Tennessee Credit Card Surcharge Laws

Quick Summary:

• Credit card surcharging is legal in Tennessee with disclosure requirements
• Must clearly communicate fees in advance of transaction
• Both cash and credit prices must be listed if charging different amounts
• Cannot disguise surcharges as "cash discounts" without proper pricing disclosure
• Debit card surcharging remains prohibited under federal law
• Tennessee Consumer Protection Act requires transparent pricing practices

Credit card surcharging is legal in Tennessee, but the Volunteer State emphasizes transparency and consumer protection through its enforcement approach. Tennessee's Attorney General has issued specific guidance warning against deceptive surcharge practices, requiring businesses to clearly disclose all fees in advance and properly display pricing for different payment methods.

This creates opportunities for Tennessee businesses handling large invoice-based payments, particularly contractors, wholesalers, and service providers, to recover credit card processing costs while maintaining compliance with the state's consumer protection standards.

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 Tennessee?

Yes, credit card surcharging is legal in Tennessee under the condition that businesses provide clear advance disclosure to customers. Tennessee follows federal guidelines without imposing additional state-specific caps on surcharge amounts, but the Tennessee Consumer Protection Act requires transparent business practices that prevent customer deception.

The Tennessee Attorney General's office has issued specific guidance emphasizing that merchants must not mislead customers by displaying lower prices than they actually charge or hiding differences between credit card, debit card, and cash prices. This consumer-focused approach ensures businesses can recover processing costs while maintaining trust through honest pricing practices.

What's Allowed

Tennessee businesses can legally implement these surcharge practices:

• Add surcharges up to federal 4% limit (3% for Visa cards)
• Display both cash and credit card prices when charging different amounts
• Apply surcharges to all credit card transactions (in-person, online, phone)
• Charge different rates for different card types based on processing costs
• Implement percentage-based or flat fee surcharges with proper disclosure
• Require advance notification to customers before processing payment

What's Not Allowed

Tennessee law and federal regulations prohibit these practices:

• Surcharging debit cards - prohibited under federal law regardless of processing method
• Disguising surcharges as cash discounts without displaying both prices
• Failing to provide advance disclosure of surcharge amounts and policies
• Misleading customers about actual transaction costs or payment options
• Displaying only cash prices while charging more for credit cards
• Exceeding card network limits (3% for Visa, 4% for other networks)

Penalty For Non-Compliance

Tennessee enforces surcharge violations through several mechanisms:

• Consumer complaints filed with the Tennessee Attorney General's Consumer Protection Division
• Tennessee Consumer Protection Act violations for deceptive business practices
• Civil penalties up to $1,000 per violation for consumer protection law breaches
• Card network penalties including fines up to $25,000 for non-compliance
• Private consumer lawsuits for misleading pricing practices

The Tennessee Attorney General's office actively monitors surcharge practices and has issued public warnings about deceptive implementations, emphasizing that "consumers deserve to know exactly how much they are paying for a product or a service."

Is Debit Card Surcharging Legal in Tennessee?

No, debit card surcharging is illegal in Tennessee under federal law. This prohibition applies nationwide through the Durbin Amendment of the Dodd-Frank Act, regardless of whether debit cards are processed as signature-based transactions.

Tennessee businesses must ensure their surcharge systems properly identify debit cards and exclude them from surcharge programs. This federal restriction applies even when debit cards are run as "credit" transactions, making proper payment method detection crucial for compliance.

The Tennessee Attorney General's guidance specifically mentions that merchants cannot hide differences between credit card, debit card, and cash prices, reinforcing the importance of properly categorizing each payment method.

Types of Businesses That Must Follow Tennessee's Surcharge Laws

Tennessee's surcharge requirements apply broadly to all merchants accepting credit cards within the state. The Tennessee Consumer Protection Act covers any business engaging in trade or commerce, making compliance necessary for:

Retail establishments including stores, restaurants, and service providers must display both cash and credit prices when implementing surcharges. Professional service providers such as contractors, consultants, and healthcare practices must clearly disclose surcharge policies in advance of service delivery.

Online businesses operating in Tennessee must provide surcharge disclosure on their websites and during checkout processes. Government entities in Tennessee are also authorized to impose surcharges on credit card payments for taxes, fees, and other obligations, following similar transparency requirements.

The key requirement across all business types is advance disclosure and honest pricing practices, ensuring customers understand the total cost before completing their transactions.

Tennessee Credit Card Surcharge FAQs

Can Tennessee restaurants add surcharges to credit card payments without changing their menu prices?

Tennessee restaurants can add surcharges but must display both cash and credit prices clearly. Simply adding a surcharge at payment without showing the credit card price on menus violates Tennessee's transparency requirements. Many Tennessee restaurants find success by showing credit card prices on menus while offering cash discounts.

Do Tennessee contractors need special disclosure for large project payments?

Tennessee contractors must provide advance disclosure regardless of project size. For large contracts, contractors should include surcharge policies in their written agreements and clearly state whether quoted prices include processing fees. This prevents disputes and ensures compliance with the Tennessee Consumer Protection Act.

How do Tennessee's requirements compare to neighboring states for wholesale distributors?

Tennessee is less restrictive than some neighbors - Georgia requires alternative payment methods for convenience fees, while Kentucky has fewer specific guidance requirements. Tennessee's focus on "advance disclosure" and displaying both prices gives wholesalers clear compliance guidelines while maintaining flexibility in implementation.

Can Tennessee automotive dealers display different prices for cash vs financing transactions?

Yes, Tennessee allows dual pricing for automotive transactions. However, dealers must clearly display both the cash price and credit/financing price rather than advertising only the cash price and adding fees later. The Tennessee Attorney General's guidance on transparent pricing applies to all industries including automotive sales.

What should Tennessee service businesses know about the state's merchant service provider disclosure law?

Tennessee's Public Chapter 526 requires payment processors to disclose their fee structures to businesses, helping Tennessee companies understand their actual processing costs. This transparency requirement supports merchants in setting appropriate surcharge amounts and justifying fees to customers when questioned about surcharge policies.

Ready to eliminate credit card processing fees without dealing with Tennessee's surcharge disclosure requirements and potential customer resistance? Nickel offers unlimited free ACH transfers for Tennessee businesses, helping you reduce payment costs while avoiding complex compliance requirements.

👉 Get started with free ACH payments

‍