Credit card surcharging is the practice of adding a small fee - typically 1-4% - when a customer pays with a credit card, to offset the interchange merchants pay networks like Visa and Mastercard. Once banned by card brand rules, surcharging became broadly permissible after a 2013 antitrust settlement and is now legal in 47 states; only Connecticut, Massachusetts, and Puerto Rico still prohibit it. It's important to note that surcharging applies only to credit cards - federal law forbids it on debit and prepaid transactions, though many small merchants do it anyway due to thin enforcement.
From rare to routine
Surcharging is accelerating. J.D. Power finds 35% of U.S. small businesses now surcharge credit cards. Healthcare is moving faster: our 2026 ProviderPay survey shows 45% of independent medical and dental practices already surcharge, with veterinary clinics at 55%. Counting office managers who say they may surcharge in the future, the trajectory points to 85–90% of independent healthcare providers passing along card fees. The drivers are familiar - flat payer reimbursement, interchange of 1.5–3.5% per swipe, and patient responsibility now 20-30%+ of practice revenue. Absorbing those fees is hard to sustain for practices.
The controversy
Not surprisingly, there is pushback on surcharging - including in healthcare. Patients facing record out-of-pocket costs especially those on high-deductible plans may view a 3% fee on a $400 visit as making healthcare that much more unaffordable – and one more point eroding trust in the system. Under the last administration, the CFPB, HHS, and Treasury opened inquiries into medical payment practices. Consumers vote with their wallets: J.D. Power reports 81% of cardholders who encountered a surcharge later switched payment methods to avoid it. Providers counter that interchange has quietly become one of their largest operating costs after labor and rent, and that a transparent surcharge is more honest than burying it in higher prices.
What's next
For one, regulation. Colorado has capped surcharges at 2%, New York requires they match actual processing cost, and Illinois’ Interchange Fee Prohibition Act - the first of its kind - takes effect July 1, 2026 unless legal challenges cause a delay. Walmart and major retail groups are challenging the proposed $200B Visa-Mastercard settlement, demanding deeper interchange reform. Stax Payments data shows 22% of credit transactions migrate to debit or ACH once a surcharge appears, threatening bank card revenue while giving acquirers reason to encourage the practice.
For healthcare, three forces will dominate: tighter state disclosure rules, patient migration to debit and ACH, and bank-led merchant education. And adoption is uneven. While vet practices currently surcharge more often than dental and medical practices (55% vs. 45%, see here), we expect dental offices to catch up fast. Like it or not, surcharging is taking its place as part of the new economics of healthcare payments.