Credit card surcharge vs cash discount at a gas station: the 2025 state rules.

Why this matters now

Card processing fees hit a record in 2024. A c-store doing $4 million in annual sales with 75 percent of revenue on cards pays $75,000 to $105,000 a year in processing. That is often equal to 1.5 to 2 employees.

Operators are increasingly passing some or all of that cost to the customer. There are two ways to do it legally, and the wrong setup can trigger:

• State attorney general complaints (especially in CA, NY, NV)
• Card brand fines for non-compliant surcharge programs
• Customer chargebacks alleging deceptive pricing
• State consumer-protection class actions

The 2025 wave of state law changes (MN, KS, ongoing NY enforcement) is the reason to revisit your setup this year, even if you have been surcharging for years.

Surcharge vs cash discount: the legal difference

Surcharge

A surcharge is an extra fee added on top of the published price when a customer pays with a credit card. Example: the shelf price is $10.00. The customer pays with a credit card. The total is $10.30 ($10.00 + 3% surcharge). The receipt must show the surcharge as a separate line.

Card brand rules require:

• Sign at point of entry: "A surcharge of X% applies to credit card transactions"
• Sign at the register
• 30 days notice to Visa, Mastercard, and your processor before starting
• Surcharge amount itemized on receipt
• Surcharge cannot exceed your actual processing cost (or 3 percent for Visa, 4 percent for Mastercard, whichever is less)
• Surcharge only on credit cards, not debit (regardless of how the debit is run)

Cash discount

A cash discount is a reduction in the published price when a customer pays cash. Example: the shelf price is $10.30 (the "sticker" price). The customer pays with cash. The total is $10.00. The discount is shown on the receipt.

Cash discount is legal in all 50 states with no card brand restrictions. The catch: the shelf price must actually be $10.30, not $10.00 with a quiet markup at the register. Several states have prosecuted operators who ran a "cash discount" that was really a hidden surcharge.

The 2025 state law changes you need to know

Minnesota (January 1, 2025)

Minnesota now requires that any surcharge be built into the displayed shelf price. The total amount the customer owes must be clearly visible before they decide how to pay. Operators surcharging in Minnesota in early 2025 either need to rebuild their signage or convert to a cash discount model.

Kansas (January 1, 2025)

Kansas previously banned surcharges. As of January 1, 2025, surcharges are legal with disclosure requirements. Sign at entry and at the register, plus receipt itemization. Kansas operators who were running cash discount programs may now switch to surcharge if they prefer.

New York (February 11, 2024)

New York banned listing the pre-surcharge subtotal as a separate line item on the receipt. The receipt must show only the total credit price (with surcharge included) and the surcharge amount itself, not the "subtotal before surcharge." This sounds minor but it is the most-cited compliance issue in NY in 2025. Update your receipt template.

The still-banned states

As of mid-2025, four jurisdictions still ban credit card surcharges:

• Connecticut
• Massachusetts
• Maine
• Puerto Rico

In these markets, you must use a cash discount model if you want to pass card processing cost to the customer.

How to decide: surcharge or cash discount

Choose surcharge if:

• Your state allows it (most do)
• You want shelf prices to look low and the credit cost to be visible
• Your customers expect a clear add-on (some markets are used to it from gas pump pricing)
• You are willing to file the 30-day notice with card brands and maintain signage

Choose cash discount if:

• You are in CT, MA, ME, or PR (no surcharge allowed)
• You are in MN (surcharge must now be in shelf price; effectively a cash discount)
• You prefer not to deal with card brand notice and signage
• Your customer base is heavily cash-paying (cash discount feels like a reward, not a penalty)

The setup steps for surcharge

1. Confirm your state allows it. Check with your state attorney general or a payments lawyer if there is any ambiguity.
2. File 30-day notice with Visa, Mastercard, and your processor. Each has an online form.
3. Calculate your actual blended credit processing cost. Add basis points for interchange, network fees, and processor markup. This is your surcharge cap.
4. Set the POS surcharge rate. Most c-store POS systems support a percent-based surcharge with a max cap.
5. Install required signage at point of entry and at every register.
6. Update receipt template to itemize the surcharge as a separate line.
7. Train cashiers on the difference between credit and debit (debit cannot be surcharged).
8. Set up surcharge revenue as a separate revenue line in your back office for reconciliation against processor fees.

The setup steps for cash discount

1. Reprice every SKU to include the discount margin in the shelf price. A 3 percent cash discount means shelf prices go up about 3 percent.
2. Set the POS to automatically apply the cash discount when the cashier rings up a cash sale.
3. Install signage at point of entry: "Prices reflect a X% cash discount for cash payment."
4. Update receipt template to show the cash discount as a separate line.
5. Confirm your POS handles debit and card differently if required.
6. Track cash discount revenue (technically negative revenue) as a separate line in your back office.

Reconciliation: the part most operators miss

Whether you run surcharge or cash discount, the back office needs to reconcile what you collected against what you paid in fees. The two numbers should roughly match.

Weekly reconciliation:

• Pull surcharge revenue total from POS
• Pull processor statement for the same period
• Compare surcharge revenue to processing fees
• If surcharge revenue significantly exceeds processing fees, you may be over-charging (compliance risk)
• If surcharge revenue is significantly below processing fees, your surcharge rate is too low (revenue leak)

Many states require the surcharge amount to roughly match actual processing cost. Over-collecting can trigger attorney general inquiries. Under-collecting is leaving money on the table.

The 4 mistakes that get operators in trouble

1. Surcharging debit cards

Card brand rules prohibit surcharging debit cards, even when the debit is run as a credit transaction. Many POS systems do not auto-detect this. If your POS surcharges all card transactions, you are out of compliance.

2. Surcharge above the cap

Visa caps at 3 percent. Mastercard caps at 4 percent. Most operators set 3 percent to stay safe with both. Set 4 percent and you are out of compliance with Visa.

3. Listing pre-surcharge subtotal in NY

New York's 2024 law specifically bans showing the pre-surcharge subtotal as a separate line item. Many operators have not updated their receipt template. Each non-compliant receipt is a potential violation.

4. No signage at the entrance

Both surcharge and cash discount require signage at point of entry. A sign only at the register is not enough. Some states have prosecuted operators for omitting the entrance sign even when the register sign was present.