Ask the Mayor: Why Can Nail Salons Charge Extra for Using a Credit Card?

Mayor Alan Arakawa answers some of the most-asked questions submitted to his office staff.

Aloha Mayor,

Q: How is it that all the nail salons in Kīhei charge an extra fee if you use a credit card to pay, and you cannot put a gratuity on the charge? Tips must be in cash only. They all have signs posted. Is this legal?

A: Interesting question. According to the Visa website, in 2013, it became legal for merchants to charge customers a surcharge except in the 10 states that have laws limiting surcharges.

Hawai‘i does not have a law limiting surcharges, so a merchant may pass along a surcharge to customers, as long as it is within the limits imposed by the credit card company and is clearly disclosed on the receipt provided by the merchant. Surcharges may not be imposed for purchases made with a debit or prepaid card.

Regarding the cash tips: Tips are a “voluntary” payment, and there is nothing in our state law that prevents a merchant from asking for tips in cash vs a credit card. From the IRS’ perspective, tips in any form—in any line of work—are considered taxable income and should be reported on a worker’s tax return.

If you would like further information or want to file an official complaint, you may contact the State Office of Consumer Protection online.

Want to Ask the Mayor?

Submit your questions about County of Maui programs, services, operations or policies to Mayor Alan Arakawa via email at AsktheMayor@mauicounty.gov, by phone at 270-7855 or by mail to 200 S. High St., 9th Floor, Wailuku, HI 96793. Questions submitted will be considered for inclusion in the Ask the Mayor column.