Credit card processing and merchant services in Texas

Section 604A.0021 says that in a sale of goods or services, a seller "may not impose a surcharge on a buyer who uses a credit card for an extension of credit instead of cash, a check, or a similar means of payment." Government entities and private schools that take cards for fees are exempt.

In 2018 the federal court for the Western District of Texas held the section unconstitutional as applied to the merchants in Rowell v. Paxton, who planned to surcharge no more than their swipe fees. Opinion KP-0257 (2019) reads the ruling narrowly: the law "remains enforceable in some contexts," and the court suggested its analysis would differ for surcharges above the swipe fee. The State Law Library calls enforceability unclear. As of October 2026, if you surcharge, stay at or below your cost and get legal advice first.

Section 604A.002 says a merchant may not impose a surcharge on a buyer who uses a debit or stored value card instead of cash, a check, a credit card, or a similar means of payment. The State Law Library notes that the 2018 lawsuit addressed only the credit card law, not debit cards.

Visa and Mastercard don't allow surcharges on debit or prepaid cards either, even when the customer chooses "credit" at the terminal. If your system adds a fee automatically, confirm it can tell the two card types apart.

Under Section 604A.003, knowingly violating either surcharge section can bring a civil penalty of up to $500 per violation. Before suing, the Attorney General or the county prosecutor must send a notice with compliance guidance. If you comply within 30 days of that notice, the violation is cured. A business that has already had one notice gets no second chance to cure.

The State Law Library says it isn't clear whether those penalties can still be imposed after Rowell v. Paxton, a case that dealt only with credit cards.

Chapter 604A defines a surcharge as a price increase on a buyer who pays by credit, debit or stored value card that isn't imposed on a buyer who pays another way. The same definition says the term "does not include a discounted price charged for goods or services to a buyer who pays with cash."

That makes a genuine cash discount the lower-risk way to price for card costs in Texas. Post the regular price, take the discount off for cash, and keep it a real discount rather than a renamed card fee.

Texas charges a 6.25% state sales and use tax. Cities, counties, special purpose districts and transit authorities can add up to 2% combined, for a maximum combined rate of 8.25%.

In general, local sales tax is based on the seller's place of business. An order placed in person is taxed at that place of business, wherever it's fulfilled from, and the Comptroller's seller guide covers orders taken by phone or online. A new remote seller can elect the single local tax rate on its sales and use tax application.