Card processing rules for Houston merchants

Texas still has a surcharge ban on the books, and a court has enjoined it

Texas is one of the harder states to get a straight answer on, because the statute a merchant would read and the law that is actually enforced are not the same thing. Texas Business and Commerce Code section 604A.0021 says a seller may not impose a surcharge on a buyer who uses a credit card. It is still printed in the code. But in 2018 a federal court held it unconstitutional in Rowell v. Paxton, 336 F. Supp. 3d 724, following the Supreme Court's reasoning in Expressions Hair Design v. Schneiderman that a surcharge ban regulates how a price is described rather than what a price may be.

That is where most summaries stop, and it is where they get a Houston merchant into trouble. The Texas State Law Library's own FAQ on credit card surcharges, last updated 26 August 2025, adds the part that matters: an Attorney General opinion, KP-0257, treats the surcharge statutes as remaining enforceable in some contexts. So the honest position for a Houston business is that credit card surcharging is widely practised and the central prohibition has been held unconstitutional, but the statute has not been repealed and the enforcement picture is not settled. A bill to repeal section 604A.0021 outright, House Bill 3615, passed the Texas House in May 2023 and was never placed back on the Senate intent calendar. It did not become law.

The debit provision was not part of that case

Section 604A.002 is a separate provision covering debit and stored value cards, and the Rowell decision addressed only the credit card statute. The Texas State Law Library makes that distinction explicitly. Independently of Texas law, United States card network rules prohibit surcharging debit and prepaid card transactions anywhere in the country, which is why a compliant fee program has to be able to tell a debit tap from a credit tap at the moment of authorisation and drop the fee on the debit one.

This is the single most common way a Houston fee program breaks. A terminal configured to add a flat percentage to every card presented will surcharge debit, and in a city where a large share of everyday retail and quick-service spend runs on debit, that is not a rare edge case — it is a daily occurrence that shows up in a network audit. If you are considering a card fee program, the question to put to whoever is selling it is not "is surcharging allowed in Texas" but "how does your platform identify debit at authorisation, and what happens to the fee when it does".

Two business types, two different problems in Houston

For a Houston restaurant, the debit question is the sharp one. Tip-adjusted transactions authorise at one amount and settle at another, and a percentage-based fee program that is calculated at authorisation behaves differently from one calculated at settlement. Add the debit exclusion and you have two moving parts that have to be configured correctly rather than assumed. Our restaurant payment processing hub covers tip handling, authorisation versus settlement, and how the fee structures compare on a restaurant card mix.

For Houston retail, the sales tax point does most of the work. Retail tickets are fully taxable more often than restaurant tickets are, the tax component sits at the 8.25 percent ceiling, and average tickets vary widely enough that the same headline rate produces very different effective rates across two shops on the same street. Our retail payment processing hub sets out how to read that off a statement rather than off a quote.