Credit-Card Surcharges & Cash Discounts for Restaurants & Bars (2026)

The cleanest path for most restaurants is the cash discount: post the card price, offer a lower cash/debit price. If you surcharge, the math and disclosure rules are stricter — and the tip must stay untouched.

The tip rule (non-negotiable)

A surcharge must be calculated on the pre-tip subtotal and shown as its own line. You may never add a surcharge on top of a gratuity. Compute the fee before the tip, disclose it, then add the tip separately. Misapplying the fee to the tip is a common and costly mistake.

State junk-fee and mandatory-fee laws

Some states regulate mandatory fees. California’s SB 478 (effective 2024) requires advertised prices to include all mandatory fees; the food-and-beverage treatment has been debated, so verify the current CA AG position. Minnesota’s HF 3438 requires mandatory fees to be included in the advertised price and disclosed orally and on posted signage, with penalties that can reach $25,000. A cash-discount program avoids these questions because it is a discount, not a mandatory fee.

Setup checklist

• Choose cash discount (everywhere) or surcharge (permitted states only).
• If surcharging: compute on pre-tip subtotal, never on the gratuity.
• Disclose the fee before the guest pays; print it as a separate receipt line.
• Update menus/boards to show the card price prominently.
• Train servers on the disclosure script and the tip separation.

See the Toast-specific setup.Toast setup guide →

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