Rules checked October 19, 2026 from official sources. Laws and card network rules change, and this isn’t legal advice. Check with your payment provider and your state (or province) before you add a surcharge.
The short answer
A cash discount gives people money off for paying with cash (or another way you choose). Federal law protects your right to offer one. That’s different from a surcharge, which adds a fee for paying by credit card.
The catch is how the program works at the register. Visa says if the card price comes from “applying an additional fee for a card payment,” it “may appear to be, and may be treated as, a surcharge” (Visa Q&A). Then surcharge rules apply, including state bans and the ban on surcharging debit.
So the question isn’t what the program is called. It’s what your customer actually sees.
What federal law allows
Two federal laws protect cash discounts.
Dodd-Frank (15 U.S.C. 1693o-2). Card networks may not “inhibit the ability of any person to provide a discount or in-kind incentive for payment by the use of cash, checks, debit cards, or credit cards” (15 U.S.C. 1693o-2). The discount can’t treat card issuers or networks differently, and it must be offered to all buyers and disclosed where federal or state law requires.
The same law defines a discount as a cut from the regular price. It says a discount “does not include any means of increasing the price that customers are informed is the regular price.” In other words, this law protects discounts. It does not protect surcharges.
The Truth in Lending Act (15 U.S.C. 1666f). A card issuer “may not, by contract or otherwise, prohibit any such seller from offering a discount to a cardholder to induce the cardholder to pay by cash, check, or similar means rather than use a credit card” (15 U.S.C. 1666f). That discount isn’t a finance charge “if such discount is offered to all prospective buyers and its availability is disclosed clearly and conspicuously.”
American Express also allows it. Its guide says “You may offer discounts or in-kind incentives from your regular prices for payments in cash, ACH funds transfer, check, debit card, or credit/charge card,” if clearly disclosed and offered to everyone (Amex Merchant Operating Guide).
A real discount vs a disguised surcharge
Visa draws the line this way. A real cash discount shows either:
- only the card price, or
- the card price and the cash price side by side.
Either way, the card total has to come from the prices you posted on the items. It can’t come from a fee added when the customer pays. If it does, Visa says it may treat it as a surcharge under its surcharge rules (Visa Q&A).
Here’s what that looks like on a $10.00 sandwich:
| What the customer sees | How Visa’s description reads on it |
|---|---|
| Menu says $10.00. Cash customers get 30¢ off and pay $9.70. | Card price is the posted price. Fits a real discount. |
| Menu says “$10.00 card, $9.70 cash.” | Card and cash prices side by side. Fits a real discount. |
| Menu says $9.70. A “non-cash adjustment” of 30¢ is added at the terminal for cards. | Card total comes from a fee added at payment. Visa says this may be treated as a surcharge. |
That last row is our example, applying Visa’s words. It isn’t a ruling.
What some states say about cash discounts
We’ve checked these states against official sources. Several that ban surcharges still allow real discounts:
- Connecticut bans surcharges but allows discounts for cash, check or debit versus credit. “No person may offer any such discount unless such person posts a notice disclosing such discount.” The notice goes on your premises, online before checkout, and out loud on phone orders (C.G.S. ch. 739).
- Maine: “A discount or reduction from the regular price is not a surcharge” (9-A M.R.S. 8-509).
- Massachusetts bans surcharges. Card issuers can’t stop cash discounts, and a cash discount isn’t a finance charge if offered to all and clearly disclosed (M.G.L. c.140D §28A). More on our Massachusetts page.
- Florida’s surcharge ban “does not apply to the offering of a discount for the purpose of inducing payment by cash,” when offered to all customers (Fla. Stat. 501.0117).
- Minnesota: a surcharge “does not include a discount offered by a seller or lessor to a customer who makes payment for goods or services by cash, check, or similar means” (Minn. Stat. 325G.051).
- New York: “Nothing in this subdivision shall be deemed to prohibit merchants from offering a two-tier pricing system” (N.Y. GBL §518). More on our New York page.
For other states, see our surcharge rules page. If your state isn’t there, we haven’t verified it yet.
What to ask a provider selling you a cash discount program
Before you sign up for one, ask the provider in writing:
- What price goes on my menu or shelf? If it’s the cash price and cards get a fee added at the terminal, Visa says that may be treated as a surcharge.
- Does it add anything to debit cards? Visa and Mastercard don’t allow surcharges on debit or prepaid cards. Visa says that holds even when the customer picks “credit.”
- Is it allowed in my state? Ask them to name the state law they rely on. If your state bans surcharges, ask how the program avoids working like one.
- Will you notify Visa and Mastercard for me? If the program is really a surcharge, Visa wants 30 days’ notice to your acquirer, and Mastercard wants notice to both Mastercard and your acquirer.
- What signs and receipts does it produce? Federal law asks that a discount be disclosed clearly and conspicuously. Some states, like Connecticut, require specific notices.
- What does it cost me, and how do I leave? Ask for the rate, every monthly fee, and the cancellation terms.
If the answers are vague, that tells you something.
The other way to fix it
A cash discount only shifts who pays the card cost. Lowering the cost itself works on every sale, and there’s no sign to post.
Keep reading
- Credit card surcharge rules by state: card network caps and every state we’ve verified.
- Credit card processing fees, explained: what every line on your statement means.
- Interchange-plus vs flat rate: which pricing model costs less.
Common questions
Is a cash discount program legal?
A real cash discount is protected by federal law. Card networks can't stop you giving a discount for paying by cash, check, debit or credit, and card issuers can't stop cash discounts. But Visa says a card price built by adding a fee at payment may be treated as a surcharge, and some states ban surcharges. The details decide it.
What is the difference between a cash discount and a surcharge?
A cash discount lowers the regular price for people who pay another way. A surcharge raises the price for people who pay by credit card. Federal law defines a discount as a cut from the regular price, and says it does not include "any means of increasing the price that customers are informed is the regular price."
Can I offer a cash discount in a state that bans surcharges?
In several states we checked, yes. The surcharge bans in Connecticut, Maine, Massachusetts and Florida all leave room for real cash discounts. Connecticut requires a posted notice, an online notice before checkout and a spoken notice on phone orders. The discount must be real, so your posted price is the card price and cash pays less.
Do I have to put up signs for a cash discount?
Federal law says a cash discount is not a finance charge if it is offered to all buyers and its availability is disclosed clearly and conspicuously. Some states add their own rules. Connecticut, for example, requires a notice on your premises, online before checkout, and out loud on phone orders. Check your own state's rules.