California Credit Card Surcharge Law and SB 478

Read this first

This page is general information, not legal advice. It is current as of September 16, 2026, and quotes or summarizes the primary sources listed at the end. Surcharge rules change through new laws, amendments and court cases, so check current rules with your processor and your own counsel before you add a card fee. CELER Merchants is an independent merchant services agent, not a law firm or a processor. California is a state where the statute and its enforcement do not line up neatly, so counsel review matters more here than almost anywhere.

What Civil Code 1748.1 says

Civil Code section 1748.1(a) says no retailer in any sales, service or lease transaction with a consumer may impose a surcharge on a cardholder who elects to use a credit card instead of cash, check or similar means. Under subsection (b), a retailer who willfully violates the section and does not pay the surcharge back within 30 days of a written demand sent by certified mail is liable for three times the actual damages, and the cardholder can also recover reasonable attorney's fees and costs. The section was last amended by Statutes 2005, chapter 426, effective January 1, 2006. The law also lets retailers offer discounts for paying by cash, check or debit card, which the Attorney General says must be offered to all customers.

The Italian Colors decision

The California Attorney General's credit card surcharge page says that in January 2018 a federal appeals court decision, Italian Colors v. Becerra (9th Cir. 2018) 878 F.3d 1165, prevented enforcement of the surcharge law against the plaintiff businesses and similarly situated merchants. The same page says merchants are still barred from misleading customers, for example by falsely advertising a lower price than they actually charge, or by hiding differences between credit card, debit card and cash prices. The statute has not been repealed, so do not read the decision as blanket permission. Ask counsel how it applies to your business.

SB 478: when a card fee must be in the advertised price

California's Honest Pricing Law, SB 478, took effect July 1, 2024 and is found at Civil Code section 1770(a)(29). It prohibits advertising a price that leaves out mandatory fees. The Attorney General's FAQ says a credit card processing fee generally does not have to be included in the advertised price, because it is not mandatory if the customer can avoid it by paying another way, such as cash. But if a business only accepts credit cards, the card fee is mandatory and must be included in the advertised price. The Attorney General also notes that SB 1524 exempts mandatory fees charged by restaurants, bars and certain food vendors from SB 478, as long as the fee is clearly and conspicuously displayed wherever prices are shown.

How card network rules fit in

Every US merchant who accepts Visa also has to follow Visa's rules, whatever state law allows. Visa's U.S. Merchant Surcharge Q&A says to notify your acquirer at least 30 days before you start surcharging, to limit surcharging to credit cards (debit and prepaid cards cannot be surcharged, even when a debit cardholder selects "credit"), to keep the amount at or below your merchant discount rate for that card or 3%, whichever is lowest, and to disclose the surcharge at the point of entry, at the point of sale and on every receipt. Mastercard, American Express and Discover set their own conditions, so check current rules for each network you accept. Where a state rule and a network rule differ, follow the stricter one.

Practical setup for California merchants

1. Take the Civil Code 1748.1 question to counsel before adding any credit card surcharge. 2. If you prefer lower legal risk, look at a cash or debit discount offered to all customers instead. 3. If you only accept cards, build any card fee into the advertised price. 4. Make sure menus, shelf tags, websites and receipts never show a lower price than the customer pays. 5. Never add a fee to debit or prepaid cards where network rules forbid it. 6. Re-check the Attorney General's pages at least once a year.