Dual pricing vs. surcharging vs. cash discounts (2026)

Merchants who want to stop absorbing card fees have three options: add a surcharge to credit card sales, give a discount to customers who pay cash, or show two prices with dual pricing. They sound alike, but card-brand rules and state law treat them very differently. The differences matter most in Texas.

How the three options compare

What is a credit card surcharge?

A surcharge is a fee added to a credit card sale to cover what accepting the card costs the business. Visa and Mastercard allow surcharges, with conditions.

• Credit cards only. Visa and Mastercard don't allow surcharges on debit or prepaid cards, even when the customer presses "credit" at the terminal.
• A cap tied to your cost. Visa limits a surcharge to your cost of accepting the card or 3%, whichever is lower. Mastercard caps it at 4%, and at no more than your average cost for Mastercard credit cards.
• 30 days' notice. Tell your processor at least 30 days before you start. Mastercard also requires its own notice, filed through an online form.
• Disclosure at every step. Post signs at the entrance and at checkout, and show the surcharge as its own line on the receipt. Mastercard wants the receipt to show it in dollars and as a percentage.
• State law on top. Connecticut, Maine and Massachusetts ban surcharges. Colorado limits them to 2% or the merchant's actual processing cost, and Oklahoma to whichever of those is lower. New York requires the highest total price, including the surcharge, to be posted.

What is a cash discount?

A cash discount lowers the price for customers who pay cash. The posted price is the card price, so card customers pay exactly what's on the menu or shelf tag.

• Federal law protects it. Card networks can't stop a merchant from offering a discount for paying with cash, checks, debit or credit, as long as the discount is offered to everyone and disclosed clearly where the law requires.
• How prices are shown matters. Visa allows the card price alone, or the card price and cash price side by side for each item. A total reached by adding a fee to card payments can be treated as a surcharge.
• Debit pays the card price. The discount is for cash, so debit cards, credit cards and phone wallets all pay the posted price.

What is dual pricing?

Dual pricing is a cash discount that shows both prices, so customers see the card price and the cash price before they pay. Here's how one item looks at checkout:

Set up correctly, dual pricing follows five rules:

1. Posted prices are card prices.
2. Signs at the door and at the register explain the cash discount.
3. Customers see both prices before they pay.
4. The receipt shows the cash discount.
5. It's never called a fee or a surcharge.

Most BP Global Merchant Services merchants run on dual pricing. It usually works on the POS system or terminal a business already has.

Is surcharging legal in Texas?

It's unclear. Texas Business and Commerce Code sections 604A.002 and 604A.0021 bar sellers from charging a fee for paying by credit or debit card. In 2018, a federal court in Rowell v. Paxton held the credit card part unconstitutional and blocked the state from enforcing parts of it. In 2019, Texas Attorney General Opinion KP-0257 said the law still applies in some situations.

The Texas State Law Library says it can't tell whether a business may charge a card fee, and the law allows civil penalties of up to $500 per violation. The same law says a cash discount isn't a surcharge. That's why dual pricing is the safer choice for most Texas businesses.

This is general information, not legal advice. Talk to an attorney about your own situation.

What the Visa and Mastercard settlement could change

A federal judge in New York gave preliminary approval to a revised settlement between merchants and Visa and Mastercard on June 9, 2026. The final approval hearing is set for Nov 16, 2026. Until the settlement is approved, today's rules stand.

If approved, the settlement would:

• Let merchants surcharge Visa and Mastercard credit cards up to their cost of acceptance or 3%, whichever is lower, whether or not they surcharge other card brands.
• Let merchants turn down some premium rewards and commercial credit cards.
• Cut average credit card interchange by 0.10 percentage points for five years, and cap interchange on standard consumer credit cards at 1.25% for at least eight years.

A convenience-store trade group has said it will appeal if the settlement is approved, so the timing could slip. State laws, including Texas's, would still apply.

Which option fits your business?

• Dual pricing fits most Texas businesses that want to stop paying most of their card fees, especially when many customers pay with debit cards.
• A surcharge fits a business in a state that allows it, with mostly credit card customers and the staff to handle the notice and disclosure rules. Fees on debit cards still come out of the business's margin.
• Interchange-plus pricing fits a business that doesn't want to change what customers pay. The business pays the card networks' actual cost plus a fixed markup it can see on every statement.

For scale: at $30,000 a month in card sales and a 3% effective rate, card fees cost about $900 a month, or $10,800 a year. That's the money each option is trying to recover.

When BP Global Merchant Services fits

BP Global Merchant Services is a Dallas-based, independent merchant services provider and Elavon MSP. BP Global sets up dual pricing on a merchant's current POS or terminal, including the signs and receipt wording, and offers interchange-plus pricing to merchants who'd rather keep one price. If a POS can't run dual pricing, or state rules don't allow the option a merchant wants, BP Global says so before anyone switches.

Send one recent processing statement, and BP Global will show you in writing what you pay now and what you'd pay under each option.