Colorado Surcharge Law: How to Comply With the 2% Cap

Colorado surcharge law lets a business add a fee to credit and charge card payments, but only up to 2% of the transaction or the actual processing fee it pays, and only if it posts the exact notice the statute requires. Debit cards, cash, checks and gift cards can never be surcharged, and the fee has to show as its own line on the receipt. If you are running a 3% or 3.5% "national" surcharge at a Colorado counter, you are almost certainly over the limit.

What Colorado's surcharge law says

For years, Colorado was one of the few states that flatly prohibited credit card surcharges. That changed when the legislature passed Senate Bill 21-091, which the governor signed on July 9, 2021. The amended statute, C.R.S. § 5-2-212, took effect on July 1, 2022, and it is still the rule Colorado businesses follow today.

The law sits inside the Colorado Uniform Consumer Credit Code. That detail matters for two reasons. First, it is enforced by the Administrator of the Consumer Credit Code, which is part of the Colorado Attorney General's office. Second, a business that breaks the surcharge rules is treated as a "creditor" in violation of the Code, which exposes it to administrative enforcement and consumer claims, and willful violations can carry criminal penalties.

For how Colorado compares with other states, see our 2026 guide to credit card surcharge rules.

The Colorado 2% surcharge vs. the cost-based option

The statute gives you two ways to set your surcharge. You choose one and post the notice that matches it.

The cost-based option looks attractive because many businesses pay more than 2% on rewards and commercial cards. The catch is proof: a surcharge above 2% has to be backed by what your processor actually charged on that sale, which is hard to pin down on flat-rate or tiered pricing. On interchange-plus pricing, the cost of each card is visible on your statement, which makes the math easier to defend.

A worked example

Say a Colorado repair shop closes a $1,000 ticket on a customer's rewards credit card, and the shop's all-in cost on that card works out to $27.

• Under the 2% option: the most the shop can add is $20.00. The shop absorbs the other $7.
• Under the merchant discount fee option: up to $27, if the shop can document that charge and its sign uses the matching wording.
• Under Visa's rules alone: the lower of 3% or cost, so $27. Colorado law is the tighter limit.

Required sign and online disclosure wording

Colorado doesn't just require "a sign." The statute spells out the wording. For a surcharge capped at 2%, the notice reads:

If you use the cost-based option, the notice swaps the 2% language for "in an amount not to exceed the merchant discount fee that the seller or lessor incurs in processing the sales or lease transaction." Everything else stays the same.

In person, the notice has to be visible signage at your business; posting it at the entrance and the register covers you. Online, it has to appear before the customer completes the transaction, on the checkout or payment screen. If you take phone or payment-link sales, adding the same wording to invoices is a sensible precaution. Your processor may supply a sign, but check it word for word: a generic "up to 3% card fee" sign doesn't meet Colorado's requirement.

Which payments you can and can't surcharge

The debit rule trips people up at the terminal. A debit card is still a debit card when the customer presses "credit" or skips the PIN, so your terminal has to identify the card type from the card itself, not from the button tapped. We explain how that works in can you surcharge debit cards?

• Labels don't matter. Colorado's statute defines a surcharge as any additional amount imposed at the time of the sale for using a credit or charge card. Calling it a "service fee," "convenience fee" or "non-cash adjustment" doesn't move it outside the law.
• Business-to-business sales. The Administrator's interpretive opinion says the provisions apply to consumer sales and leases, not to business transactions without a consumer purpose. Card-network rules still apply to those sales.

If you'd rather not surcharge at all, a properly built cash discount program works differently under Colorado law. Our cash discount vs. surcharge comparison walks through both.

Card-network rules still apply on top

You have to satisfy Colorado's statute and the card networks, and the stricter rule wins.

• Visa caps a surcharge at the lower of 3% or your merchant discount rate for that card, a limit that took effect April 15, 2023. Visa also requires merchants to notify their acquirer at least 30 days before they start surcharging.
• Mastercard sets its own cap, higher than Visa's, with its own disclosure requirements. Neither network allows surcharging debit or prepaid cards.

The 2% state cap is lower than either network cap, so it is the number that binds. The advance notice to your processor is the step owners most often skip.

How Colorado's total-price law fits in

Colorado added a second layer in 2025. House Bill 25-1090, which took effect January 1, 2026, targets so-called junk fees: it requires businesses to show a single total price that includes all mandatory charges, and violations are treated as deceptive trade practices under the Colorado Consumer Protection Act.

A surcharge allowed under § 5-2-212 is generally different from a mandatory fee, because the customer can avoid it by paying with cash or debit at the same transaction. But how the new law applies to card fees is still developing, so make the surcharge easy to see and easy to avoid: the required notice, a clear debit and cash option, and a receipt that shows exactly what was added.

One more 2026 development: the legislature passed SB 26-134, which would have barred interchange fees on the sales-tax portion of a card payment, but Governor Polis vetoed it in June 2026. For now, the surcharge statute remains the main state rule that touches your card costs directly.

Colorado surcharge compliance checklist

Use this before you turn a surcharge on, and again any time you change processors or POS systems:

• Decide which cap you are using: 2%, or the actual merchant discount fee you can document.
• Set the terminal and online checkout to that amount, applied to the total payment for the sale, with only one surcharge per transaction.
• Confirm the system identifies debit and prepaid cards from the card itself and never surcharges them, even when the customer selects "credit."
• Exclude gift card redemptions, cash and checks.
• Post the statutory notice, word for word, where customers see it before paying, and display it online before checkout.
• Make sure every receipt shows the surcharge as a separate line item.
• Notify your processor in writing at least 30 days before you start, as Visa requires.
• Apply the same rules to phone, invoice and payment-link sales, and train staff to explain the fee.
• Review a month of statements afterward to confirm the surcharge amounts match what you posted.

What the Visa/Mastercard settlement could change

On June 9, 2026, Judge Brian Cogan of the U.S. District Court for the Eastern District of New York granted preliminary approval to the revised Visa and Mastercard interchange settlement, and a final approval hearing has been scheduled for November 16, 2026. Several large merchant groups have objected, so appeals are possible.

If the settlement is approved, merchants would gain more room to surcharge or discount certain card categories and to decline some premium and commercial credit cards. For Colorado businesses, the key point is that the settlement changes network rules, not state law. Colorado's 2% cap, the notice wording, the receipt rule and the debit ban would all still apply. Any new network flexibility would have to fit inside those limits.

Is surcharging worth it in Colorado?

It can be, but go in with clear expectations. Under the 2% option, you recover part of your credit card cost and none of your debit cost, and you take on signage and setup work. For auto repair shops with large credit tickets, that trade can make sense. For a coffee shop with mostly small debit and tap payments, the recovery is often small and the customer friction is real. Often the bigger savings are in your pricing, not at the register; our guide to reading a merchant statement shows how to find your real rate.

If you'd like a second set of eyes before you decide, send us a recent statement for a free statement review. We'll show you your true effective rate, what a compliant Colorado surcharge would recover and whether better pricing gets you further without changing anything at the register.

Frequently asked questions