Restaurants and Other Merchants Can Now Charge Different Rates for Credit Cards and Cash

Restaurants and Other Merchants Can Now Charge Different Rates for Credit Cards and Cash


America is definitely moving toward a cashless economy; the numbers prove it. According to a survey by Bankrate in 2020, customers used cash in only 17% of all restaurant orders while more than half of their takeout orders were paid with credit cards. Finding the right high-risk merchant account processors that can implement these charges seamlessly is important. But did you know that restaurants as well as other merchants can legally charge different rates for credit card and cash payments? Here’s what we know: ● Almost every state in America allows different charges for purchases.

Restaurants in the country can charge more for bills paid with credit cards compared to those paid with cash. Depending on the state that you’re in, you have the option to either charge an extra fee for credit card payments or offer discounts and freebies for cash payments.

If you choose to add a surcharge for credit card purchases, you need to disclose this to the customer before the payment is made to avoid disputes and you also need to apply the same surcharge to all types of credit cards used in your business.

According to the United States General Services Administration (GSA), Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, Texas, and Utah are the states that prohibit surcharges for credit card payments.

● All states in America can offer cash discounts.

The FDIC allows cash discounts, so if you’re doing business in states where surcharges are prohibited, you always have the option to offer a discount for cash payments. A lot of restaurants state on their menu that they will be offering a certain percentage discount for bills paid using cash. Some merchants also have two prices for every product on their menu, one for credit card payments and the other for cash.

The cash discount may look similar to a surcharge, but even the 10 states that forbid it allow cash discounts because they’re deemed more reasonable.

California even allows merchants to offer discounts for check and debit card payments. If you want to offer a cash discount to your customers, you should make it known before they make their purchases so they know their options. A lot of businesses encourage their customers to pay in cash since they need to pay a processing fee for every credit card payment made to their establishment and fees are usually higher than with debit card payments. A surcharge is an indirect way of passing that processing fee to customers, although some states don’t allow this move. This is why you have the option to offer a cash discount instead, so you can still encourage cash payments and save on processing fees without sacrificing your reputation to customers. Other businesses also just offer two different prices for cash and credit card payments, and they let customers decide which option they would like to take.


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