​(July 31, 2012) The much-publicized proposed settlement announced earlier in July between Visa/MasterCard and U.S. retailers will have limited, if any, application in California, which is one of 10 states that prohibit surcharges for credit card transactions.

California’s ban on credit card surcharges applies to private businesses, but not government agencies or public utilities.

The California law prohibiting the surcharges was enacted in 2005, but specifically allows discounts for cash payments. As stated in Section 1748.1(a) of the California Civil Code: “No retailer in any sales, service, or lease transaction with a consumer may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check, or similar means. A retailer may, however, offer discounts for the purpose of inducing payment by cash, check, or other means not involving the use of a credit card, provided that the discount is offered to all prospective buyers.”

Other states that ban credit card surcharges, according to The Electronic Payments Coalition, are Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

The proposed settlement, which requires court approval, is opposed by some retailers, including Wal-Mart and Target.