South Carolina Credit Card Surcharge Laws

Quick Summary:

• Credit card surcharging is legal in South Carolina
• A 2013 amendment to Title 39, Section 39-1-100 allows cash discounts
• No state-specific restrictions beyond federal regulations
• Must follow standard federal 4% cap and card network rules
• Debit card surcharging remains prohibited
• 2013 House Bill 3477 to ban surcharging failed to pass

Credit card surcharging is legal in South Carolina following a 2013 amendment that overturned the state's previous prohibition on the practice. The Palmetto State now allows businesses to implement surcharge programs by offering cash discounts, effectively permitting merchants to pass credit card processing costs to customers who choose to pay with plastic.

This change provides significant opportunities for South Carolina's physical economy businesses, including contractors, wholesale distributors, and manufacturers who handle large invoice-based payments. With credit card processing fees ranging from 2.5% to 4%, the ability to recover these costs can meaningfully impact profit margins for businesses operating on thin spreads.

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 South Carolina?

Yes, credit card surcharging is legal in South Carolina under the current law. The state previously prohibited surcharging under an older statute from 1976, but a 2013 amendment to Title 39, Section 39-1-100 of the South Carolina Code changed this by allowing merchants to offer cash discounts.

This legal framework essentially permits surcharging by letting businesses display their credit card prices as the standard rate while offering discounts for cash, check, or other payment methods. South Carolina follows federal guidelines without imposing additional state-specific restrictions on surcharge amounts or disclosure requirements.

What's Allowed

South Carolina businesses can legally implement these surcharge practices:

• Add surcharges up to 4% of transaction amount following federal guidelines
• Offer cash discounts as the primary method for implementing differential pricing
• Charge different rates for different card types based on actual processing costs
• Apply surcharges to all credit card transactions including in-person, online, and phone payments
• Follow standard disclosure practices required by card networks
• Use percentage-based or flat fee structures as long as they don't exceed processing costs

What's Not Allowed

South Carolina law and federal regulations prohibit these practices:

• Surcharging debit cards - prohibited nationwide even when processed as credit
• Exceeding federal 4% cap or actual processing costs for each card type
• Using surcharges to generate profit - fees must only recover processing costs
• Surcharging prepaid cards or gift card transactions
• Failing to provide proper disclosure as required by card network rules
• Misleading customers about surcharge amounts or payment options

Penalty For Non-Compliance

South Carolina enforces surcharge violations through multiple channels:

• Consumer complaints filed with the South Carolina Department of Consumer Affairs
• Federal enforcement under truth-in-advertising and consumer protection regulations
• Card network penalties including fines ranging from $1,000 to $25,000 for repeat violations
• Civil enforcement under South Carolina's Unfair Trade Practices Act
• Private lawsuits by consumers for deceptive business practices

The South Carolina Department of Consumer Affairs actively investigates consumer complaints and has authority to take administrative action, issue orders, or refer matters for criminal prosecution when businesses engage in unfair trade practices.

How Surcharging Laws in South Carolina Have Changed Over Time

South Carolina's path to allowing surcharges reflects changing attitudes toward payment processing costs and business flexibility. Under a 1976 law, the state prohibited merchants from adding surcharges to credit card transactions, requiring businesses to absorb all processing fees.

However, a significant shift occurred in 2013 when South Carolina amended Title 39, Section 39-1-100 to allow cash discounts. This change came as part of broader national trends following the 2013 federal court settlement that removed restrictions preventing merchants from passing credit card costs to customers.

Interestingly, even after this change, there was legislative pushback. House Bill 3477 was introduced in the 2013-2014 session, which would have prohibited surcharging entirely and imposed criminal penalties including fines up to $500 or imprisonment up to one year. However, this bill failed to advance beyond the House Committee on Labor, Commerce and Industry, ensuring that surcharging remained legal.

This legislative history demonstrates South Carolina's ultimate decision to prioritize business flexibility over strict consumer protection in payment processing, aligning with the majority of states that allow surcharging.

South Carolina Credit Card Surcharge FAQs

Can South Carolina construction contractors add surcharges to large project payments?

Yes, South Carolina contractors can add credit card surcharges to project payments of any size. This is particularly valuable for contractors handling $50,000+ invoices where even a 2.9% credit card fee represents $1,450+ in processing costs. The 2013 cash discount framework allows contractors to show their credit card prices while offering discounts for checks or ACH payments.

Do South Carolina wholesale distributors need special disclosure for B2B surcharges?

South Carolina doesn't require special B2B disclosure beyond standard card network rules. Wholesale distributors can surcharge business customers following the same guidelines as consumer transactions. However, many distributors find success by clearly explaining that surcharges offset processing costs rather than generate profit, which helps maintain good business relationships.

How do South Carolina surcharge laws affect recurring billing for service companies?

South Carolina allows surcharging on recurring transactions like monthly service contracts. Service companies should disclose surcharge policies in their initial contracts and can structure pricing to show credit card rates with ACH discounts. This approach works well for managed service providers, HVAC companies, and other businesses with recurring billing models.

Can South Carolina gas stations display different prices for cash vs credit?

Yes, South Carolina follows the federal framework allowing dual pricing at gas stations. However, the 2013 amendment structures this as "cash discounts" rather than "credit surcharges." Gas stations typically display the credit card price prominently and offer cash discounts, which achieves the same economic effect while complying with South Carolina's legal framework.

What should South Carolina businesses do if House Bill 3477-style legislation gets reintroduced?

While the 2013 effort to ban surcharging failed, businesses should monitor South Carolina legislative activity for any new attempts to restrict surcharging. The South Carolina Legislature website provides bill tracking, and businesses can work with trade associations to oppose restrictive legislation. Currently, no similar bills are pending, and surcharging remains fully legal.

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