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Another State Grapples with Debit Fee Surcharges

By Tom Nawrocki
May 29, 2026
in Analysts Coverage, Merchant
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Cash and Debit Discounts: Shoppers, Coinbase Visa Debit Card Litecoin, PayPal Debit Cards and Check Deposits, cash digital payments, Global real-time payments, decoupled debit credit unions, prepaid transaction accounts

Cash and Debit Discounts: More Ways for Shoppers to Save

As merchants and cardholders continue to pass the hot potato of surcharges back and forth, Louisiana is on the verge of imposing stiff penalties on retailers that add additional charges to debit card purchases.

The legislation has passed both the Louisiana Senate and House of Representatives and now awaits the governor’s signature. If enacted, it would give the Attorney General’s Office authority to impose civil penalties of up to $500 per violation and require the state to set up both a toll-free hotline and an online reporting system for consumers to submit receipts.

Illinois recently tackled the issue by banning credit and debit interchange fees on taxes and tips. That law—slated to take effect this summer—is now tied up in the courts. Together, the Illinois effort and the Louisiana bill suggest that the battles over debit card surcharges are far from over.

“Merchants continue to push against card fees, and one of the chief ways of doing it is by passing fees along to consumers,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “Merchants say, ‘Hey, the consumer is getting their airline miles and cash back, so why shouldn’t they pay the fee?’”  

How We Got Here

Surcharging on card transactions was once prohibited by both Visa and Mastercard, but the restrictions created problems for many municipalities, which were barred from paying bank fees to collect taxes and fines. In response, the card networks created a category called the “convenience fee,” arguing that consumers were paying for the convenience of using alternative payment channel—like online payments—rather than for using a credit or debit card.

Many independent sales organizations now market programs to merchants that classify the surcharge as a convenience fee, allowing it to be applied to all cards. As long as the retailer doesn’t explicitly label the charge a “surcharge,” additional fees on debit cards remain in play.

“For the first time, legislators are saying you’re not fooling anyone by calling this a convenience fee,’” Apgar said. “It’s a surcharge and you can’t charge it on debit cards.”

The Battle Continues

Visa and Mastercard later dropped their prohibition on surcharging as part of a class-action settlement, though surcharging on debit cards remained prohibited. Visa has since stepped up enforcement, issuing fines up to $5,000 against non-compliant merchants.

As consumer backlash against these fees continues, more lawmakers are likely to look for ways to shield constituents from having to pay them.

“As more consumers complain to their local elected officials, you’ll see more laws pop up across the country,” said Apgar. “This is an ongoing tug of war between consumers and merchants. Meanwhile, nobody wants card payments to go away—just the fees.”

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Tags: Credit Card SurchargingDebit Card FeesIllinoisLouisianaSurcharge

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