Walk into three businesses that "pass on card fees" and you might see three different programs: one adds a fee for credit cards, one gives money off for cash, and one shows two prices side by side. They sound interchangeable. Legally, they're not — and the differences decide what's allowed in your state, what the card networks permit, and what your customers will accept.
Here's each model in plain terms, where each stands legally, and how to pick the one that fits your business.
The three models, defined
Surcharge
You post one price and add a fee at checkout when the customer pays with a credit card. Surcharges are capped by the card networks (currently at 3% for the major brands), apply to credit cards only — never debit, which is prohibited under federal rules — and require disclosure signage. A handful of states still restrict or ban them, so check yours before you start.
Cash discount
You post the regular price and take money off for customers who pay with cash. Legally the cleanest of the three — federal law explicitly protects a merchant's right to offer cash discounts in every state. The catch: a true cash discount means the posted price is the card price. Programs that post a low price and quietly add a "service fee" for cards are surcharges wearing a costume, and the card networks treat them as such.
Dual pricing
Both prices are displayed — cash price and card price, side by side — and the customer simply chooses. Nothing is added at the register and nothing is hidden, which is why it has become the preferred model: full transparency for the customer, full fee offset for you. We cover the mechanics in depth in our dual pricing guide.
Where businesses get into trouble
Surcharging debit cards. Federal rules prohibit it regardless of state — this is the single most common compliance mistake.
Mislabeled programs: a "cash discount" where the fee appears only on the receipt is a non-compliant surcharge, and card networks have been cracking down.
Missing signage. Surcharge and dual pricing programs both require clear disclosure before the customer reaches the register — a surprise fee at checkout is how you turn a compliance issue into a chargeback problem too.
Exceeding the cap: a 4% "service fee" violates network rules even where surcharging is legal.
Which model fits your business
If your customers are mostly consumers paying in person — restaurants, shops, salons, service counters — dual pricing is usually the best fit: transparent, compliant in all 50 states when run correctly, and customers respond better to a visible choice than to an added fee.
If you're B2B with invoice billing, a credit card surcharge (where legal) paired with free ACH payment often works better: business customers understand the economics, and most happily take the bank-transfer option.
Whichever model you choose, the terminal has to do the math automatically — hand-calculated fees are where compliance dies. Our programs run on terminals configured for compliant dual pricing out of the box. Ask us or call 718-702-0186 to see what the numbers look like for your volume.