California Credit Card Surcharge Law
California credit card surcharge law allows surcharging statewide. The old state ban died in federal court in 2018 and the state does not enforce it. Card network caps set the ceiling, and clear disclosure at the door and the counter keeps you inside the rules.
California Allows Credit Card Surcharging
A ban sits in the state's civil code. It has had no teeth since 2018.
California Civil Code Section 1748.1 is a state law banning surcharges. It is still printed in the state code today, but it cannot be enforced. In Italian Colors Restaurant v. Becerra, the Ninth Circuit ruled the ban unconstitutional as applied: telling customers about a surcharge is speech, and the First Amendment protects a merchant's right to communicate its pricing that way. The California Attorney General has said it will not enforce Section 1748.1 against merchants in the same position as the ones who won that case. The legislature has not repealed the statute, but the practical result for a California dealership is the same: surcharging is open.
Nothing has moved to change that as of July 2026. No new state cap has replaced the old ban, and the legislature has not stepped in with a replacement.
| Question | Answer |
|---|---|
| Status | Allowed |
| Cap | Card network caps |
| State statute | Civil Code 1748.1, on the books but unenforceable |
| Disclosure | Clear posting, price shown must match price charged |
California is one of 47 states where surcharging is legal. See the full table at credit card surcharge laws by state.
The Card Networks Set the Ceiling
With no enforceable state cap, Visa and Mastercard's own rules do the work.
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Visa: 3% Cap
Or your actual cost of acceptance, whichever is lower.
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Mastercard: 4% Cap
Same actual cost logic as Visa, just a higher ceiling.
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Debit Never Surcharges
Debit, prepaid, and gift cards can never carry a surcharge, in California or anywhere else.
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Disclosure Is Mandatory
Post notice at the door and the counter, and show the surcharge as its own line on the receipt.
Lesser of Actual Cost, Always
Your surcharge can never exceed what card acceptance actually costs you, no matter what the network cap allows. A flat 3% works for most dealerships because it sits right at Visa's ceiling without stepping over it.
The Honest Pricing Law
California's junk fee law does not touch surcharging.
Dealers hear "no hidden fees law" and assume surcharging is next on the chopping block. SB 478 requires advertised prices to include all mandatory fees, so the worry makes sense at first read. It does not hold up once you read the state's own guidance.
The California Attorney General's SB 478 FAQ addresses this directly: a credit card surcharge is not a mandatory fee under the law, as long as the customer can avoid it by paying another way. Cash and debit both work at a dealership counter, so the surcharge stays optional in the eyes of the law. It would only become mandatory for a business that accepted credit cards and nothing else, which no dealership does.
Two Conditions Keep You Clear
The customer always has another way to pay, cash or debit both clear the transaction without a surcharge. And the price you post or quote matches the price charged at checkout, with the surcharge disclosed before the payment runs. Meet both and SB 478 has nothing to say about your surcharge.
What This Means at the Counter
The counter just needs three things right.
A standard 3% credit card surcharge sits inside Visa's cap and stays disclosed the same way every other surcharging state requires: notice at the point of entry, notice again at the point of sale, and the surcharge itemized as its own line on the receipt. Debit never carries a surcharge, in California or anywhere else, no exceptions and no workarounds. We track the state, not your front desk.
Payments post straight to the repair order in CDK Drive, so the surcharge line shows up where your advisors already work. See the full mechanics on the surcharge program page, or walk through exactly what happens at the terminal on the how it works page.
Straight Answers on California Rules
Yes. California Civil Code 1748.1 is a state law banning surcharges, but the Ninth Circuit ruled it unconstitutional as applied in 2018, and the state does not enforce it. The statute has not been repealed, but it carries no practical weight today.
Yes. With no enforceable state cap, Visa's 3 percent ceiling governs, as long as the surcharge does not exceed your actual cost of acceptance. Mastercard allows up to 4 percent under the same lesser-of-actual-cost rule.
No. The Attorney General's own SB 478 guidance treats a credit card surcharge as avoidable, not mandatory, because the customer can pay with cash or debit instead. It only becomes a problem for a business that accepts credit cards exclusively.
No. Debit, prepaid, and gift cards can never carry a surcharge, in California or any other state. That is a card network rule, not a state one, and it follows the card itself regardless of how it runs at the terminal.
Post notice at the point of entry, post it again at the point of sale, and show the surcharge as its own line on the receipt. The price you advertise or quote has to match the price charged at checkout. For pricing and program questions beyond state law, see the FAQ page.
Straight Answers on California
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