Is Surcharging Legal in Texas? Credit, Debit & Dual Pricing

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This page is general information, not legal advice. It is current as of October 15, 2026, and summarizes the primary sources listed at the end: the text of Chapter 604A of the Texas Business and Commerce Code, the Texas State Law Library's guidance, Attorney General Opinion KP-0257, the Legislature's 2025 bill records, one federal statute and the Visa and Mastercard surcharge rules. Texas courts have not settled how far the 2018 ruling reaches, so parts of this page describe how the words of the statute read, not how a court has ruled. CELER Merchants is an independent merchant services agent, not a law firm or a processor. Have your own counsel review any card pricing program before you launch it in Texas.

Why Texas answers conflict

Search for this question and you will find pages saying surcharging is simply legal in Texas and others saying it is banned. Both are leaving something out. The ban is still in the code; the Legislature has not repealed it. A federal court held the credit card part unconstitutional as applied to the merchants in that case. The Texas State Law Library, which answers this question for the public, says it is unclear whether the Texas law on credit card fees is enforceable. Debit cards are a separate rule that the court did not touch.

What Chapter 604A says

Chapter 604A has four short sections. Here is what each one does, in plain words.

What Rowell v. Paxton did and did not change

In Rowell v. Paxton, 336 F. Supp. 3d 724 (W.D. Tex. 2018), Judge Lee Yeakel held section 604A.0021 unconstitutional as applied to the plaintiff merchants, on free speech grounds, and entered a permanent injunction and final judgment on August 16, 2018 barring the Attorney General from enforcing it against them. Three limits matter for every other Texas business. First, the ruling was as applied, not a repeal: the words are still in the statute. Second, Attorney General Opinion KP-0257 (2019) says that when a court holds a statute unconstitutional as applied, it normally invalidates it only for the litigants and facts in that case, and that section 604A.0021 "remains enforceable in some contexts." Third, the State Law Library notes the case addressed credit card surcharges only, not debit cards. So section 604A.002, the debit and prepaid ban, stands untouched by that ruling.

Did anything change in 2025 or 2026?

We found no amendment to Chapter 604A from the 2025 regular session. Two swipe fee bills, Senate Bill 2056 and its House companion House Bill 4061, dealt with card networks and issuers, not merchant surcharges, and neither passed: the Legislature's records show HB 4061 left pending in committee on April 14, 2025 and SB 2056 not placed on the Senate intent calendar again after May 13, 2025. The Texas Legislature meets in regular session every other year, so the next chance for a change is the session that opens in January 2027. Check again then.

Is dual pricing legal in Texas?

The Texas definition of surcharge gives a clear safe zone. A "discounted price charged for goods or services to a buyer who pays with cash" is not a surcharge. The State Law Library says the same: cash discounts are not surcharges. Federal law adds protection: under 15 U.S.C. 1693o-2(b)(2), a card network may not stop a merchant from offering a discount for paying by cash, check, debit card or credit card, as long as it does not favor one issuer or network and is disclosed where the law requires. How a program is built decides which side of the line it sits on.

Can restaurants charge a credit card fee in Texas?

Restaurants follow the same rules as every other merchant; Chapter 604A has no restaurant exception. Three points come up most in Texas dining rooms. 1. A cash discount works the same way on a menu as on a shelf: print the regular price and state the cash price or cash discount clearly. 2. A fee added only when the guest pays by card is a surcharge under the Texas definition, so the credit card uncertainty above applies, and on debit cards it is banned. 3. A charge every guest pays no matter how they pay, such as a disclosed service charge, is not a card surcharge under 604A.001(5), because it is imposed on every buyer. It still has to be disclosed honestly on the menu and the bill, and staff should know whether it is a tip or not. Because most card readers in restaurants also handle tips, ask your provider how any card fee is calculated when a tip is added, and make sure it is never applied to debit.

How Visa and Mastercard rules fit in

Whatever Texas law allows, your card networks and your processing agreement set their own limits. In the United States both Visa and Mastercard allow surcharges on credit transactions only; debit and prepaid cards cannot be surcharged under either network's rules. For credit, Visa requires 30 days' notice to your acquirer before you start, a surcharge no higher than your cost of acceptance and never above 3%, disclosure at the point of entry and the point of sale, and the surcharge shown as a separate line on the receipt. Mastercard requires at least 30 days' written notice to Mastercard and your acquirer, caps the surcharge, and requires store-entry and point-of-sale disclosure plus the amount on the receipt. A terminal must be able to tell debit from credit before any fee is added, including tapped phone wallets.

What happens if the state acts

Under section 604A.003, a person who knowingly violates either surcharge ban is liable to the state for a civil penalty of up to $500 per violation. The Attorney General or the prosecuting attorney in the county where it happens can sue for the penalty and for an injunction. Before suing, they must send a notice that explains the rules and offers guidance. A business that complies within 30 days of that notice is not liable for the penalty, but only once: a business that has already received a notice gets no second notice and no second 30-day window. The state can also recover its attorney fees and investigation costs. Section 604A.0021(c) says the credit card section does not create a cause of action against an individual. Whether these penalties can still be imposed on credit card surcharges after Rowell is, in the State Law Library's words, not clear. Treat any notice from the Attorney General or a county prosecutor as urgent and call your counsel the same day.

A setup check for Texas merchants

1. Pull a recent receipt for a debit sale and a credit sale on each device. If the debit receipt shows any added fee or a higher total than cash, fix that first. 2. Decide which program you run: a cash discount off a posted regular price, or a credit-only surcharge. Write it down. 3. Ask your processor in writing whether the terminal checks the card type before applying any fee, including for phone wallets and cards with both debit and credit functions. 4. Label prices plainly, such as regular price and cash price. 5. If you surcharge credit, keep within Visa's and Mastercard's rules, with the notice to your acquirer, signs and receipt line, and get your counsel's view on 604A.0021 first. 6. Repeat the check on backup terminals, mobile readers, food truck and event devices, and your online checkout. 7. Keep your provider's written answers with your records.

How CELER Merchants can help

We are an independent merchant services agent: we take your statement to the market, make providers compete for your account, and bring back the best of what they offer. If you run a cash discount, dual pricing or surcharge program in Texas, send us any recent monthly processing statement, all pages, and tell us which program you use. We will point out how your current setup treats debit cards and compare it with providers that can run a cash discount properly. We do not give legal advice, so we will also tell you what to confirm with your counsel.