Last updated: Apr 8, 2026, 10:14 AM
Rising operating costs, from ingredients to rent, have put a huge strain on the restaurant industry. As these costs continue to increase, many restaurant operators are looking for ways to improve revenue, and many are shifting to implementing guest-facing fees. Restaurant operators have a few different options they can consider when implementing guest fees to offset costs. It’s critical that restaurant operators understand the differences between these options because some may be better suited for a restaurant than others. Additionally, there are various card brand rules and requirements, as well as laws and regulations, that may result in significant financial penalties or other liabilities if not adhered to. Each merchant should carefully and objectively weigh the different cost offsetting options at their disposal, including how each might impact guest behavior.
This content is provided for informational purposes only and is not intended as legal, tax, or other professional advice. You are responsible for your own compliance with applicable laws and regulations, including card brand rules. You should contact your attorney or other relevant professional advisors for advice specific to your circumstances.
| Credit Card Surcharging | Service Charges | Cash Discounting | |
| Purpose | Offset credit card processing costs | Offset operational costs associated with a specific service provided or for general business reasons unrelated to the use of any payment method by guests | Offset operational and/or credit and debit card processing costs by offering a discount to guests paying with cash. This may be coupled with an overall menu price increase |
| Payment Method Restrictions | Credit cards only, cannot be applied to debit cards, gift cards, or cash | Must apply to all payment methods equally (including cash and gift cards) | Cash only |
| State Restrictions | Not permitted in CT, MA, ME, OK Applicable laws may regulate or restrict credit card surcharging | Applicable laws may regulate or restrict certain fees | Generally permitted |
| Amount | Must be a percent (%) that is not greater than the actual cost of processing credit cards. The absolute maximum set by card brand rules is 3% (Note: Merchants located in Colorado may be subject to limitations on the rate at which they surcharge credit cards) | Flat fee or percent (%). No fixed cap | It is not applicable since no fee is being added (but the cash discount can be any amount) |
| Disclosure Requirements | Under card brand rules, a credit card surcharge must be disclosed to guests before they choose to make a purchase. Guests must be aware that the credit card surcharge does not apply to debit cards and does not exceed the restaurant’s cost of processing credit cards. Card brand rules also require disclosures placed at the points of entry to the location, points of sale, and on receipts. We also recommend adding disclosures to menus, websites, checks, and dining areas as necessary to inform guests. Applicable laws may impose additional or different requirements. | Any fee added to a guest check must be clearly and conspicuously disclosed to guests before they choose to purchase. We recommend disclosing your service charge where necessary to inform guests, such as at points of entry, points of sale, menus, dining areas, and on receipts. Applicable laws may impose additional requirements. | Discounts from listed prices offered to cash-paying guests should be disclosed to guests clearly and conspicuously before they make a purchase. |
| Additional Restrictions | Cannot be used in combination with Cash Discounting | Naming conventions have additional restrictions and recommendations (e.g., “Convenience Fee” may put a restaurant at risk if it is not used correctly). | All listed/advertised prices (including on menus) must show the higher card price, not solely the discounted cash price; cannot be used in combination with credit card surcharging |
| Learn more | Credit Card Surcharging Overview | Compliant Service Charges Overview | Cash Discounting Overview |