The government is allowed, but from Visa's own web site:

VISA (source: Card Acceptance Guidelines for VISA Merchants)

For merchant who offer an alternative payment channel (i.e., mail, telephone, or e-commerce) for customers to pay for goods or services, a convenience fee may be added to the transaction amount. If the merchant chooses to asses a convenience fee to its customers, the merchant must adhere to the following rules:

• The fee is being charged for a bona fide convenience of using an alternate payment channel outside of the merchant's normal business practice
• The Fee:
o Must be disclosed to customers as a charge for alternate payment channel convenience
o Is applied only to non face-to-face transactions
o Must be a flat or fixed amount regardless of the amount of payment due
o Is included as part of the total transaction
o Cannot be added to recurring transactions

So this fails to meet Visa's own requirements. It is a percentage being charged, it is a recurring, monthly transaction, and it's being added to the total transaction.

Even MasterCard says:

quote:
A Merchant must not directly or indirectly require any Cardholder to pay a surcharge or any part of any Merchant discount or any contemporaneous finance charge in connection with a Transaction. A Merchant may provide a discount to its customers for cash payments. A Merchant is permitted to charge a fee (such as a bona fide commission, postage, expedited service or convenience fees, and the like) if the fee is imposed on all like transactions regardless of the form of payment used

Texas law is from the Texas Finance Code, Title 4, Subtitle A, Chapter 339, Section 339.001; Imposition of Surcharges for Use of Credit Card:

quote:

IMPOSITION OF SURCHARGE FOR USE OF CREDIT CARD. (a) In a sale of goods or services, a seller may not impose a surcharge on a buyer who uses a credit card for an extension of credit instead of cash, a check, or a similar means of payment.