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Merchant services · Tennessee

Merchant Services in Tennessee

Tennessee has more than 741,000 small businesses, and they make up 99.5% of the businesses in the state. They range from Memphis barbecue joints and Smoky Mountain gift shops to Tri-Cities machine shops and farm stands along the Tennessee River. Most of them take cards, and many owners have heard that they can "pass the fees on." In Tennessee that's broadly true, but only if it's done in the open. This page explains the rules as we understand them, the processing options available, and how our ATM program works. We're based in Clifton, in Wayne County, so these are our home-state rules as well.

This page is general information, not legal or tax advice. Rules change. Check with your attorney or accountant before you change how you price.

Surcharging and dual pricing in Tennessee: what the rules say

State law

Tennessee doesn't have a statute that specifically bans or caps credit card surcharges. Some states do: Connecticut, Massachusetts, and Maine ban them, and Colorado and Oklahoma cap them. What governs Tennessee businesses is the Tennessee Consumer Protection Act (Tenn. Code Ann. § 47-18-104), which prohibits unfair or deceptive practices, including misleading statements about prices and price reductions.

In 2021 the Tennessee Attorney General's office issued a consumer alert on card surcharges that spells out what it expects. A merchant that doesn't clearly and prominently disclose the price, including any added fee, before the customer pays may be violating Tennessee's deceptive-advertising law. The alert also says:

  • customers should be able to see the full price for each payment method you accept;
  • the amount charged should match the posted price;
  • a "cash discount" is a real discount only when the customer is invited to pay less than the posted price. A fee added on top of the posted price for using a card is a surcharge, whatever you call it.

The same alert told consumers to be wary of surcharges larger than the merchant's actual cost of accepting cards.

Card-brand rules (these apply on top of state law)

Visa's published U.S. rules for merchants who surcharge include:

  • notify your processor at least 30 days before you start;
  • surcharge credit cards only, never debit or prepaid cards, even when the customer runs a debit card as "credit";
  • keep the surcharge at or below your cost of accepting that card, and never above 3%;
  • disclose it at the store entrance (or the first page online), at the point of sale, and on every receipt.

Mastercard's rules are similar. Its current published cap is 4%, also limited to your cost of acceptance. A proposed Visa/Mastercard settlement would set both networks at the lesser of 3% or cost. That settlement isn't final yet, and its fairness hearing is scheduled for November 16, 2026.

Dual pricing vs. surcharging

  • Surcharging adds a fee at checkout when a customer pays by credit card. The card-brand limits above apply.
  • Dual pricing (sometimes called cash discounting) posts two prices, a cash price and a card price, everywhere prices appear. The customer sees both before choosing.

Both can be legal in Tennessee when they're set up and disclosed honestly. In both cases, a fee the customer first discovers on the receipt is a problem.

Sales tax

Ask your accountant how Tennessee sales tax applies to a card fee or a cash price on your receipts. The Department of Revenue's guidance treats these differently, and your POS has to be set up to match.

Processing options for Tennessee businesses

Businesses in different parts of the state tend to need different setups:

  • Tourism-heavy counties (Sevier, Davidson, Shelby, Hamilton, Knox) see lots of out-of-state and premium rewards cards. That card mix often shifts the math toward interchange-plus pricing or a well-disclosed dual-pricing program.
  • Small-town Main Street shops and rural service businesses often process lower or seasonal volume. Flat-rate pricing or staying on Square can be the sensible choice there, and we'll say so.
  • Trades, ag suppliers, and B2B shops that invoice other businesses often take keyed-in or card-on-file payments, which are priced differently from tapped cards. Those businesses are worth a closer look at Level 2/3 data and invoicing tools.

The options we lay out side by side:

  1. Dual pricing (optional): two posted prices, built to the disclosure rules above.
  2. Interchange-plus: the network's actual cost for each card, plus a fixed and disclosed markup.
  3. Flat-rate: one predictable rate on every transaction.
  4. Square, if you prefer it. We'll include it as an option in your comparison.

We don't promise savings before we've seen your statement, because the real number depends on your volume, card mix, and current contract.

ATMs in Tennessee

Cash still matters in many Tennessee businesses, including flea markets, gas stations, bars, barbershops, festivals, marinas, and campgrounds. If you want an ATM on site, here's how our program works:

  • You buy and own the machine. It's a purchase, not a loan.
  • Everything's in writing. Terms are subject to the partner agreement, which is disclosed in writing before you sign.
  • Responsibilities are settled before installation. That includes cash loading, the per-withdrawal surcharge amount, and service arrangements. We don't promise monitoring, maintenance, or a revenue share. ATM surcharge income isn't guaranteed.
  • Machines come through our ATM partner, and card processing comes through our processing partners.

FAQ

Is it legal to charge a credit card fee in Tennessee?

Generally yes. No Tennessee statute bans it. You still have to disclose it clearly before payment, keep it within card-brand limits (credit cards only, and no more than your cost or 3% for Visa), and avoid any misleading pricing under the Tennessee Consumer Protection Act. This isn't legal advice.

Can I surcharge debit cards in Tennessee?

No. Card-brand rules don't allow surcharges on debit or prepaid cards, even when the customer selects "credit" at the terminal. This is one reason some merchants choose dual pricing instead.

What's the difference between a cash discount and a surcharge?

A cash discount lowers the posted price for customers who pay cash. A surcharge adds to the posted price for customers who pay by card. Tennessee's Attorney General has warned against labeling a surcharge as a "cash discount."

Do I need to tell my processor before I start surcharging?

Yes. Visa requires notice to your processor at least 30 days in advance, and your terminal has to be set up to apply the fee correctly and show it on receipts.

Is the Visa/Mastercard settlement going to change the rules?

Possibly. The settlement's fairness hearing is set for November 16, 2026. If it's approved, the surcharge cap would be 3% or your cost, whichever is lower, for both networks. We'll update this page once the outcome is known.

Do you only work in Tennessee?

No. We're based in Clifton and work with merchants nationwide, mostly by phone and email.

What does an ATM cost and who owns it?

You buy the machine and you own it. Pricing depends on the model and setup. Terms are subject to the partner agreement, and you'll get them in writing before you decide.

Get a no-obligation comparison

Send a recent statement, and we'll show your options under Tennessee's rules side by side.