Usually, no. A Philippine merchant generally cannot add 1% to the price merely because the customer pays by credit card, debit card, prepaid card, QR code, e-wallet, electronic fund transfer, or another digital payment method. The rule applies even when the additional amount is called a “processing fee,” “convenience fee,” “bank charge,” or “merchant fee.”

The important questions are who imposed the charge, why it was imposed, and whether it was already part of the disclosed selling price. A genuine service charge, delivery fee, written installment charge, or fee imposed separately by a bank may be treated differently from a merchant’s payment-method surcharge.

Is a 1% customer surcharge legal?

The usual legal treatment is as follows:

Situation	Likely legal treatment
Store adds 1% because the customer uses a credit card	Generally prohibited
Merchant adds 1% for debit card, QR, e-wallet, or bank transfer	Generally prohibited
Online seller adds the fee only at checkout after the customer selects digital payment	Generally prohibited and potentially deceptive
Store offers a genuine discount from one disclosed selling price for cash payment	Generally allowed if structured and disclosed properly
Restaurant imposes the same genuine service charge regardless of payment method	May be lawful, subject to disclosure and service-charge rules
Seller charges installment interest or financing fees expressly stated in writing	May be lawful
Delivery or platform fee applies regardless of whether payment is cash or digital	May be lawful if genuine and clearly disclosed
Card issuer separately charges foreign-exchange, cash-advance, or international transaction fees	Separate financial-services issue; not necessarily a merchant surcharge
Government agency or regulated entity collects a fee expressly authorized by law or official rules	Depends on the specific legal authority and disclosure

There is no special exception allowing a surcharge simply because it is “only 1%.” The legal issue is the nature of the charge, not whether the amount is small.

For example, if an item has a selling price of ₱10,000 and the merchant requires a credit-card customer to pay ₱10,100, the extra ₱100 is ordinarily a prohibited payment-method surcharge.

Philippine laws on credit card and digital payment surcharges

DTI Department Administrative Order No. 21-03

The broadest current rule is found in DTI Department Administrative Order No. 21-03, Series of 2021.

It applies to sellers of consumer products and services, whether registered or unregistered. It provides that the selling price must remain the same when payment is made through methods such as:

Credit cards
Debit cards
Prepaid or stored-value cards
Mobile payments
QR codes
Electronic fund transfers
Other digital payment methods

A seller may offer cash and installment options and may give a discount for cash payment. However, the seller generally cannot increase the selling price solely because the customer chooses a card or digital payment method. Payment options must also be posted conspicuously at the establishment and, where applicable, on the seller’s website or mobile application. (UP College of Law)

This means a sign stating “Add 1% for GCash,” “Card payments plus 1%,” or “Customer shoulders payment gateway fee” does not automatically make the additional charge lawful.

DTI Department Administrative Order No. 10

DTI Department Administrative Order No. 10, Series of 2006 specifically addresses credit-card, ATM-card, and debit-card purchases.

It requires retailers to use one price tag and prohibits the imposition of a surcharge, extra charge, or additional charge above the price tag when the buyer pays using these cards. It also prohibits separate “cash price” and “card price” tags designed to make card-paying customers pay more. For VATable retail sales, the displayed price should ordinarily already include VAT, although a genuine service charge may be shown separately. (Law and Policy Reform Program)

The merchant therefore cannot normally defend the surcharge by saying:

“The payment processor deducts 1% from us.”
“The bank charges us a merchant fee.”
“Our displayed amount is the cash price.”
“The cashier informed you before swiping the card.”
“There is a notice beside the cash register.”

Disclosure is important, but disclosure alone does not legalize a charge that the law prohibits.

The Consumer Act and the price-tag rule

Article 81 of the Consumer Act of the Philippines, Republic Act No. 7394, requires consumer products offered for retail sale to bear an appropriate price tag or label. A retailer cannot ordinarily sell the product at a price higher than the indicated price or discriminate among buyers in applying that price. (Supreme Court E-Library)

Article 50 also prohibits deceptive sales acts, including material concealment or misleading representations that induce a consumer to enter into a transaction. A hidden 1% fee appearing only after the customer has selected an item, entered payment details, or reached the final checkout screen may therefore raise both surcharge and deceptive-pricing concerns. (Supreme Court E-Library)

Article 167 is especially important: the Consumer Act’s remedies may apply despite an agreement stating otherwise. A customer’s decision to proceed after seeing a “1% surcharge” notice does not necessarily waive the statutory protection. (Supreme Court E-Library)

Does calling it a processing fee or convenience fee make it legal?

Not by itself. Regulators generally look at the charge’s substance rather than its label.

A fee is likely to be treated as a prohibited surcharge when:

It is added only when the customer chooses a card, QR code, e-wallet, or bank transfer.
The customer must pay more than the posted, advertised, menu, or checkout price.
The amount is calculated as a percentage of the transaction.
The merchant explains that the fee reimburses its payment-processing cost.
Cash customers do not pay the same fee.

For example, these descriptions may all refer to substantially the same prohibited practice:

“1% card processing fee”
“1% terminal charge”
“1% e-wallet fee”
“1% merchant discount rate recovery”
“1% convenience fee for cashless payment”
“1% bank fee to be shouldered by buyer”

The fact that a payment provider charges the business a merchant discount rate does not generally authorize the business to increase the customer’s selling price. The fee charged by the payment provider is normally part of the merchant’s cost of accepting that payment channel.

The Bangko Sentral ng Pilipinas’ rules on merchant payment acceptance recognize that licensed payment providers may charge merchants reasonable and transparent merchant fees. From the customer’s perspective, however, BSP’s guidance states that person-to-merchant payments should not carry a customer fee. (Bangko Sentral ng Pilipinas)

Cash discount versus payment surcharge

A lawful cash discount and an unlawful digital-payment surcharge can produce similar-looking totals, but they are not the same legal arrangement.

Example of a genuine cash discount

Disclosed selling price: ₱10,000
Cash discount: ₱100
Cash customer pays: ₱9,900
Card or QR customer pays: ₱10,000

DTI DAO No. 21-03 expressly allows a seller to give a discount for cash payment. The safer approach is to maintain one genuine selling price and deduct a clearly described cash discount.

Example of a likely surcharge

Price tag or advertised price: ₱9,900
Customer selects card, QR, or e-wallet
Merchant adds 1%
Customer pays: ₱9,999

Here, the digital-payment customer pays more than the price presented as the selling price. Calling the ₱99 difference a “cash discount adjustment” does not necessarily cure the problem.

Merchants should also avoid displaying parallel “cash price” and “card price” tags. DAO No. 10 requires one price tag and prohibits separate pricing structures that effectively make card users pay an additional amount. (Law and Policy Reform Program)

When can an additional 1% charge be lawful?

Not every percentage-based charge is automatically illegal. The charge may be lawful when it has a genuine legal and commercial basis independent of the customer’s choice to use a digital payment method.

Genuine service charge

A restaurant, hotel, or similar establishment may impose a genuine service charge if it is properly disclosed and applies according to the establishment’s regular policy rather than only to card-paying customers.

Under Republic Act No. 11360 of 2019, service charges collected by hotels, restaurants, and similar establishments must be distributed completely and equally among covered employees, except managerial employees. (Lawphil)

This law does not permit a merchant to rename a card surcharge as a service charge. A charge imposed only on customers using cards or e-wallets remains vulnerable to challenge.

Written installment or financing charge

A seller may impose interest or an installment charge when the customer buys on credit, provided the charge is expressly stipulated in writing. Article 1956 of the Civil Code states that no interest is due unless it has been expressly agreed upon in writing.

DAO No. 21-03 also requires the seller to inform the customer about applicable installment fees. A separately agreed financing charge is different from adding 1% merely because the customer uses a card to make an ordinary full payment. (UP College of Law)

Delivery, booking, or platform fee

A genuine delivery, booking, administrative, or platform-service fee may be lawful when:

It corresponds to a separate service.
It is disclosed before the customer commits to the transaction.
It is not merely a payment-processing cost imposed only on digital payers.
The displayed price and fee presentation comply with consumer and sector-specific rules.

The merchant should be able to explain what service the fee pays for. A vague fee appearing only after a customer chooses a card is more likely to be treated as a disguised surcharge.

Bank or card-issuer fee

A fee appearing on the customer’s bank or card statement may have been imposed by the financial institution rather than by the merchant. Examples include:

Foreign-currency conversion fees
Cross-border or international transaction fees
Cash-advance fees
Interest and late-payment charges
Certain account-to-account transfer fees

These charges are governed principally by financial consumer-protection rules, the cardholder agreement, and BSP regulations. Under Republic Act No. 11765, financial service providers must disclose pricing and costs transparently and maintain a free internal complaint-handling mechanism. (Supreme Court E-Library)

A customer should therefore determine whether the extra 1% appears on the merchant’s invoice or only on the bank statement.

Authorized government or regulated fee

Some government agencies, regulated utilities, or sector-specific payment systems may collect fees expressly authorized by law, regulation, or an approved schedule.

The mere fact that the payee is a government office does not automatically validate every “convenience fee.” The customer may ask for the circular, regulation, ordinance, official fee schedule, or other authority supporting the charge.

Online stores, apps, e-wallets, and QR payments

The same basic pricing protections apply online.

Under the Internet Transactions Act of 2023, Republic Act No. 11967, online merchants must display the price of goods or services consistently with the Consumer Act’s price-tag rule. Online merchants must also issue invoices or receipts and maintain an accessible mechanism for consumer complaints. (Supreme Court E-Library)

For disputes involving an online marketplace or platform, the consumer should first use the platform’s internal redress mechanism. This remedy is considered exhausted when the complaint remains unresolved after seven calendar days. (Supreme Court E-Library)

The merchant remains primarily liable for its unlawful acts. An e-marketplace or digital platform may become subsidiarily liable in circumstances specified by RA No. 11967, including certain failures to exercise required diligence or respond to lawful notices. (Supreme Court E-Library)

A merchant also cannot avoid the rule merely by asking customers to send payment to a personal e-wallet or personal QR code. What matters is the underlying consumer sale. An actual transfer fee imposed directly by the e-wallet provider may be a separate financial charge, but an additional percentage imposed by the seller remains subject to DTI’s same-price rule.

What to do if a merchant charges an extra 1%

1. Identify who imposed the fee

Check where the additional amount appears:

On the merchant’s receipt or invoice
On the point-of-sale terminal slip
On the online checkout page
In a message from the seller
Only on the bank or e-wallet statement

A charge added by the merchant follows a different complaint route from a fee separately imposed by the customer’s bank or payment provider.

2. Preserve evidence immediately

Take screenshots or photographs before the merchant changes the price display or deletes the conversation.

Useful evidence includes:

Evidence	What it helps prove
Photograph of the price tag, menu, shelf, or posted rate	Original selling price
Screenshot of the product page or checkout screen	Price before and after payment selection
Official receipt or invoice	Final amount collected and merchant identity
Card terminal or e-wallet receipt	Payment method and transaction amount
Photograph of the surcharge notice	Merchant’s stated policy
Chat, email, or text message	Seller’s explanation for the extra 1%
Bank or card statement	Whether the charge came from the merchant or issuer
Refund request and response	Attempt to resolve the dispute

Keep the merchant’s complete business name, branch address, online-store link, mobile number, and account name. A social-media page name alone may be insufficient to identify the respondent.

3. Ask for an itemized invoice or receipt

Request a written breakdown showing:

The selling price
VAT, where applicable
Service charge, if any
Delivery or platform fees
The disputed 1% charge
The legal or contractual basis claimed by the merchant

Do not rely only on a cashier’s verbal explanation.

4. Request a refund in writing

State the basic facts clearly:

The advertised or posted price
The payment method used
The amount of the additional charge
The date and location of the transaction
The remedy requested

You may cite DTI DAO No. 21-03 and, for credit, ATM, or debit card transactions, DTI DAO No. 10. A written request creates evidence even when the merchant refuses.

5. Use the platform complaint system for an online purchase

For marketplace or app transactions, file through the platform’s dispute or help center. Upload the price screenshot, invoice, proof of payment, and the seller’s statement about the 1% fee.

Under RA No. 11967, allow the internal redress process to run for up to seven calendar days before escalating an unresolved online complaint. (Supreme Court E-Library)

6. File a consumer complaint with DTI

A complaint may be filed through the DTI Consumer CARe portal or with the nearest DTI regional or provincial office. Metro Manila complaints are generally handled through the Fair Trade Enforcement Bureau.

DTI’s Initial Consumer Complaint Form specifically lists the imposition of credit or debit card surcharges as a complaint category. (Fair Trade Enforcement Bureau)

Attach clear copies of:

Valid identification
Receipt, invoice, or proof of payment
Price-tag, menu, or checkout screenshot
Surcharge notice
Communications with the merchant
Written refund request and response
Platform complaint result, for online transactions

A foreign customer may use the same process for a Philippine consumer transaction. For an initial online complaint, clear electronic copies are normally the practical starting point. If formal adjudication later requires sworn foreign documents, DTI may request notarization or appropriate authentication, depending on the document and where it was executed.

7. Complain to the bank or payment provider when it imposed the fee

When the merchant charged only the disclosed selling price but the bank or e-wallet later added 1%, complain first through the institution’s internal complaint mechanism.

If the complaint remains unresolved and the institution is BSP-supervised, the customer may escalate it through the BSP Consumer Assistance Channels. BSP generally asks for the original complaint to the financial institution, its response, and supporting transaction documents. (Bangko Sentral ng Pilipinas)

For a foreign-issued card, currency-conversion or cross-border fees may be imposed by the overseas issuer. The cardholder may need to use the issuer’s dispute process and, if necessary, the financial regulator in the issuing country.

How the DTI complaint process works

DTI consumer complaints generally begin with mediation. The purpose is to help the consumer and merchant reach a voluntary settlement, such as a refund or correction of the merchant’s pricing practice.

Stage	What ordinarily happens
Initial complaint	Consumer submits the form and supporting evidence
Referral or mediation	DTI notifies the merchant and schedules settlement proceedings
Failed mediation	DTI may issue a Certificate to File Action
Formal adjudication	Consumer files a verified formal complaint
Position papers and evidence	Parties submit written arguments and supporting documents
Decision	Adjudication officer decides the administrative case
Appeal or enforcement	Available procedures depend on the order and governing rules

Mediation is generally required before formal consumer adjudication. (Fair Trade Enforcement Bureau)

A formal complaint should ordinarily contain:

Names and addresses of the parties
A concise statement of the relevant facts
Date, time, and place of the transaction
Relief requested
Documentary evidence and sworn witness statements, if any
Verification
Certification against forum shopping
Certificate to File Action issued after failed mediation

The consumer does not ordinarily need a lawyer, and DTI consumer complaints do not require a filing fee. (Fair Trade Enforcement Bureau)

Once ordered, parties may be given 10 working days to file their position papers. The Consumer Act directs the adjudication officer to render a decision within 15 working days after the case is submitted for decision or the investigation is terminated. These periods are not an assurance that the entire case will finish within 15 days; service of notices, mediation schedules, incomplete submissions, and procedural motions can extend the overall timeline. (Fair Trade Enforcement Bureau)

Possible remedies and penalties

Depending on the facts and the legal provision violated, DTI may order or impose:

Cessation of the unlawful practice
Refund, restitution, or rescission of the transaction
Correction of misleading representations
Administrative fines
Other appropriate administrative measures

Article 164 of the Consumer Act authorizes administrative fines ranging from ₱500 to ₱300,000, with a possible additional daily fine for a continuing violation. Article 169 contains a two-year prescription rule, so consumers should file promptly rather than allow the matter to remain unresolved indefinitely. (Supreme Court E-Library)

For deceptive or unfair online sales practices, RA No. 11967 provides additional administrative penalties ranging from ₱20,000 to ₱100,000 for a first offense, with substantially higher amounts for repeated offenses. (Supreme Court E-Library)

DTI may order consumer remedies such as refund or restitution, but it does not generally award civil damages, attorney’s fees, or litigation expenses. A consumer seeking damages beyond the administrative remedies may need to pursue an appropriate court action after considering the cost, evidence, jurisdiction, and applicable procedural requirements. (Fair Trade Enforcement Bureau)

Common real-life surcharge situations

“Our payment processor charges us 1%, so the customer must pay it”

This is generally not a valid justification. A payment provider may charge the merchant for accepting digital payments, but that does not ordinarily allow the merchant to increase the customer’s selling price based on payment method.

“The surcharge is legal because we posted a notice”

A notice may prove that the merchant disclosed its policy, but disclosure does not override DAO No. 21-03, DAO No. 10, or the Consumer Act. It can actually become evidence that the merchant regularly imposes the surcharge.

“The fee applies only to foreign credit cards”

A Philippine merchant’s additional fee remains a merchant surcharge even when the card was issued abroad. A separate foreign-exchange or international transaction fee imposed by the foreign card issuer is different.

“The restaurant already has a service charge”

A genuine service charge imposed under the restaurant’s ordinary policy is separate from a 1% card fee. The restaurant should not impose an additional payment-method charge on top of the disclosed menu price and service charge merely because the customer pays by card.

“The seller uses a personal GCash or Maya account”

Using a personal account does not change the underlying transaction into a private money transfer when the payment is actually for goods or services. A seller-imposed 1% addition remains subject to consumer-pricing rules.

“The buyer already paid without objecting”

Payment does not necessarily make the surcharge lawful or eliminate the consumer’s right to seek a refund. The customer should preserve the receipt and promptly raise the issue in writing.

Frequently Asked Questions

Is it legal for a store to charge 1% extra for credit-card payment?

Generally, no. DTI rules prohibit retailers from adding a surcharge above the selling price because the customer pays by credit card.

Does the rule also cover debit cards, GCash, Maya, and QR payments?

Yes. DAO No. 21-03 requires the selling price to remain the same for debit cards, prepaid cards, mobile payments, QR codes, electronic fund transfers, and other digital payment methods.

Can a merchant call the 1% charge a convenience fee?

The label does not determine legality. If the charge exists only because the customer selected a digital payment method, it is likely to be treated as a prohibited surcharge.

Is the fee valid when there is a sign beside the cashier?

Not necessarily. Advance notice does not legalize a payment-method surcharge prohibited by consumer regulations.

Can a store legally offer a lower price for cash?

A genuine cash discount is generally allowed. The safer structure is one disclosed selling price, with the cash discount deducted from that price. The merchant should not post a lower “cash price” and then add a fee for card or digital payment.

Is a restaurant service charge the same as a card surcharge?

No. A genuine service charge is connected with the establishment’s service and ordinarily applies regardless of payment method. A card surcharge is imposed because the customer pays by card.

Can I demand a refund of the 1% charge?

Yes. Request the refund in writing and attach the receipt, price display, proof of payment, and any notice or message explaining the surcharge. If the merchant refuses, the complaint may be brought to DTI.

Where do I report a credit-card or e-wallet surcharge?

Report a merchant-imposed surcharge to DTI through Consumer CARe or the nearest regional or provincial DTI office. Report a fee separately imposed by a BSP-supervised bank or e-wallet first to that institution, then to BSP if unresolved.

Do I need a lawyer to file a DTI complaint?

Ordinarily, no. Consumers may represent themselves in DTI mediation and administrative adjudication.

Is there a filing fee for a DTI consumer complaint?

DTI consumer complaints generally have no filing fee. The consumer should nevertheless prepare complete evidence to avoid delays.

Can a foreigner file a complaint against a Philippine merchant?

Yes. A foreign visitor or resident who entered into a Philippine consumer transaction may use the merchant’s complaint process, the online platform’s redress mechanism, and the appropriate DTI channels. Difficulties may arise when the seller has no identifiable Philippine address or business presence, making complete screenshots and platform records especially important.

Key Takeaways

A merchant generally cannot add 1% merely because the customer pays by credit card, debit card, QR code, e-wallet, bank transfer, or another digital method.
Calling the charge a processing fee, convenience fee, or merchant fee does not automatically make it lawful.
A genuine cash discount may be allowed, but the merchant should maintain one disclosed selling price rather than charge digital payers more.
Service charges, written installment charges, delivery fees, and bank-imposed fees require separate analysis and must not be disguised payment surcharges.
Preserve the price display, receipt, payment record, and merchant communications, request a refund in writing, and escalate an unresolved merchant surcharge to DTI.