Can Dentists Pass Credit Card Fees to Patients? Comparing Surcharging Rules in New York, New Jersey and Pennsylvania
As credit card processing costs rise, many dental practices are exploring whether they can pass those fees to patients who choose to pay with credit cards. While the practice of credit card surcharging is increasingly common in retail settings, dentists need to navigate applicable laws carefully. The rules vary across New York, New Jersey, and Pennsylvania, and even small compliance missteps can lead to penalties or consumer complaints.
New York
In New York, surcharging for merchants generally is permitted as of 2024, provided businesses clearly post the total price, inclusive of any surcharge, before the transaction takes place. The surcharge cannot exceed the actual fee charged by the credit card company, and businesses must show both the “cash” and “credit” price, if using a two-tier pricing system. Importantly, merchants cannot simply add a line-item “processing fee” to a receipt; the total price must be disclosed upfront, to avoid any surprise charges.
New Jersey
New Jersey law also permits surcharging for merchants as of 2023, but it places similar limits to those in New York – businesses cannot charge more than their actual cost to process the credit card payment. Clear notice of the surcharge must appear at the point of entry and point of sale. Violations are treated as unlawful practices under the state’s consumer protection laws; therefore, compliance documentation and transparent signage are essential.
Pennsylvania
Pennsylvania currently allows credit card surcharging but does not have a detailed statute regulating the practice. Unlike New York and New Jersey, in Pennsylvania, merchants may be able to use credit card surcharging for amounts greater than recoupment of credit card processing fees. However, the use of surcharging in Pennsylvania has been a source of debate and may see regulation in the future. As with New York and New Jersey, it is a best practice to ensure that surcharges are disclosed clearly to consumers before the transaction occurs.
Additional Restrictions
Federal law limits the amount of a credit card surcharge to 4%. Accordingly, even in New York and New Jersey, where a merchant is only able to surcharge the actual amount of each processing fee, there are still caps at 4% per federal law.
It is important to note that surcharging debit cards is not allowed under federal law. Additionally, adding surcharges to payments made through digital wallets like Apple Pay or Google Pay may be unlawful depending on how those transactions are routed. Surcharging Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) can also raise compliance concerns, since those cards are often governed by health benefit and tax regulations that restrict fee pass-throughs.
Professional and Contractual Considerations
The laws in New York and New Jersey are new, and their interactions with professional obligations are unclear.
Beyond the new consumer laws, dentists must also consider professional conduct rules and insurance carrier contracts. Some state dental boards regulate how discounts, fees, or billing adjustments are represented to patients.
Medicare has issued guidance prohibiting fees charged to patients above and beyond what is allowed based on the fee schedule. Accordingly, any participating dentists that apply a surcharge to covered services for Medicare or Medicaid patients may risk penalties and exclusion from government health plans.
Likewise, many commercial insurance carriers – including dental PPOs – prohibit miscellaneous charges and discounts in their provider agreements. Even a well-intentioned surcharge could violate those terms, leading to audits, penalties, or contract termination.
Takeaway
Before implementing a surcharge policy, dental practices should review their state’s consumer protection laws, confirm that their merchant processor can accurately calculate fees, and consult legal counsel. A small amount of advance compliance work can prevent significant headaches later.
If you are considering a credit card surcharge policy or have questions about how your state’s laws apply to your dental practice, contact Evan Sampson at esampson@postschell.com or 856.301.2561 for guidance tailored to your situation.
Disclaimer: This post does not offer specific legal advice, nor does it create an attorney-client relationship. You should not reach any legal conclusions based on the information contained in this post without first seeking the advice of counsel.
