It isn't 'against the law' for them to do this but it is against their merchant agreements with the CC companies.
They cannot charge more for CC purchase than cash and they cannot have a minimum price for credit card purchases. You can report them to the CC companies if they do it. It can impact their ability to accept credit cards which could in turn hurt their business. Still the CC fees that merchants are charged are not insignificant - you help them by paying cash. You help the credit companies by using your card EVEN IF YOU DON'T CARRY A BALANCE!
The merchant agreements also indicate that to accept a credit card the merchant CANNOT ASK FOR ID! They have to use the signature on the back for ID Verification purposes. If you write 'ask for ID' on the back of your card instead of signing it - technically that card you are using is not valid.
Also, if you use your card as a debit card (using your PIN instead of signing) the fees are different if not eliminated for the merchant. The problem with that is the risk is moved from the CC companies to your bank account. I never debit for a purchase - EVER. I try to pay cash, for larger purchases I will use the CC for some of the protections provided - especially for online transactions.
I never accept Paypal for payment but have used it to make payments. Check out
www.paypalsucks.com...
Just some food for thought...