Delaware Credit Card Surcharge Laws

Quick Summary:

• Surcharging is legal: Delaware allows credit card surcharges following federal guidelines
• No state-specific restrictions: Delaware defers to federal law (4% maximum surcharge)
• Card network limits apply: Visa caps surcharges at 3%, Mastercard at 4%
• Debit card prohibition: Cannot surcharge debit cards, even signature-based transactions
• Employee tip protection: Businesses cannot withhold tips to cover credit card processing fees

Delaware maintains a business-friendly approach to credit card surcharging with no state-specific laws restricting the practice. Businesses can implement surcharges up to federal limits, making Delaware one of the more permissive states for merchants seeking to offset credit card processing costs. However, merchants must still comply with federal regulations and card network rules to avoid penalties.

Legal Disclaimer: This information is for reference only and does not constitute legal advice. Consult with an attorney before implementing surcharging programs, as card network rules and federal regulations change frequently.

Is Credit Card Surcharging Legal in Delaware?

Yes, credit card surcharging is legal in Delaware because the state has no specific laws prohibiting the practice. Delaware businesses default to federal regulations, which allow surcharges up to 4% of the transaction value when properly implemented and disclosed.

This legal status remains unchanged despite attempts to restrict surcharging. In 2022, former State Representative Valerie Longhurst introduced House Bill 488, which would have prohibited credit card surcharges, but the bill failed to pass and died in committee.

What's Allowed

Delaware businesses can legally implement these surcharging practices:

Federal guidelines compliance:

• Surcharges up to 4% of transaction value
• Proper disclosure before payment processing
• Separate line item on receipts showing surcharge amount

Card network variations:

• Visa: Maximum 3% or actual processing cost, whichever is lower
• Mastercard: Maximum 4% or actual processing cost, whichever is lower
• Must notify card networks before implementing surcharges

Cost recovery focus:

• Surcharges cannot exceed actual processing costs
• Cannot use surcharging to generate profit
• Must reflect genuine cost of card acceptance

What's Not Allowed

Delaware law and federal regulations prohibit these surcharging practices:

Prohibited surcharge applications:

• Debit card transactions (including signature-based debit)
• Prepaid card transactions
• Gift card transactions

Excessive surcharges:

• Exceeding card network caps (3% for Visa, 4% for others)
• Charging more than actual processing costs
• Using surcharges to generate additional profit

Employee tip violations:

• Withholding any portion of employee tips for processing fees
• Deducting credit card costs from gratuities (illegal under Delaware Code Title 19, Chapter 9, Section 902(d))

Penalty For Non-Compliance

Delaware enforces surcharge violations through multiple mechanisms depending on the type of violation:

Card network penalties: Merchants violating card network rules may face fines from $50,000 to $1 million, passed down from payment processors who face initial $1,000 fines for non-compliant merchants.

Federal enforcement: Violations of federal surcharge caps or disclosure requirements may result in federal consumer protection action.

Employee tip violations: Delaware Department of Labor enforces tip withholding violations under state wage payment laws, which can result in civil penalties and required restitution to employees.

Consumer complaints: File complaints with Delaware Attorney General's Consumer Protection Unit at consumer.protection@delaware.gov or call (800) 220-5424 for assistance with potential surcharge violations.

Delaware Credit Card Surcharge FAQs

Does Delaware's business-friendly reputation extend to surcharge laws?

Yes, Delaware's approach to surcharging reflects its business-friendly environment. The state consciously chose not to enact restrictive surcharge laws, allowing businesses to follow federal guidelines without additional state-level complications. This is consistent with Delaware's general approach of minimal regulatory interference with business operations.

Can Delaware restaurants withhold tips to cover credit card processing fees?

No, this is explicitly illegal under Delaware law. The Delaware Department of Labor issued a statement in January 2025 confirming that withholding any portion of employee tips for credit card processing fees violates Delaware Code Title 19, Chapter 9, Section 902(d). Businesses must pay employees the full amount of tips received, regardless of payment method.

What happened to House Bill 488 that would have banned surcharges?

House Bill 488, introduced in 2022 by former Representative Valerie Longhurst, would have amended Title 6 of the Delaware Code to prohibit credit card surcharges. The bill stalled in committee and was never enacted, leaving Delaware's current permissive approach unchanged. There are no current legislative efforts to restrict surcharging.

Are there different rules for different types of Delaware businesses?

No, Delaware's surcharge rules apply uniformly to all business types. Unlike some states that have special provisions for gas stations, restaurants, or professional services, Delaware maintains consistent rules across all industries. However, businesses in regulated industries should check with their professional licensing boards for any additional ethical requirements.

How do Delaware's lack of restrictions compare to neighboring states?

Delaware is more permissive than some neighbors. Pennsylvania allows surcharging with federal guidelines, while Maryland allows surcharges up to 4%. However, unlike states with complex disclosure requirements or percentage caps, Delaware's simple approach of following federal law makes compliance more straightforward for businesses operating across state lines.