Surcharging, cash discounts and dual pricing: what is allowed where

Part of Fees and pricing models. Start with the main guide: Interchange plus vs blended vs flat rate: which pricing model costs less?

Accepting cards costs money, and many business owners wonder whether they can pass some or all of that cost on to customers. The answer depends entirely on where you trade and how you do it. Some methods are banned outright, some are allowed with limits, and some are legal almost everywhere but have to be done carefully.

This guide explains the three main approaches, summarises the position in the UK, Australia and the US as of late 2026, and compares what each choice does to your costs. It is general information, not legal advice. Rules change, so check the current position with your regulator, your provider and your legal adviser.

What are the three ways to pass on card costs?

The legal treatment can differ for each. In some places a cash discount is permitted where a surcharge is banned, because the price on display is the card price. In others the rules treat them the same. Never assume.

What are the surcharging rules in the UK?

Since 13 January 2018, businesses in the UK cannot add a surcharge to payments made by consumer debit cards, consumer credit cards or other electronic payment methods. The ban came through the Payment Services Regulations 2017, which amended the Consumer Rights (Payment Surcharges) Regulations 2012. The UK went further than the minimum the EU required by extending the ban to all types of retail payment instruments, including services such as PayPal.

What remains allowed:

• A flat fee that applies to every payment method. Booking, delivery and administration fees are not surcharges as long as they are the same whatever the customer uses to pay.
• Minimum spend limits. Setting a minimum purchase for card payments is still allowed.
• Surcharges on commercial cards. The ban does not apply to commercial debit or credit cards. Any surcharge on them must not exceed the cost the business incurs in processing the payment.

The UK also has rules on how prices must be displayed, so check them if you plan to show different prices by payment method.

What are the surcharging rules in Australia?

The Reserve Bank of Australia published its conclusions on merchant card payment costs and surcharging on 31 March 2026. Most of its changes take effect on 1 October 2026. These include removing card surcharging on the designated networks (eftpos, Mastercard and Visa) and lowering interchange caps. Banks have published guidance for merchants, and the coverage of other card types, such as American Express, should be checked against the RBA's own text. Our guide to Australia's 2026 RBA changes covers the detail.

Because the change is recent, Australian businesses that surcharged until now need to update their prices and their signage. Many will need to move to raising prices or absorbing the cost.

What are the surcharging rules in the United States?

The US picture is the most complicated, because it combines card network rules with state laws.

• Network rules. Visa and Mastercard rules have permitted surcharging on credit cards under conditions, including notice to customers and a cap. Debit card surcharges are barred by the network rules.
• The cap. Under the terms of a proposed settlement, a merchant would be able to surcharge at either the brand level or the product level, but not both, and the surcharge could not exceed 3% of the transaction or the cost of acceptance, whichever is less. The settlement was still subject to court approval at the time of writing, so check current status.
• State laws. Several states restrict or ban credit card surcharges. Connecticut, Maine and Massachusetts are commonly listed as banning them, as is Puerto Rico. Other states, including Texas and California, have unsettled or contested positions. Florida and Oklahoma have statutes that courts have limited.
• Cash discounts and dual pricing. These are generally treated more favourably than surcharges, but the rules differ and providers have their own requirements.

If you operate in the US, ask your provider for its surcharge and dual pricing rules, and check the law in each state where you trade.

What are the surcharging rules in New Zealand and elsewhere?

In our research we could not confirm a current ban on card surcharging for New Zealand merchants, and the Commerce Commission's recent work has focused on interchange caps. Rules in other countries, including South Africa and the EEA, vary. Check with your regulator or provider before you add any fee.

A summary by market

What does each approach do to your costs?

Before choosing, look at the numbers. A business takes £10,000 on cards in a month with an effective rate of 1.5%. Its card costs are £150.00. There are four ways to handle that.

The chart is simplified. A cash discount works like a surcharge in effect, because those who pay by card carry the cost, but it is presented as a saving for those who pay by cash. Raising prices spreads the cost over all customers, including those who pay by cash.

Three things can go wrong with any of these.

• Customer reaction. A visible surcharge is often disliked, and some customers will leave or switch to cash.
• Rule breaches. Surcharging where it is banned, or failing to give the notice required, can lead to complaints, fines or losing card acceptance.
• Margin on cash. If the extra revenue from the surcharge is more than the card cost, it can be seen as a profit, which may be against the rules.

Where a surcharge is allowed: how big can it be?

In markets that allow surcharging, the cap usually relates to the cost of accepting the card. Where a percentage cap applies, the amount grows with the size of the sale.

In practice a surcharge should not exceed what the card actually costs you. If your effective rate is 1.5%, a 3% surcharge would be more than twice your cost, and where the rule says "the lesser of 3% and the cost of acceptance", it would not be allowed.

A decision path

Use these steps to decide what to do. They are a thinking aid, not a legal test.

How do cost and customer experience trade off?

A decision that looks right on a spreadsheet can look different at the till. Some businesses absorb card costs because it keeps the experience simple and competitive. Others raise prices a little to cover the average cost. Some use cash discounts to nudge customers toward cheaper payment methods. There is no single right answer, but there is a wrong one: choosing an approach before you know what cards really cost you.

Start by finding the effective rate. Our guide to the effective rate shows how. Then think about the card mix: debit, credit and commercial cards cost different amounts, and the average cost is what you need to cover.

For consultants

Surcharging is one of the most common questions merchants ask. Be careful with answers. Do not give legal advice, and do not tell a merchant it is fine to surcharge unless you have checked the rules for their country and state. A safer approach is to show them what cards cost, explain the options, point them to the relevant regulator and suggest they take advice. The checkmyrates calculator shows the monthly card cost so the merchant knows the size of the amount at stake.

Frequently asked questions

Can I charge extra for card payments?

It depends on your country, and in some countries, the card type. In the UK, surcharging consumer cards has been banned since 2018. In Australia it ends from 1 October 2026. In the US it is allowed for credit cards under limits, with some state bans.

What is the difference between a surcharge and a cash discount?

A surcharge adds a fee for paying by card. A cash discount lowers the price for paying by cash. The result can be similar, but the rules often treat them differently.

What is dual pricing?

Showing two prices for the same item, one for cards and one for cash. The rules for it vary, and it should not be used to disguise a banned surcharge.

Is surcharging legal in the United States?

Credit card surcharging is allowed under card network rules with conditions, and debit surcharges are barred. Several states ban or restrict it, so check the law where you trade.

Can I surcharge commercial cards in the UK?

The UK ban does not apply to commercial debit or credit cards, but any surcharge must not exceed what it costs you to process the payment.

What should I do if I cannot surcharge?

Work out what cards really cost, then decide whether to absorb it, adjust prices or review your provider. Comparing providers on the effective rate can reduce the cost itself.

Figures in this guide are examples to show the method. Fees, rules and rates change, so check your own statement, contract and current rules before you decide. This is general information, not financial or legal advice.