How can my business legally add a surcharge for customers who pay with a credit card in California?

While California law technically prohibits credit card surcharges, you can legally achieve a similar result by offering customers a discount for paying with cash or debit. Here is how to structure this legally as a cash discount program: Step 1: Set Your Regular Price Establish the credit card price as the standard, regular price for all your goods and services. You must display this regular price on all menus, shelf tags, and other price lists. Step 2: Calculate Your Cash Discount Determine the percentage discount you will offer for cash or debit payments. This discount should be reasonably related to the processing fee you save, typically between 2-4%. The discount is applied to the regular (credit card) price. Step 3: Post Clear and Conspicuous Signage You must place signs at your business entrance and at every point of sale (cash register) that clearly explain your pricing policy. For example: "All prices listed are our regular prices. We offer a X% discount for payments made with cash/debit." Step 4: Program Your Point-of-Sale (POS) System Update your POS system to automatically apply the discount when a customer pays with cash or debit. The customer's receipt must clearly show the regular price and then list the cash discount as a separate line item, resulting in the lower final total. Important considerations: The key legal distinction is between a prohibited "surcharge" and a permitted "discount." You are not adding a fee for credit card use; you are giving a discount for not using one. All advertised prices must be the higher credit card price. Failing to clearly and consistently disclose this pricing structure could lead to claims under California's Unfair Competition Law or Consumers Legal Remedies Act. Warnings and limitations: Never call this fee a "surcharge," "credit card fee," or "service fee." Always frame it as a "cash discount." Additionally, review your merchant agreements with credit card companies (like Visa and Mastercard), as they have their own rules regarding pricing, surcharges, and discounts that you must also follow. This is general information and does not constitute legal advice. For complex situations, or to ensure your specific implementation is fully compliant, consult with a qualified California attorney.