Rhode Island Credit Card Surcharge Laws

Quick Summary:

• Credit card surcharging is legal but regulated under SB925
• Must display dual pricing showing both credit and cash prices
• Notices required at store entrance and point of sale (minimum 16pt font)
• Maximum surcharge of 4% or actual processing cost, whichever is lower
• Online transactions require disclosure on homepage and checkout page
• Debit card surcharging is prohibited

Rhode Island takes a unique middle-ground approach to credit card surcharging. While many states either ban surcharges entirely or allow them with minimal restrictions, the Ocean State permits surcharging but requires detailed disclosure and transparency measures under Senate Bill 925 (SB925). This makes Rhode Island one of the more regulated states for surcharge implementation, requiring businesses to show customers exactly what they'll pay regardless of payment method.

For small businesses handling large invoice-based payments, particularly contractors, wholesale distributors, and manufacturers, Rhode Island's structured approach provides a clear framework for recovering credit card processing costs while maintaining customer transparency and trust.

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

Is Credit Card Surcharging Legal in Rhode Island?

Yes, credit card surcharging is legal in Rhode Island under Senate Bill 925 (SB925), but the state heavily regulates the practice. Unlike states that either ban surcharging completely or allow it with minimal oversight, Rhode Island requires merchants to follow detailed disclosure and transparency requirements.

Rhode Island's approach reflects its commitment to consumer protection while recognizing that businesses need ways to manage credit card processing costs. The state's regulations ensure customers understand exactly what they'll pay before completing their purchase, whether they choose credit cards or alternative payment methods.

What's Allowed

Rhode Island businesses can legally implement these surcharge practices under SB925:

• Add surcharges up to 4% of transaction amount or actual processing cost, whichever is lower
• Display dual pricing showing both credit card and cash/alternative payment prices
• Post required signage at store entrances and points of sale in minimum 16-point font
• Charge different rates for different card types as long as they comply with network rules
• Apply surcharges to online transactions with proper homepage and checkout disclosure
• Include surcharge information in phone sales through verbal disclosure before processing

What's Not Allowed

Rhode Island law and federal regulations prohibit these practices:

• Surcharging debit cards - prohibited even when processed as credit transactions
• Exceeding 4% surcharge limit or actual processing costs
• Adding surcharges without proper disclosure at multiple required locations
• Using insufficient signage - notices must be minimum 16-point font and prominently displayed
• Failing to show dual pricing for in-person transactions
• Omitting required online disclosures on homepage and checkout pages

Penalty For Non-Compliance

Rhode Island enforces surcharge violations through several mechanisms:

• Consumer complaints filed with the Rhode Island Attorney General's Consumer Protection Unit
• Investigation and mediation by the Attorney General's office for deceptive trade practices
• Civil enforcement actions under Rhode Island's Unfair and Deceptive Trade Practices Act
• Card network penalties for violating Visa, Mastercard, or other network rules

The Rhode Island Attorney General's office actively investigates consumer complaints and has authority to file lawsuits against businesses engaging in deceptive practices, with the Consumer Protection Unit handling hundreds of complaints monthly.

How Surcharging Laws in Rhode Island Have Changed Over Time

Rhode Island's path to allowing surcharges reflects ongoing tension between business needs and consumer protection. Initially, the state's former Attorney General Peter Kilmartin opposed surcharging, supporting multiple bills in 2013 and 2014 that would have prohibited the practice entirely.

Attorney General Kilmartin argued that surcharges would put Rhode Island businesses at a competitive disadvantage compared to neighboring Connecticut and Massachusetts, where surcharging was illegal. He also expressed concern about consumer protection, stating that "Rhode Island consumers should not be penalized with a four percent surcharge simply for paying with credit cards."

Despite these opposition efforts, Rhode Island ultimately passed SB925, which legalized surcharging but with strict disclosure requirements that addressed many of the consumer protection concerns raised during the legislative process. This compromise approach allows businesses to recover processing costs while ensuring transparency.

Rhode Island Credit Card Surcharge FAQs

Do Rhode Island contractors need special signage for mobile job sites?

SB925 requires notice at "points of entry" and "points of sale," which for contractors typically means job site offices or where payment processing occurs. Mobile contractors should display required notices where customers make payments, and for field locations, verbal disclosure combined with clear invoice documentation helps ensure compliance.

Can Rhode Island wholesale distributors use different surcharge rates for different business customers?

Yes, Rhode Island allows different surcharge rates for different card types as long as each rate doesn't exceed actual processing costs for that specific card. Wholesale distributors often pay different interchange rates for various business cards, so they can structure surcharges accordingly while maintaining the dual pricing display requirements.

How do Rhode Island's disclosure requirements apply to recurring billing for service businesses?

For recurring transactions, Rhode Island businesses must provide surcharge disclosure at the initial signup and clearly show both pricing options. The dual pricing requirement means subscription services should display both "credit card price" and "ACH/check price" on their pricing pages, with surcharges disclosed in the initial contract.

What happens if Rhode Island businesses use payment processors that automatically add surcharges?

Businesses remain responsible for SB925 compliance even when using third-party processors. They must ensure proper signage, dual pricing displays, and all required disclosures are in place. The merchant, not the processor, faces potential violations if Rhode Island's transparency requirements aren't met.

Are there any industries in Rhode Island that face additional surcharge restrictions?

While SB925 applies broadly to retail transactions, landlords in Rhode Island face separate restrictions under recent legislation that prohibits "convenience fees" for rent payments using specific methods like credit cards. This creates an exception where residential property management cannot surcharge rent payments, though other business transactions remain subject to standard SB925 rules.

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