Alabama Credit Card Surcharge Laws

Quick Summary:

• Credit card surcharging is legal in Alabama with no state restrictions
• Maximum surcharge: 4% of transaction (3% for Visa cards)
• Must clearly disclose fees to customers before payment
• Applies only to credit cards - debit card surcharging is illegal
• Alabama government entities are authorized to surcharge taxpayers

Alabama permits credit card surcharging without state-specific restrictions, making it one of the most business-friendly states for implementing surcharge programs. State law explicitly authorizes government entities to pass credit card processing costs to taxpayers, creating clear legal precedent for private businesses. This straightforward approach helps Alabama's many wholesale distributors, contractors, and manufacturers offset rising payment processing costs that impact their bottom line.

Legal Disclaimer: This information is for reference only and does not constitute legal advice. Consult with an attorney before implementing surcharge programs, as rules can change.

Is Credit Card Surcharging Legal in Alabama?

Yes, credit card surcharging is completely legal in Alabama. The state has no laws prohibiting surcharges on credit card transactions, and Alabama Code explicitly authorizes government entities to impose surcharges for credit card payments.

Alabama follows federal guidelines, which cap surcharges at 4% of the transaction amount (3% for Visa). Businesses must ensure surcharges don't exceed their actual processing costs.

What's Allowed

Alabama businesses can implement surcharge programs with these guidelines:

• Surcharge up to 4% of transaction amount (3% for Visa cards)
• Apply to all credit cards including Visa, Mastercard, American Express, and Discover
• Clear disclosure required through signage, website notifications, and receipts
• All business types eligible including retail, restaurants, and B2B companies
• Government payments can be surcharged (commonly practiced by Alabama municipalities)

What's Not Allowed

Federal law and card network rules impose these restrictions:

• No debit card surcharging even when processed as credit transactions
• Cannot exceed processing costs - surcharges can't generate profit
• No hidden fees - all surcharges must be disclosed before payment
• Must be clearly itemized on receipts as separate line items

Penalty For Non-Compliance

While Alabama doesn't specify unique penalties for surcharge violations, businesses face enforcement through multiple channels:

• Card network fines ranging from hundreds to thousands of dollars per violation
• Account termination by Visa, Mastercard, or other networks for repeated violations
• Consumer complaints through the Alabama Attorney General's Consumer Interest Division
• Potential lawsuits under Alabama's Deceptive Trade Practices Act

Customers can file complaints with the Alabama Attorney General's office through their online complaint form or Consumer Hotline.

Alabama Credit Card Surcharge FAQs

Can Alabama restaurants add surcharges to credit card payments?

Yes, restaurants can legally surcharge credit card transactions. They must post clear notices at entrances and ensure the surcharge appears on receipts.

Do online Alabama businesses need to disclose surcharges?

Absolutely. Online businesses must display surcharge information prominently during checkout before customers enter payment details.

Can contractors surcharge large B2B invoices?

Yes, and this is common practice among Alabama contractors and wholesalers. A 3% surcharge on a $50,000 invoice saves $1,500 in processing costs.

What's the maximum surcharge allowed in Alabama?

4% of the transaction amount for most cards, but only 3% for Visa transactions. The surcharge cannot exceed actual processing costs.

Can Alabama businesses surcharge government credit card payments?

Yes, many Alabama government entities already surcharge taxpayers for credit card payments, and private businesses can extend this practice to government customers.