California is the state where the difference between dual pricing and surcharging matters most. It has an old statute against credit card surcharges, a new law against hidden fees, and the largest number of small businesses trying to stop absorbing card costs. Here is how those pieces fit, and what a compliant setup looks like on the counter.
This page describes the rules as we apply them when we set up merchants. It is not legal advice. If your situation is unusual, ask a lawyer.
Three ways to pass on card costs, and how California treats them
| Model | How it works | California status |
|---|---|---|
| Surcharge | One posted price; a percentage is added at checkout for credit cards | Civil Code 1748.1 prohibits credit card surcharges by retailers. A 2018 Ninth Circuit ruling limited enforcement against merchants who clearly disclose. SB 478 (2024) adds a price-transparency requirement. Processors generally treat it as restricted. |
| Cash discount | The card price is the posted price; cash payers get a discount | Expressly permitted by 1748.1, which allows discounts for cash, check or similar means. |
| Dual pricing | Both a cash price and a card price are posted; the customer chooses | Functionally a cash discount with both prices shown. Fits 1748.1’s cash-discount allowance and SB 478’s requirement that the advertised price be the full price. |
The two laws
Civil Code section 1748.1. Enacted in 1985. It says a retailer may not impose a surcharge on a cardholder who elects to use a credit card instead of cash, check or similar means, and in the same breath says a retailer may offer discounts for paying by cash or similar means. In 2018, in Italian Colors Restaurant v. Becerra, the Ninth Circuit held the statute could not be enforced against a group of merchants who wanted to post a single price and add a clearly disclosed credit card fee, on free-speech grounds. The statute was not repealed. The practical effect is uncertainty, which is not a comfortable place for a small business.
SB 478, the “honest pricing” law. Effective July 1, 2024, as part of the Consumers Legal Remedies Act. It prohibits advertising, displaying or offering a price for a good or service that does not include all mandatory fees or charges, other than government taxes and reasonable shipping. The Attorney General’s guidance framed it as: the price you show must be the price the customer pays. The law was written for resort fees and ticket fees, but it applies to any business. A card fee added after the customer sees the price is the kind of thing it targets. Whether a fee the customer can avoid by paying cash is “mandatory” is a question we would rather not test on a client’s behalf.
Dual pricing sidesteps both. The card price is displayed as the price for card payers before they choose. Nothing is added at checkout. The receipt shows the price paid. That is consistent with 1748.1’s cash-discount allowance and with SB 478’s rule that the displayed price is the full price.
Card-brand rules on top of state law
Visa and Mastercard rules apply nationally and are enforced through your processor. As of 2026:
- Surcharging: capped at 3% (Visa) and never on debit or prepaid cards, with 30 days’ written notice to your acquirer before you start. Restricted or prohibited in California, Connecticut, Massachusetts and Maine under state law.
- Dual pricing and cash discounts: permitted, no cap tied to the surcharge rule, no registration, applies to credit and debit alike, provided the applicable price is disclosed before payment and the receipt reflects the price paid.
The failure mode we see: a merchant is sold a “cash discount program” that actually adds a “non-cash adjustment” line at the terminal on top of the posted price. The receipt says “fee.” Visa treats that as a surcharge, and in California it is exactly what the two statutes are aimed at.
A compliant California setup
- Two prices, visible before payment. Menus say “Prices shown are cash prices; card prices are 3.99% higher,” or list both. Retail uses shelf labels or a register sign listing both. The customer-facing terminal screen shows both totals before the card is tapped.
- Charge exactly the posted card price. No separate line for a fee, adjustment or surcharge.
- Receipt shows the price paid and the tender type. Not a base price plus an add-on.
- Same treatment for credit and debit. No carve-outs.
- Signage at the entrance and register. We supply it.
- A one-sentence staff script. “We show a cash price and a card price; the card price covers the processing cost.”
On Clover, Dejavoo and Exatouch this is configured at the processor level and takes about a day. The Clover specifics, including what the customer screen looks like, are in dual pricing on Clover.
What about online sales and invoices?
Online orders are card-only, so the card price is the price shown. For invoices, a bank-transfer price and a card price on the same invoice, both visible before the payer chooses, is the same model. A manually added “3% processing fee” line on a QuickBooks invoice is a surcharge and carries the surcharge problems above. More on that in the QuickBooks fees guide.
Sources
- California Civil Code section 1748.1.
- Italian Colors Restaurant v. Becerra, 878 F.3d 1165 (9th Cir. 2018).
- California SB 478 (2023), Civil Code section 1770(a)(29), effective July 1, 2024, and the California Attorney General’s published guidance on it.
- Visa Core Rules on surcharging, as summarized in 2026 industry compliance guides; Visa reduced the surcharge cap to 3% in April 2023.