Minnesota Credit Card Surcharge Laws

Quick Summary:

• Credit card surcharging is legal in Minnesota only if consumers can reasonably avoid the fee
• As of January 1, 2025, all mandatory fees must be included in advertised prices under HF 3438
• Surcharges cannot exceed 4% federally (despite Minnesota allowing up to 5% in state law)
• Violations of the new pricing transparency law carry penalties up to $25,000 per violation
• Credit card surcharges are subject to Minnesota sales tax and use tax

Minnesota significantly updated its credit card surcharge laws effective January 1, 2025, under House File 3438, which modified the state's Deceptive Trade Practices Act. While surcharging remains legal, businesses must now include all mandatory fees in their advertised prices rather than adding them as separate line items during checkout. This change prioritizes consumer transparency and prevents surprise fees at the point of sale.

The new law defines "mandatory fees" as charges that customers cannot reasonably avoid, meaning traditional surcharge disclosure methods like posted signs are no longer sufficient for compliance. Businesses must now carefully evaluate whether their surcharge fees qualify as avoidable to determine proper disclosure requirements.

Legal Disclaimer: This information is for reference only and does not constitute legal advice. Consult with an attorney before implementing surcharge programs, as Minnesota's recent law changes create complex compliance requirements.

Is Credit Card Surcharging Legal in Minnesota?

Yes, credit card surcharging is legal in Minnesota, but only under specific conditions. As of January 1, 2025, Minnesota law requires that all mandatory fees be included in advertised prices, fundamentally changing how businesses can implement surcharge programs.

According to Minnesota Statute 325G.051, businesses can impose credit card surcharges provided customers can reasonably avoid the fee by paying with cash, check, or similar means. However, the new Deceptive Trade Practices Act amendments under Minnesota Statute 325D.44 now require that unavoidable fees be built into advertised pricing.

What's Allowed

Minnesota businesses can implement credit card surcharges under these conditions:

• Avoidable surcharges - fees that customers can reasonably avoid by using cash, check, or debit cards
• Proper disclosure - verbal notification for in-person sales, conspicuous signage, and clear online disclosure
• Cost-based pricing - surcharges cannot exceed actual processing costs
• State law compliance - maximum 5% under Minnesota law (though federal limits apply)
• Tax collection - surcharges are subject to Minnesota sales and use tax

What's Not Allowed

Minnesota's updated laws prohibit these surcharge practices:

• Mandatory fee separation - cannot add unavoidable fees as separate line items after advertising base prices
• Cashless business surcharges - businesses accepting only credit/debit cards cannot add separate surcharges
• Store-branded card fees - cannot surcharge customers using the business's own credit cards
• Exceeding processing costs - fees cannot generate profit beyond actual processing expenses
• Inadequate disclosure - failing to meet Minnesota's specific notification requirements for each transaction type

Requirements by Transaction Type

In-Person Sales: Must provide both oral notification at time of sale and conspicuous signage posted on premises.

Online Sales: Must disclose surcharges conspicuously during the sale, at point of sale, on customer order summary, or on checkout page.

Telephone Sales: Must inform customers orally about surcharges before processing payment.

Penalty For Non-Compliance

Minnesota enforces surcharge violations through multiple mechanisms with severe penalties:

Deceptive Trade Practices Violations: Under HF 3438, businesses violating the mandatory fee disclosure requirements face civil penalties of up to $25,000 per violation - significantly higher than most other states.

Consumer Protection Enforcement: The Minnesota Attorney General's Office can investigate businesses for unfair or deceptive practices, potentially leading to cease and desist orders and additional penalties.

Individual Lawsuits: Consumers harmed by violations can file private lawsuits under Minnesota's Consumer Protection Act, potentially recovering damages plus attorney fees.

To report surcharge violations or file consumer complaints in Minnesota, contact:

• Minnesota Attorney General's Office
• Phone: (651) 296-3353 (Twin Cities) or (800) 657-3787 (statewide)
• Online: Consumer Assistance Request Form
• Address: 445 Minnesota Street, Suite 600, St. Paul, MN 55101

How Surcharging Laws in Minnesota Have Changed Over Time

Pre-2025 Era: Minnesota allowed traditional credit card surcharging with disclosure requirements similar to most other states, including posted signage and verbal notification.

January 1, 2025 - HF 3438 Implementation: Governor Tim Walz signed the comprehensive "junk fee" legislation that fundamentally altered how Minnesota regulates pricing transparency. The law requires all mandatory fees to be included in advertised prices rather than disclosed separately.

Key Changes Under New Law:

• Eliminated the ability to add mandatory fees as separate line items
• Defined "mandatory fees" as those not reasonably avoidable by consumers
• Increased penalties to $25,000 per violation for compliance failures
• Required price transparency across all advertising and marketing materials

Future Considerations: Minnesota's approach mirrors similar legislation in California and New York, suggesting a national trend toward eliminating surprise fees through pricing transparency rather than outright surcharge bans.

Surcharging vs. Cash Discounts in Minnesota

Minnesota law creates an important distinction between surcharges and cash discounts that affects compliance strategies:

Traditional Surcharges: Adding fees to credit card transactions above a base price. Under the new law, these are only permissible if customers can reasonably avoid them.

Cash Discounts: Offering lower prices for cash payments while maintaining higher advertised prices for credit cards. According to Minnesota Attorney General guidance, this approach may offer more compliance flexibility since customers pay less than the advertised price rather than more.

Dual Pricing: Businesses can display separate cash and credit prices as long as the higher price is clearly disclosed and the pricing structure doesn't mislead consumers about total costs.

The Minnesota Attorney General has indicated that cash discount programs may face less scrutiny under the new pricing transparency requirements since they don't add fees to advertised prices.

Is Debit Card Surcharging Legal in Minnesota?

No, debit card surcharging is illegal in Minnesota and all 50 states. Federal law prohibits surcharges on debit card transactions regardless of how the card is processed.

According to Minnesota Statute 325G.051, surcharges can only be applied "when a customer elects to use a credit or charge card in lieu of payment by cash, check, or similar means." Debit cards are specifically excluded from surcharge eligibility.

This prohibition applies to:

• Traditional PIN debit transactions
• Signature debit transactions processed as credit
• Prepaid debit cards
• FSA/HSA debit cards

Businesses must ensure their payment systems can distinguish between credit and debit cards to avoid accidentally surcharging prohibited transactions.

Minnesota Credit Card Surcharge FAQs

Can Minnesota restaurants include service charges in their credit card surcharges?

Minnesota's new law allows restaurants to charge mandatory gratuity that goes directly to employees, but this must be clearly disclosed alongside pricing. However, general service charges for business expenses must now be included in menu prices if they cannot be reasonably avoided.

Do Minnesota's new surcharge rules apply to online businesses based outside the state?

Yes, any business conducting transactions with Minnesota residents must comply with the state's pricing transparency requirements when advertising or selling to consumers within Minnesota, regardless of where the business is located.

Can Minnesota businesses that only accept credit cards still impose surcharges?

No, businesses that don't offer alternative payment methods like cash or debit cannot add separate surcharges under the new law, since the fees would not be "reasonably avoidable" by consumers.

Are there exemptions to Minnesota's mandatory fee disclosure requirements?

Yes, the law includes specific exemptions for businesses regulated by the Minnesota Public Utilities Commission, real estate settlement services, and certain airport-regulated industries (which have until June 1, 2025 to comply).

What happens to existing surcharge programs in Minnesota after January 1, 2025?

Businesses with existing surcharge programs must evaluate whether their fees are "reasonably avoidable." If not, they must either build the fees into advertised prices or eliminate the surcharges to comply with the new law.

Are Minnesota credit card surcharges really subject to sales tax?

Yes, the Minnesota Tax Court ruled that credit card surcharges are part of the total consideration for sales and must be included in taxable gross receipts, making them subject to state sales and use tax.