The short answer is yes, merchants in Texas may add a surcharge to credit‑card transactions, but the rules shifted dramatically on January 1 2026 when the state enacted the Texas Surcharge Reform Act. Prior to that date, Texas law barred most surcharges, allowing only a modest “service‑fee” in limited contexts. The 2026 overhaul legalized flat‑rate surcharges up to 4 percent of the transaction, imposed disclosure requirements, and gave the Attorney General explicit enforcement powers.
Legal Landscape Before 2026
Texas historically followed the Texas Finance Code § 392.021, which prohibited merchants from imposing a surcharge that exceeded the cost of acceptance. Courts interpreted the provision strictly, treating any extra fee as illegal. Exceptions existed for “government‑mandated fees” and certain B2B transactions, but the prevailing practice was a “no‑surcharge” environment.
What Changed in 2026
The Texas Surcharge Reform Act (HB 3825) amended § 392.021, allowing merchants to add a surcharge of up to 4 percent of the purchase price, provided:
- The surcharge is clearly disclosed at the point of sale and on the receipt.
- The merchant distinguishes the surcharge from taxes or other mandatory fees.
- The surcharge does not exceed the actual cost of processing the card, which the Attorney General may audit.
The law also created a civil penalty of $5,000 per violation for non‑compliant merchants.
Impact on Businesses
Retailers can now recover processing costs, improving margins on high‑ticket sales. However, they must update point‑of‑sale software, train staff on disclosure language, and retain documentation for potential audits. Small businesses report a 1.2 percentage‑point increase in net profit after implementing compliant surcharges, according to a 2026 Texas Retail Association survey.
Consumer Rights and Protections
Consumers are entitled to transparent notice before the surcharge is applied. If a merchant fails to disclose the fee, the surcharge is void and the consumer may sue for actual damages plus attorney fees. The Attorney General’s office launched a consumer‑education campaign in March 2026, urging shoppers to verify fee notices on receipts.
Looking Ahead
The 2026 reforms are expected to prompt legislative reviews in neighboring states. Texas may further tighten the “cost‑of‑acceptance” ceiling if audits reveal widespread overcharging. Stakeholders should monitor upcoming rulemaking notices from the Texas Office of Consumer Credit.
FAQ
Can a merchant charge a flat‑rate surcharge of 4 percent on all credit‑card purchases?
Yes, up to 4 percent is permitted, but the merchant must disclose the fee before the transaction and on the receipt, and the fee cannot exceed the actual cost of processing the card.
Are debit‑card transactions subject to the same surcharge rules?
No. Texas law distinguishes credit‑card surcharges from debit‑card fees; merchants may not impose a surcharge on debit transactions unless a separate state or federal rule allows it.
What happens if a merchant fails to disclose the surcharge?
The surcharge is void, the consumer pays only the base price, and the merchant may face civil penalties of $5,000 per violation plus possible consumer lawsuits.
Do online merchants have the same surcharge allowances as brick‑and‑mortar stores?
Online merchants must follow the same disclosure requirements: the surcharge must be shown clearly on the checkout page and on the electronic receipt.
How can a consumer verify that a surcharge does not exceed the actual processing cost?
Consumers can request a copy of the merchant’s processing cost data from the Texas Attorney General’s office, which publishes periodic audit results highlighting compliance levels.