Cash Discount, Non-Cash Adjustment, Surcharge, Dual Price, it all can sound so confusing. What is legal and what guidelines should your small business follow? Before we dive in, let’s clear up some industry terms that get thrown around.

Definitions:

Cash Discount: The business calculates the cost of accepting a card payment and builds it into their regular price. One price is displayed, and a cash discount is calculated at the register. Some businesses offer a cash discount if a PIN based debit card is used, but not all businesses accept PIN debit cards. True cash discounting is legal in all 50 states.

Dual Pricing: Both prices are clearly displayed on all items. Most businesses refer to the card price as the ‘List Price’. Dual Pricing is legal in all 50 states.

Non-Cash Adjustment: A sign is posted stating that all listed prices include a cash discount. If a card is used for payment, a non-cash adjustment will be added. This is NOT COMPLIANT and is considered a surcharge.

The Non-Cash Adjustment program has been a hot topic and has been incorrectly referred to as “Cash Discounting”. State governments and card brands have been cracking down on these programs.

Surcharging: A surcharge is added when cash is not used except for PIN based debit cards. Surcharging is legal in many states (listed below) and was recently capped at 3% by the card brands.

Prior to 2013, credit card surcharging was restricted in all 50 states. The big players (Visa, MC AMEX Discover) feared that it would discourage consumers from using their cards. Gas stations were given an exemption, but it was not an option for most.

In 2013, a group of merchants challenged the legality of the ban and in 2015 the tide started to turn in favor of the businesses. One of the final battles was in NY and it was settled in January of 2019, clearing the way for businesses here as well.

Surprisingly, most consumers have not had strong objections and understand the basic costs involved for the business owner. The biggest complaint has been from people who are not told ahead of time and were hit with a surprise on their bill.

A recent article in the NY Post described customers as ‘furious over sneaky charges’ on their bill.

However, the article only mentioned three consumers and was not widely circulated.

Inevitably, there will be some people who don’t like it, but overall, we haven’t heard of businesses facing severe backlash for surcharging.

As you can see from our definitions, cash discounting, when done properly, is not the same as surcharging.

States Where Surcharging is Legal

(As of April, 2024)

Alabama
Alaska
Arizona
Arkansas
California
Colorado
DC
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Iowa
Indiana

Kansas
Kentucky
Louisiana
Maryland
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
North Carolina

 

North Dakota
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
States Where Surcharging is Legal
(As of April, 2024)

Connecticut
Maine
Massachusetts
New York

As you can see from our definitions, cash discounting, when done properly, is not the same as surcharging.

The good news is that our dual pricing software is legal in all 50 states and fully compliant with all card brand regulations. If you would like to have a free demo account emailed to you please contact us today.