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Card processing rules for Los Angeles merchants

California's price-display law changed the question a Los Angeles business has to answer about card fees. It is no longer only "may I charge this" — it is "does this fee have to be inside the price I advertise". This page covers SB 478, the restaurant amendment that followed it, and the sales tax rate your card fees are calculated on.

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SB 478 regulates the advertised price, and a card fee can fall inside it

Since 1 July 2024, California Civil Code section 1770(a)(29) has made it an unlawful practice to advertise, display or offer a price for a good or service that does not include all mandatory fees or charges, other than taxes or fees imposed by a government on the transaction and reasonable shipping costs for physical goods. The Attorney General's office is explicit that this is a transparency law rather than a price-control law: it does not change what a business may charge, only what the number on the sign, the menu, the shelf or the booking page has to represent.

For a Los Angeles merchant thinking about a card fee, that reframes the whole decision. The state is not asking whether you may recover your cost of acceptance. It is asking whether the charge is one the customer can avoid. The Attorney General's guidance treats a credit card processing fee as generally not a mandatory fee where the customer has another way to pay, such as cash — the fee is then a consequence of a choice the customer makes. Where a business accepts cards only, and a great many Los Angeles businesses now do, the same fee becomes unavoidable, and an unavoidable fee is a mandatory fee that has to be inside the advertised price.

That is a genuinely awkward result for cashless operations, because the commercial point of a surcharge is that it sits visibly outside the price. Going cashless and running a card surcharge are, under this law, in tension with each other. It is worth resolving that deliberately rather than discovering it later.

The restaurant amendment is narrower than it sounds

SB 1524 amended the statute shortly before it took effect, exempting mandatory fees charged by restaurants, bars and food vendors — provided the fee is clearly and conspicuously displayed wherever prices are shown. Read the condition carefully. The exemption does not say a food business can bury a service charge and reveal it at the end. It says the fee does not have to be folded into the menu price so long as it appears, clearly and conspicuously, everywhere the prices appear. On a printed menu, an online ordering page, a third-party listing and a QR menu, that is four places, not one.

For a Los Angeles restaurant group running the same fee across in-house dining and delivery channels, that is a content-management problem as much as a compliance one. The fee has to travel with the prices.

Surcharging rules sit on top of this, not instead of it

SB 478 is a display law. It does not replace the separate body of California rules and card network rules that govern surcharging itself. Card network rules in the United States prohibit surcharging debit and prepaid card transactions regardless of state law, which means any fee program has to distinguish debit from credit at authorisation and drop the fee on debit. A terminal configured to add a flat percentage to every card presented will surcharge debit, and in Los Angeles retail and quick-service that is a daily event rather than an edge case. Our California credit card surcharge law guide covers the surcharge side with the primary sources.

9.75 percent in the City of Los Angeles, and higher a block outside it

California's statewide base sales and use tax rate is 7.25 percent. The CDTFA's rate publication, CDTFA-95, lists Los Angeles County at 9.75 percent. The City of Los Angeles does not appear as a separate line in that publication, which is how CDTFA indicates that a city is at the countywide rate rather than carrying its own district add-on — so a sale inside Los Angeles city limits is at 9.75 percent.

What makes Los Angeles County unusual is how many cities are listed separately, and how much they differ. The same publication shows Alhambra, Burbank, Long Beach, Inglewood and dozens of others at their own rates, several of them at 10.25 percent, 10.5 percent or 10.75 percent, with Lancaster and Palmdale higher still. For a business with more than one location around the county, that is not a rounding difference. Two shops fifteen minutes apart can sit on materially different combined rates, and the CDTFA rate table is organised by city and county rather than by ZIP code, so a ZIP-based lookup is not a safe substitute.

This matters to card costs for a reason that is easy to check and rarely raised in a sales conversation: interchange and your processor's discount rate are calculated on the full authorised amount, and the full authorised amount includes the sales tax you collect and remit. At 9.75 percent, roughly 8.9 percent of every card-funded ticket is money you never keep and still pay a percentage on. At a 10.75 percent city rate, it is close to 9.7 percent. That is arithmetic, not a projection, and it is one reason the difference between pricing structures widens across a multi-location Los Angeles group rather than staying constant.

We will not attach a saving to that, because the honest answer depends entirely on your card mix, average ticket and pricing model, and a quote given before a statement is read is a guess. What it does justify is looking at each location's effective rate separately instead of accepting one blended number for the whole group.

How a fee itself interacts with the taxable base is a separate question from the rate. We cover the general shape of it in our guide to sales tax on credit card surcharges; confirm the California treatment with your accountant and the CDTFA before you change anything.

Los Angeles restaurants versus Los Angeles retail

For a Los Angeles restaurant, SB 1524 is the provision that decides your options. You can keep a mandatory service or card fee outside the menu price, but only if it is clearly and conspicuously displayed wherever prices are shown — and for a modern restaurant that means the printed menu, the website, the online ordering flow and every third-party marketplace listing. Tip-adjusted card transactions add the usual authorisation-versus-settlement wrinkle on top. Our restaurant payment processing hub covers tip handling and how the pricing models compare on a restaurant card mix.

For Los Angeles retail, there is no food-service exemption, so the SB 478 default applies in full: any mandatory fee has to be inside the advertised price. If you take cash as well as cards, a card fee is generally not mandatory and can sit outside the price, subject to the surcharge rules and network requirements. If you have gone cashless, it cannot. That single operational decision changes which fee structures are open to you, and it is worth making it with your real cost of acceptance in front of you. Our retail payment processing hub sets out how to read that off a statement.

Sources

Updated 17 September 2026. General information, not legal or tax advice. Rules change; confirm current rules with the Attorney General's office, the CDTFA, your attorney and your accountant before you change how you price or charge.

Related pages

Los Angeles FAQ

Los Angeles card processing questions

Not by itself. SB 478 is a price-display law, not a price-control law. It makes it unlawful to advertise, display or offer a price that does not include all mandatory fees or charges, other than government-imposed taxes and reasonable shipping costs. The question it forces is whether your card fee is mandatory.

The Attorney General's guidance treats a card processing fee as generally not mandatory where a customer can choose to pay another way, such as cash. Where card is the only payment method a business accepts, the fee becomes unavoidable and therefore mandatory, and it has to be inside the advertised price.

SB 1524 amended the law so that mandatory fees charged by restaurants, bars and food vendors are exempt, as long as the fee is clearly and conspicuously displayed wherever prices are shown. That is a narrower exemption than it first appears: it removes the requirement to fold the fee into the price, not the requirement to display it.

9.75 percent. California's statewide base rate is 7.25 percent, and CDTFA publication CDTFA-95 lists Los Angeles County at 9.75 percent. The City of Los Angeles is not listed separately in that publication, which means the countywide rate applies rather than a higher city rate. Many neighbouring cities in the county are listed separately and are higher.

Yes, separate from SB 478. California has its own history of surcharge litigation and its own disclosure expectations, and United States card network rules prohibit surcharging debit and prepaid cards anywhere in the country. Our California surcharge guide covers that side.

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