Credit card processing and merchant services in California

Civil Code 1748.1 bars a retailer from adding a surcharge when a customer pays by credit card instead of cash, and it has never been repealed. In January 2018 a federal court held in Italian Colors v. Becerra that the law could not be enforced against the businesses that brought the case. The Attorney General says it will generally apply that decision to merchants similarly situated to those plaintiffs.

Merchants are still barred from misleading customers, such as by advertising a lower price than they charge or hiding differences between credit card, debit card and cash prices. The card network rules apply on top: no more than your cost, a 3% ceiling for Visa and 4% for Mastercard, notice at the entrance and the point of sale, the amount on the receipt, and no surcharge on debit or prepaid cards.

Since July 1, 2024, the Honest Pricing Law (SB 478) has required most businesses to include mandatory fees in the prices they advertise. The Attorney General's FAQ says a credit card processing fee generally doesn't have to be in the advertised price, because the customer can avoid it by paying another way, such as cash.

A card-only business is different. If you accept only credit cards, the card fee is mandatory and has to be included in the advertised price.

We found no statewide California law that requires businesses to accept cash. San Francisco does have one: Police Code Article 55 requires brick-and-mortar businesses to take cash, and our San Francisco page has the details. Check your own city's code before you stop taking cash.

California's statewide base rate is 7.25%. Most areas add district taxes of 0.10% to 2.00%, and some areas have more than one, so the rate depends on the exact location of the sale.

District rates change as new local taxes are approved. On October 1, 2026, Measure ER raised the rate across Los Angeles County by 0.5%, and on April 1, 2026, Measure A raised it across Santa Clara County by 0.625%. CDTFA's lookup by address gives the current rate for any location.

Beginning January 1, 2027, California sales and use tax applies to digital products. CDTFA's notice is addressed to sellers of prewritten computer software and to businesses that license or provide remote access to prewritten software, whether it's transferred electronically or accessed remotely.

For software delivered electronically or accessed remotely, the place of sale is generally the customer's address, so your online checkout or billing system needs a location for each customer.