. As such, a merchant may raise their prices in order to “offset” certain costs, such as credit card processing fees. In order to do so, businesses must prominently display the total price of a product or service, including any increases to offset costs of credit card transactions, before a client finalizes their purchase. The merchant should note a discount to clients if cash is used and likewise prominently display the discount. More information available here and here.
Maine
Surcharge fees are prohibited, but cash discount programs are OK. In Maine, surcharge fees are prohibited by state law; however a cash discount program is permitted. As such, a merchant may raise their prices in order to “offset” certain costs, such as credit card processing fees. In order to do so, businesses must prominently display the total price of a product or service, including any increases to offset costs of credit card transactions, before a client finalizes their purchase. The merchant should note a discount to clients if cash is used and likewise prominently display the discount. More information available here and here.
Massachusetts
Surcharge fees are prohibited, but cash discount programs are OK. In Massachusetts, surcharge fees are prohibited by state law; however a cash discount program is permitted. As such, a merchant may raise their prices in order to “offset” certain costs, such as credit card processing fees. In order to do so, businesses must prominently display the total price of a product or service, including any increases to offset costs of credit card transactions, before a client finalizes their purchase. The merchant should note a discount to clients if cash is used and likewise prominently display the discount. More information available here. (An opinion from the Massachusetts Office of Consumer Affairs and Business Regulation in January 2020 determined that surcharges are permissible when (a) payment processing done by a 3rd party, (b) the merchant does not profit from the surcharge, and (c) the consumer had a choice to pay by other method). Customers utilizing Offset satisfy all of those requirements. More information is available here.)
Oklahoma
Surcharge fees are prohibited, but cash discount programs are OK. In Maine, surcharge fees are prohibited by state law; however a cash discount program is permitted. As such, a merchant may raise their prices in order to “offset” certain costs, such as credit card processing fees. In order to do so, businesses must prominently display the total price of a product or service, including any increases to offset costs of credit card transactions, before a client finalizes their purchase. The merchant should note a discount to clients if cash is used and likewise prominently display the discount. More information available here. (However, an advisory opinion from the Oklahoma Attorney General from December 2019 determined that Oklahoma’s surcharge prohibition is likely unconstitutional. More information is available here.)
States with a surcharge law that has been overturned by the courts
Courts have found the anti-surcharging statutes in California, Florida, Kansas, and Texas unconstitutional on First Amendment grounds because the communication of prices to customers is protected commercial speech. Regulators in these states have generally taken the guidance from these courts and, to date, do not enforce broad prohibitions against surcharge fees provided that merchants prominently display the surcharge fee prior to final purchase.
California
Prohibition overturned. The California state attorney general recognizes the case overturning the state’s surcharge prohibition. More information is available here.
A note about California’s “Honest Pricing Law.” SB 478, known as the "Honest Pricing Law" or "Hidden Fees Statute," went into effect on July 1, 2024. While this law requires businesses to include all mandatory fees in advertised prices, it does NOT apply to credit card surcharges in most cases. The California Attorney General's office has explicitly confirmed that:
Credit card surcharges are NOT considered mandatory fees under SB 478 as long as customers have alternative payment options.
Businesses can apply credit card surcharges in California without incorporating them into advertised prices, provided that:
Alternative payment methods are available (cash, debit cards)
The surcharge is clearly disclosed before payment
The surcharge does not exceed the actual processing cost
Florida
Prohibition overturned. The Florida state attorney general recognizes the case overturning the state’s surcharge prohibition and notes that “merchants in Florida may add a surcharge to credit card purchases.” More information is available here. The state AG provides additional guidance:
Prominent display of surcharge before purchase. Businesses must prominently display the amount of the surcharge fee before a client finalizes their purchase.
Surcharge can’t exceed merchant processing cost. In addition, a merchant may not impose a surcharge on a client that is greater than the actual cost to the merchant to process the credit card payment. Boulevard charges 4% for credit card transactions when you are enrolled in Offset, and Offset charges clients a 3% surcharge – less than the total processing cost.
Kansas
Prohibition overturned. In CardX, LLC v. Schmidt, in 2021, a federal district court in the District of Kansas ruled that Kansas’ restriction on credit card surcharge pricing “as applied to Plaintiff, violate[d] Plaintiff’s rights under the First Amendment.” While the Kansas Attorney General hasn’t yet issued an official statement since the ruling, during the 2022 state congressional session, a bill to permit surcharge fees was introduced by the state senate. More information is available here.
Texas
Prohibition overturned. The Texas state attorney general recognizes the case overturning the state’s surcharge prohibition, noting that it may still be enforceable where a merchant attempts to make a profit from the surcharge fee (Note that Boulevard charges 4% for credit card transactions when you are enrolled in Offset, and Offset charges clients a 3% surcharge – less than the total processing cost). More information is available here.
States that regulate (but do not prohibit) surcharge fees
Recent law in New York and New Jersey, as well as well-established laws in Colorado and Minnesota, focus on (a) making certain that consumers are aware of any surcharge fee before they purchase and (b) limiting surcharge fees to the merchant’s own processing costs.
Boulevard has built Offset into our checkout process so that the transaction total is displayed, inclusive of all fees, prior to the client submitting payment. Additionally, Boulevard charges 4% for credit card transactions when you are enrolled in Offset, and Offset charges clients a 3% surcharge – less than the total processing cost.
New Jersey
Prominent display of surcharge before purchase. Effective December 2023, New Jersey passed a law that requires businesses to prominently display the amount of the surcharge fee before a client finalizes their purchase.
Surcharge can’t exceed merchant processing cost. In addition, a merchant may not impose a surcharge on a client that is greater than the actual cost to the merchant to process the credit card payment.
New York
As of February 2024, New York does not prohibit credit card surcharges entirely, but has specific disclosure requirements that effectively transform traditional surcharges into a "clear pricing" model. New York's Credit Card Surcharge Law (effective February 11, 2024) requires:
Limiting credit card surcharges to the amount charged to the business by its payments processor.
Businesses must post the total price inclusive of the credit card surcharge; or display both the credit card price and cash price before checkout.
Colorado
Prominent display of surcharge before purchase. As of July 2022, Colorado passed a law that requires businesses to prominently display the amount of the surcharge fee before a client finalizes their purchase.
Surcharge can’t exceed merchant processing cost. In addition, a merchant may not impose a surcharge on a client that is greater than 2% OR the actual cost to the merchant to process the credit card payment (Note that Boulevard charges 4% for credit card transactions when you are enrolled in Offset).
Minnesota
Prominent display of surcharge before purchase. Credit card surcharges are permitted in Minnesota as long as the consumer is clearly informed of the surcharge.
Surcharge can’t exceed 5%. In addition, a merchant may not impose a surcharge on a client that is greater than 5% (Note that as part of Offset, clients are charged a 3% surcharge fee).
A note about Minnesota’s “Price Transparency Law.” Minnesota has enacted a new Price Transparency Law, effective January 1, 2025, which is similar to California's “Honest Pricing Law” in its approach to credit card surcharges and price transparency. While these laws require businesses to include all mandatory fees in advertised prices, it does NOT apply to credit card surcharges in most cases. The Minnesota Attorney General's office has explicitly stated that:
Credit card surcharges are NOT considered mandatory fees as long as customers have alternative payment options.
Businesses can apply credit card surcharges in California without incorporating them into advertised prices, provided that:
Alternative payment methods are available (cash, debit cards)
The surcharge is clearly disclosed before payment
The surcharge does not exceed Minnesota's existing 5% cap on surcharges
States with no surcharge regulations
If you operate in a state that is not discussed above, it likely means that — to date — there is no state law regulating surcharge programs. Of course, card network rules, federal law, and general fair business practices always require the following, all of which are enabled by default with Boulevard Offset:
No surcharges on debit cards. The ability to surcharge only applies to purchases made with a credit card. Merchants cannot surcharge purchases made using a debit card or prepaid card.
Transparency and disclosure. Merchants must be transparent about any fees they charge; explaining the amount, nature, and purpose of these fees prior to purchase. Clients should be informed about which payment methods incur these fees and whether they can avoid them.
Surcharge fees must be capped. Card networks cap surcharge fees at 3%. In addition, and as discussed above, surcharge fees should never exceed the fees charged for credit card processing.
What if a merchant operates stores in multiple states, and state laws prohibit the merchant from surcharging in some states but not others? Each merchant location must follow the state laws in which the merchant is located. If a merchant is legally prohibited from surcharging by state law, they cannot surcharge transactions in those stores. They may, however, surcharge at locations in other states that do not prohibit surcharging. Boulevard Offset can be enabled by individual location, helping you remain compliant in every state in which you operate.