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A recent survey of 2,507 United States credit card users from Dec. 8 to Dec. 22, 2021by PYMNTS, an online news source for the payments industry found that despite expressed cardholder opposition, eighty-five (85%) of card holders paid the credit card surcharge when faced with them. Cardholders in that situation find another payment method just 14% of the time and will leave the store only in rare instances.

This is good news for merchants’ margins squeezed by higher cost of goods and labor costs.  Credit card surcharges allow merchants to increase their income by a few percentage points and cover their card processing costs.

Surcharging and Customer Satisfaction

Cardholders who have not faced surcharges may talk tough, but when faced with surcharges, they tend to pay the extra fee. Just 21% of cardholders say surcharges hurt their satisfaction with merchants when faced with such fees.

As with hypothetical surcharges, more baby boomers and seniors than any other demographic had strong objections, but even so, a minority reported negative impacts, as 48% of baby boomers and seniors said their satisfaction with the merchant decreased when asked to pay surcharges.

There was much less dissatisfaction with these fees among cardholders from other age groups. Twenty-seven percent (27%) of Generation X cardholders, nineteen percent 19% of bridge millennials and fourteen percent (14%) of millennials say they were dissatisfied with merchant surcharges. Just sixteen percent (16%) of Generation Z cardholders say their satisfaction with merchants declined because of surcharges.

Fee Sensitivity by Income

Income-based analysis confirms that lower-income cardholders care about even relatively small fees: 34% of cardholders earning less than $50,000 annually say their satisfaction with merchants decreased after facing surcharges — a much greater share than the 21% reported by cardholders making $50,000 to $100,000 per year and the 18% seen among cardholders earning more than $100,000.

Merchants can maximize their income from credit card surcharges by recognizing cardholders’ willingness to pay extra fees and understanding its variance among types of establishments.

PYMNTS’ data found that about nine percent (9.2%) of cardholders who used their cards at restaurants or retail stores in the past month were asked to pay surcharges on credit card transactions. Cardholders generally agree to pay surcharges, although the type of establishment impacts the rate of acceptance. Eighty-nine percent (89%) of cardholders asked to pay a surcharge by a restaurant that is part of a national or regional chain pay the fee — the largest share for the merchant categories we surveyed.

Credit card holders usually pay the surcharge when faced with one. Our data finds that 85% of the cardholders who faced surcharges agreed to pay them, meaning that most comply with the request. The remaining 15% either used a different payment method or decided not to buy anything at the store or restaurant.

Merchants need to recognize that many cardholders have a severely negative perception of surcharges before experiencing them. Education is key, as this reaction tempers once customers go through the process.

Seventy-one percent (71%) of cardholders who did not encounter surcharges in their most recent purchases say their satisfaction with a store or restaurant would decline if they were faced with paying one at the time of purchase, but just 21% of cardholders who have been asked to pay a surcharge say their satisfaction with a business dropped because of it. This means that merchants have an opportunity to limit the damage to customer relationships by clearly explaining the fees.

Merchants can also help offset a surcharge’s potential harm to customer relationships by offering cardholders the option to easily switch payment methods at checkout.

Cardholders who do not want to pay surcharges will readily use alternative payment methods when available at checkout. Seventy-one percent of cardholders have used cash to avoid surcharges, and forty percent (40%) have used debit cards. Different generations have preferred alternatives to credit — cash is the most common alternative for baby boomers and seniors, with seventy-eight percent (78%) having used it to avoid a surcharge. Seventy-two percent (72%) of Generation Z cardholders have used debit cards, making this generation the most frequent users of this payment method. Other popular alternatives include PayPal, other digital wallets and checks.

Merchants can limit erosion to their customer bases by identifying the situations in which cardholders are most resistant to surcharges and where they are most willing to pay them.

Seventy-nine percent of customers at local retailers agreed to pay these fees, making this the lowest share among the business categories PYMNTS surveyed: local retailers, local restaurants, retailers that are part of national or regional chains and restaurants that make up national or regional chains.

This willingness to pay a surcharge could suggest that local retailers have many accessible competitors to which customers can switch, but it also may simply be that local retailers understand their customers and have adopted several of their preferred payment options, as 20% of customers at local retailers chose another payment method when asked to pay a surcharge — the highest share among the four merchant categories.

Eighty-nine percent of cardholders asked to pay a surcharge at a national or regional chain restaurant did so — a share that leads all the business categories PYMNTS surveyed.

Merchants utilizing surcharges need to provide customers with enough payment alternatives to retain customers’ business, even when the customer is determined to avoid the surcharge.  IntelliPay helps merchant offer compliant surcharging and offers a wide variety of alternative payment options including cash, debit, ACH/eCheck, Google Pay and eCash.


Credit card surcharges allow merchants to offset some of the processing costs on card transactions. To realize that extra bit of income, however, merchants need to compensate for consumers’ stated antipathy toward card surcharges. PYMNTS’ data has found that fifty-eight percent (58%) of cardholders say they will avoid card surcharges if faced with the prospect of paying them, but the reality is that surcharges are imposed on less than ten percent (10% ) of card purchases and that consumers pay them in  eighty-five percent (85%) of those instances.

Merchants that work on maintaining good relationships with their customers can reap the extra income surcharges make possible with little disruption to their business.


Source: Credit Card Surcharges – What Merchants Can do to Maximize Income