Massachusetts Credit Card Surcharge Laws

Quick Summary:

• Credit card surcharging is completely prohibited for all businesses in Massachusetts
• No exceptions or exemptions exist for any business type or transaction size
• Businesses can offer cash discounts and convenience fees under strict conditions
• Massachusetts General Laws Chapter 140D, Section 28A provides the legal framework
• Violations enforced by Massachusetts Attorney General's Consumer Protection Division

Massachusetts maintains one of the strictest credit card surcharge prohibitions in the United States, completely banning any seller from imposing additional charges on customers who choose to pay with credit cards instead of cash, check, or similar payment methods. Under Massachusetts General Laws Chapter 140D, Section 28A, this prohibition applies universally to all businesses operating in the state.

The law reflects Massachusetts's strong consumer protection philosophy, ensuring that advertised prices remain final prices regardless of payment method. Unlike states that allow surcharging with disclosure requirements, Massachusetts provides no exceptions or workarounds for businesses seeking to recover credit card processing costs through direct customer fees.

Legal Disclaimer: This information is for reference only and does not constitute legal advice. Massachusetts strictly enforces its surcharge prohibition, and businesses should consult with an attorney before implementing any payment fee structures.

Is Credit Card Surcharging Legal in Massachusetts?

No, credit card surcharging is completely illegal in Massachusetts. Massachusetts General Laws Chapter 140D, Section 28A(2) explicitly states: "No seller in any sales transaction may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means."

This prohibition is absolute and applies to all businesses operating in Massachusetts, regardless of industry, size, or transaction volume. Massachusetts provides no exceptions for small businesses, high-volume transactions, or specific industries that might face significant processing costs.

The law was designed to protect consumers from surprise fees and ensure price transparency. Massachusetts legislators determined that businesses should either absorb credit card processing costs or build them into their base pricing structure rather than adding fees at the point of sale.

What's Allowed

Massachusetts businesses can implement these legal alternatives to surcharging:

• Offer cash discounts from clearly posted regular prices
• Use dual pricing showing separate cash and credit card prices
• Charge convenience fees under very specific third-party conditions
• Include processing costs in base pricing for all customers
• Encourage alternative payments like ACH transfers, checks, or cash
• Display transparent pricing that reflects true costs upfront

What's Not Allowed

Massachusetts law strictly prohibits these practices:

• Any surcharges on credit or debit card transactions
• Additional fees based solely on payment method choice
• Processing charges added at checkout or point of sale
• Non-cash adjustments that increase prices for card users
• Payment method penalties regardless of terminology used
• Hidden fees that appear after price advertisement

Penalty For Non-Compliance

Massachusetts enforces its surcharge prohibition through multiple mechanisms:

• Massachusetts Attorney General investigations for violations of consumer protection laws
• Consumer complaints processed through the Massachusetts Consumer Advocacy & Response Division
• Private lawsuits under Massachusetts Consumer Protection Act Chapter 93A
• Civil penalties and restitution requirements for affected consumers

Massachusetts consumers can report surcharge violations by calling the Attorney General's Consumer Hotline at (617) 727-8400 (Monday-Friday, 8 AM - 4 PM) or filing complaints online through the official consumer complaint portal.

How Massachusetts Businesses Handle Processing Costs

Since Massachusetts prohibits surcharging, businesses must find alternative methods to manage credit card processing expenses. Many successful Massachusetts companies have developed strategies that comply with state law while maintaining profitability.

Common approaches include:

• Build processing costs into base pricing across all products and services
• Offer cash discount programs that reduce prices for non-card payments
• Encourage ACH or check payments through discount incentives
• Negotiate better processing rates with merchant service providers
• Use dual pricing models that clearly display different payment method costs

Example of legal cash discount: A restaurant posts menu prices that apply to credit card payments, with prominent signage offering "5% discount for cash payments." Cash customers pay less than posted prices, while credit card customers pay the advertised amount.

Example of illegal surcharge: The same restaurant posts lower menu prices and adds "3% credit card processing fees" at checkout, or includes "non-cash adjustment" charges on receipts.

Convenience Fees vs. Credit Card Surcharges in Massachusetts

Massachusetts law distinguishes between prohibited credit card surcharges and potentially permissible convenience fees, though the requirements for legal convenience fees are extremely restrictive.

Convenience fees may be legal when ALL these conditions are met:

• Third-party processing only - fees charged by completely independent payment processors
• No merchant benefit - businesses cannot receive any compensation from the convenience fee
• Alternative payment options - customers must have other ways to pay without fees
• Actual cost pass-through - fee amount exactly matches third-party processing cost
• Independent service provider - no relationship between merchant and processor

These strict requirements mean that most typical "convenience fees" charged by businesses violate Massachusetts law. The Division of Banks has issued guidance clarifying that convenience fees are only permissible in very limited circumstances involving truly independent third-party processors.

Most businesses cannot meet these requirements, making convenience fees impractical for standard merchant operations. The vast majority of payment processing arrangements involve merchant relationships that disqualify them from convenience fee exceptions.

Types of Businesses Affected by Massachusetts's Surcharge Ban

Massachusetts's surcharge prohibition applies universally to all businesses conducting sales transactions within the state, creating uniform compliance requirements across every industry sector.

All businesses subject to the surcharge ban:

• Retail establishments including department stores, specialty shops, and online retailers
• Restaurants and food service from food trucks to fine dining establishments
• Professional services such as law firms, medical practices, and consulting businesses
• Contractors and trades including construction, plumbing, electrical, and landscaping services
• Entertainment venues like theaters, concert halls, and sports facilities
• Educational institutions for non-governmental fee collections

The law makes no exceptions for business size, transaction amounts, or processing cost burdens. A corner convenience store faces the same restrictions as a major department store chain, requiring both to absorb processing costs or use legal alternatives like cash discount programs.

Some industries have found creative compliance solutions. Gas stations commonly use dual pricing to show cash and credit prices, while restaurants often build processing costs into menu prices and offer cash discounts to reduce customer impact.

Massachusetts Credit Card Surcharge FAQs

Can Massachusetts restaurants charge extra fees for large group dining or catering orders paid by credit card?

No, Massachusetts restaurants cannot add any surcharges to credit card payments regardless of order size or group size. The surcharge prohibition applies to all sales transactions without exception. Restaurants can build processing costs into their catering prices and offer cash discounts, but cannot add fees specifically for credit card use.

Are Massachusetts contractors allowed to charge processing fees on expensive invoice payments?

No, Massachusetts contractors cannot charge processing fees, credit card surcharges, or "non-cash adjustments" on any invoiced work. They must either absorb processing costs or build them into their project pricing. Contractors can offer discounts for payments made by cash, check, or ACH transfer to encourage cost-effective payment methods.

Do Massachusetts gas stations have different rules for cash vs. credit pricing?

Massachusetts gas stations can use dual pricing showing separate cash and credit prices, but they cannot add surcharges to credit card transactions. The credit card price must be the "regular" price, with cash representing a discount from that amount. Any pricing structure that adds fees to credit card transactions violates state law.

Can Massachusetts online retailers charge convenience fees for credit card processing?

Most online retailers cannot charge convenience fees because they fail to meet Massachusetts's strict requirements for truly independent third-party processing. Online businesses must absorb processing costs or build them into product pricing. The convenience fee exception requires complete independence between merchant and processor, which typical e-commerce setups don't satisfy.

What should Massachusetts consumers do if they encounter illegal credit card surcharges?

Massachusetts consumers should document the surcharge (receipt, photos of signage) and file a complaint with the Attorney General's Consumer Hotline at (617) 727-8400 or through the online complaint portal. The Attorney General's office investigates these violations and can require businesses to refund improper charges and change their practices.