Credit Card Fees and Patient Surcharges

Can Texas Physicians Pass Credit Card Processing Fees on to Patients?

Credit card processing fees are a routine cost of doing business for physician practices. As those fees have increased, some practices have considered passing some or all of the cost on to patients who choose to pay by credit card.

The legal answer in Texas is not as straightforward as one may assume. Texas law expressly prohibits merchants from imposing surcharges on credit card transactions, but a federal court has permanently enjoined enforcement of that prohibition, but only as applied to the merchants in Rowell v. Paxton. However, debit card surcharges are still prohibited under Texas law. The Texas Attorney General subsequently issued Opinion KP-0257 stating that the statute remains enforceable in some circumstances.

For physician practices in Texas, the practical takeaway is that while surcharges are never allowed for debit cards or stored-value cards, a credit card surcharge may be permissible, but practices should not assume that the Rowell decision creates an unrestricted right to do so.

The Texas Business and Commerce Code

Texas Business and Commerce Code Chapter 604A generally addresses surcharges imposed on customers who use credit or debit cards.

Section 604A.0021 states that a seller may not impose a surcharge on a buyer who uses a credit card instead of cash, check, or a similar payment method. Section 604A.002 imposes the same prohibition on debit card surcharges.

However, in Rowell v. Paxton, 336 F. Supp. 3d 724 (W.D. Tex. 2018), Texas merchants challenged the statute under the First Amendment. Following remand from the U.S. Supreme Court and the Fifth Circuit, the federal district court concluded that the Texas anti-surcharge law regulated commercial speech and that the State had not established the constitutional justification necessary to sustain the restriction. The court therefore permanently enjoined Texas from enforcing the law against the plaintiffs.

The Rowell decision is important because it means that the Texas credit card surcharge prohibition cannot simply be treated as an enforceable blanket ban. However, it is also important not to overstate what Rowell decided.

The court’s injunction arose from an as-applied constitutional challenge brought by specific merchants (“as-applied” evaluates whether a law or government action is unconstitutional only in the specific context of the particular person, group, or situation before the court). The Texas Attorney General subsequently issued Opinion KP-0257, acknowledging Rowell but concluding that Section 604A.0021 “remains enforceable in some contexts.”

The Texas State Law Library likewise cautions that Rowell addressed the Texas credit card surcharge law as applied to the merchants involved in that case and notes the Attorney General’s position that the statute remains enforceable in some circumstances.

Therefore, it would be too broad to say that Texas law simply allows every physician practice to charge whatever credit card fee it wants. Rather, Rowell provides a significant constitutional basis for credit card surcharging, but practices should structure any surcharge carefully and comply with other applicable requirements. The merchants in Rowell only passed on a surcharge equal to the merchant fees to recover the cost of accepting credit cards. Making a profit on these surcharges is prohibited. The Rowell plaintiffs specifically represented that their proposed surcharge would not exceed the credit card processing fees they actually incurred. The court noted this limitation in evaluating their constitutional challenge. As such, practices should limit any surcharge to the actual cost of credit card merchant fees rather than adding an arbitrary percentage designed to generate additional revenue.

Credit Card vs Debit Card Surcharges

One of the most important distinctions for practices is the difference between a credit card and a debit card. A surcharge may not be applied to debit card or prepaid card payments. Also, practices should make sure their payment systems can distinguish between credit and debit transactions before implementing a surcharge.

Credit Card-Network Rules Still Apply

Even if a credit card surcharge is permissible under applicable Texas law, the practice must also comply with the rules of the applicable card network and its merchant-services agreement. Card-network rules generally limit surcharges based on the merchant’s cost of accepting the applicable credit card and impose maximum caps.

For example, Visa’s current guidance requires merchants that surcharge to:

• Provide advance notice to the acquiring bank;
• Apply the surcharge only to eligible credit card transactions;
• Limit the surcharge to the applicable merchant discount rate or the applicable Visa cap, whichever is lower;
• Clearly disclose the surcharge to patients at the point of entry and/or point of sale; and
• Identify the surcharge on the patient’s receipt.

Visa identifies 3% as the maximum U.S. surcharge cap in its merchant guidance as of August, 2026.

Mastercard’s current merchant guidance likewise requires disclosure and limits the amount that may be charged. Mastercard identifies a 4% maximum surcharge cap as of August, 2026, subject to its other limitations and the merchant’s actual cost of accepting Mastercard credit transactions.

Practices should also verify the current requirements directly with their credit card merchant processor or acquiring bank before implementing a surcharge because card-network rules can change.

Disclosure Is Critical

A practice that decides to impose a credit card surcharge should not surprise patients with the fee after the transaction has been completed.

The surcharge should be disclosed before services are rendered and before the patient chooses the payment method and should be clearly identified as a fee associated with using a credit card. The practice should ensure that its signage, website, patient portal, payment screen, financial policy, and receipts are consistent with fee disclosure language.

The exact wording should be reviewed with the practice’s attorney and merchant-services providers to ensure that it complies with applicable requirements. Sample disclosure language might include:

     Credit Card Processing Fee: A surcharge of X% will be added to payments made with eligible credit cards. No surcharge is imposed on payments made by cash, check, or debit card.

What Should Physician Practices Do?

Before implementing a credit card fee, practices should take the following steps:

1. Determine exactly what types of cards the practice accepts. The practice’s payment system should distinguish credit cards from debit and prepaid cards.
2. Do not surcharge debit cards. Texas law prohibits surcharges on debit and stored-value cards.
3. Review the practice’s merchant agreements. The practice’s payment processor may impose requirements beyond those found in Texas law.
4. Determine the practice’s actual credit card processing costs. Consider limiting the surcharge to the actual cost of accepting the applicable credit card.
5. Confirm the applicable card-network cap. Visa, Mastercard, and other payment networks have their own rules and limitations.
6. Provide clear advance disclosure. Patients should know about the surcharge before completing the transaction.
7. Identify the fee separately on receipts. The surcharge should not be hidden in the total amount charged.
8. Apply the policy consistently. Avoid selectively charging some patients or some credit card transactions unless the payment-network rules and the practice’s policy specifically permit the distinction.
9. Determine how an increase in cash/check payments may affect the practice. Ensure your practice has cash-handling procedures and training for staff, along with processes set up to avoid embezzlement.
10. Have the policy reviewed by legal counsel. Because the Texas statutory prohibition remains on the books and the Rowell decision was an as-applied constitutional ruling, practices should obtain legal advice regarding their specific surcharge policy rather than relying solely on the general conclusion that credit card surcharges are “legal in Texas.”

This article is intended for general educational purposes and is not legal advice. Practices should consult qualified legal counsel regarding the application of these rules to their specific payment policies and payer/patient arrangements.