Yes, credit card fees are legal in California in 2026, but the way businesses must handle them has changed dramatically because of California’s new “Hidden Fees” law, SB 478. For years, many Californians believed surcharges were banned, while others assumed any business could add a small swipe fee as long as they told customers before charging it. The truth in 2026 is more complicated. The surcharge itself isn’t illegal, but the way the price is presented can make the fee unlawful. California now focuses on transparent, upfront pricing, not simply on disclosure. Businesses must show the full price—including credit card fees—before the customer agrees to buy, with only one major exception for restaurants. These rules reshape almost every industry in the state, from retail to online services, and they determine whether a credit card fee is legal or a violation of the Consumer Legal Remedies Act.
Surcharges Themselves Are Legal — But the Price Must Be Shown Upfront
California once banned credit card surcharges, but federal courts struck down that ban on First Amendment grounds. After that, businesses began adding small card-processing fees as long as they disclosed them before payment. But everything changed with SB 478, which took effect on July 1, 2024. This law targets “drip pricing,” meaning fees added at the end of a transaction. Under SB 478, businesses may still charge more for credit card payments, but the listed price must already include the mandatory credit card fee if customers are required to pay it.
This means a business cannot advertise one price and then increase that price at checkout by adding a “3% credit card fee.” If the fee is mandatory for anyone paying by card, it must be included in the price displayed on menus, signs, online listings, and advertisements.
The surcharge itself is still lawful. What changed is the rule that the price must be honest, complete, and upfront.
Disclosure Is No Longer Enough Under SB 478
Before 2024, a business could stay legal simply by posting a sign like:
“3% surcharge applies to all credit card payments.”
That approach is no longer legal for most businesses in California.
Under SB 478, disclosure isn’t the rule — the total price is. If a fee is mandatory, the law requires:
- The advertisedprice must be the actual price.
- The menuprice must be the actual price.
- The online listingmust reflect the total price.
- The shelf pricemust include all unavoidable fees.
A business may itemize the surcharge on the receipt if it wants to show the breakdown, but the customer cannot be shown a lower price first and then charged more later.
If the credit card fee increases the price at checkout, the business violates SB 478.
Cash Discounts Are Still Allowed
What remains legal is the opposite approach:
A business may list the card price as the main price and then offer a discount for customers paying cash.
This complies with SB 478 because:
- The advertised price is the highest unavoidable price (the credit card price).
- The cash discount is optional and simply lowers the total.
SB 478 regulates hidden fees, not discounts. So a business may charge more for credit payments, but the higher card price must be the posted price.
The Key Exemption: Restaurants Under SB 1524
Restaurant pricing became a battleground because many restaurants use:
- Service fees
- Health surcharges
- Kitchen equity fees
- Mandatory gratuities
- Credit card fees
Lawmakers passed SB 1524, which took effect immediately, carving out a special exception just for restaurants and food/beverage establishments. Under this law, restaurants may list mandatory fees separately, including credit card fees, as long as they:
- Clearly and conspicuously disclose them
- Display them on all menus (printed, digital, online, drive-thru)
- Show them before the customer orders
This is the only major exception to SB 478. Retailers, salons, gyms, hotels, auto shops, and online stores must follow the standard SB 478 rule and include the full price upfront.
When a Surcharge Becomes Illegal
Even though surcharges are legal, a business breaks the law if:
- It lists a lower price and adds the fee at checkout
- It surprises customers after they commit to the purchase
- It charges more than the actual processing cost
- It surcharges debit or prepaid cards (illegal everywhere)
- It hides or minimizes the true, final price
Customers can challenge such fees under the Consumer Legal Remedies Act, and businesses may face civil penalties for deceptive pricing.
Conclusion
In 2026, it is legal to charge credit card fees in California — but the rules are stricter than ever. SB 478 requires nearly all businesses to show the full, total price upfront, including mandatory card fees. Disclosure alone is no longer enough. Restaurants have a narrow exemption under SB 1524 allowing separate mandatory fees, but they must clearly display them on every menu. For everyone else, any unavoidable credit card surcharge must be included in the listed price. California didn’t outlaw card fees — it outlawed hiding them.
