The most common thing we hear from merchants is "this sounds too good to be true." We get it. But dual pricing and surcharging aren't loopholes, they're explicitly permitted by federal law, card network rules, and the laws of all 50 states when done correctly.
The key phrase is when done correctly. That's what this page is about.
Two pieces of federal legislation established the legal right for merchants to offset card processing costs.
Part of the Dodd-Frank Wall Street Reform Act. This is the law that explicitly gives merchants the right to offer discounts for cash, check, or debit card payments. It's also the law that prohibits surcharging debit cards — which is why knowing the difference between card types matters.
Further established merchant rights around payment routing and fee transparency, reinforcing that merchants have legal recourse against the card networks when it comes to processing costs.
Both networks updated their merchant rules in April 2023, and those rules remain in effect. Here's what they require.
This is where merchants get most confused, and where doing it right really matters.
Dual pricing is legal in all 50 states. No exceptions. Because it's framed as a discount for cash rather than a penalty for card use, it falls under federal discount protections and bypasses any state-level surcharge restrictions entirely.
Surcharging has a more complex state picture. A handful of states have historically restricted surcharging, though court challenges in recent years have weakened many of those restrictions. Here's the current landscape:
| Status | States |
|---|---|
| ✓ Fully permitted | Most states including TX, FL, OH, PA, GA, NC and more |
| ⚠ Additional disclosure requirements | CA, NY — permitted but extra signage rules apply |
| ℹ Historically restricted, now largely permitted | CT, MA, restrictions weakened by recent court rulings |
Important: If you're in a state with additional requirements, dual pricing is always a clean alternative — it sidesteps state surcharge law entirely.
Knowing it's legal is one thing. Staying compliant is another. These are the real-world mistakes that get merchants into trouble.
This is the biggest one. Federal law under the Durbin Amendment prohibits applying surcharges to debit card transactions. The card networks enforce this aggressively, violations can result in immediate merchant account termination. Your terminal must automatically detect card type and apply the correct pricing.
If your posted price is your cash price and card users pay more — that's a surcharge, no matter what you call it. New York and California regulators have specifically pursued merchants on this. Labels matter legally.
Even if your actual processing cost is higher, surcharges are capped at 3%. You absorb the difference. Dual pricing has no such cap, though keeping the spread at 3–4% is standard practice.
You must notify your processor in writing before you begin surcharging. No exceptions. Skipping this step puts your merchant account at risk.
Both programs require clear disclosure before the customer pays. For surcharging, Visa and Mastercard require at least 14-point font on signage at the entrance and point of sale. No signage means you're out of compliance even if everything else is set up correctly.
Every single one of the issues above is handled automatically when you onboard through FeeSlicers. The terminals we set up detect card types automatically, the signage is included, the processor notifications are handled, and you're walked through everything before you go live.
Merchants get into trouble when they try to piece this together themselves or when their processor doesn't specialize in these programs. That's not what happens here.
This page is for informational purposes and reflects our understanding of federal law and card network rules as of 2026. State laws can change. FeeSlicers is not a law firm and this is not legal advice. For specific legal questions about your situation, consult a licensed attorney in your state.
We've helped merchants navigate this in every state. If you're not sure whether dual pricing or surcharging is right for your business, or whether your state has any quirks worth knowing about — just ask.