Credit Card Surcharges Test Checkout Loyalty

Across U.S. retail and service environments, more merchants are adding credit card surcharges at checkout to offset rising processing costs — fees historically absorbed by stores but now increasingly visible to consumers. While this practice helps some businesses manage their margins, it is also creating friction in the consumer experience and testing customer loyalty.

The core issue is simple: merchants incur costs for accepting credit card payments through networks like Visa and Mastercard, commonly referred to as interchange fees. As those costs rise or remain significant, some merchants respond by imposing surcharges — extra charges added to the transaction when a customer pays with a credit card rather than cash or debit.

Consumer Backlash and Behavioral Shifts

PYMNTS Intelligence reports show that even though many cardholders eventually pay surcharges at the point of sale, the presence of these fees can weaken customer satisfaction and loyalty. In a new Credit Card Surcharges survey conducted with Payroc, 56% of cardholders said being asked to pay a surcharge made them highly likely to consider switching to a different merchant next time — underscoring the loyalty risk brands face when introducing these charges.

Additionally, broader consumer surveys in the industry find that a significant share of customers will cancel purchases when a surcharge appears on their bill, particularly unexpected ones. In a J.D. Power merchant services survey, about 32% of small businesses reported that customers have walked away from purchases when confronted with credit card surcharges — a clear signal of growing resistance at checkout.

These behaviors reflect a deeper consumer sensitivity to transparent pricing — where “hidden” or late-appearing fees can feel like a breach of trust or value. Other PYMNTS findings from related consumer payment research show that a large proportion of cardholders check receipts for unanticipated surcharges and that many say such fees hurt their perception of a merchant.

The Loyalty Trade-Off: Short-Term Gain vs. Long-Term Value

For merchants, the calculus of adding surcharges is complex. On the financial side, passing on processing costs can protect margins and allow competitive pricing elsewhere on the shelf. However, retailers must balance this with the potential long-term revenue impact of alienating customers.

Industry analysis suggests that while customers often accept paying surcharges when faced with them, their intentions toward future loyalty change more dramatically. Nearly half of surveyed consumers said they would be “very” or “extremely” likely to switch merchants to avoid such fees in the future — even if they paid the surcharge that day.

This pattern dovetails with the broader trend of payment method choice influencing shopping behavior. Beyond cash and debit alternatives, some consumers are turning to wallets, digital payment options, and even loyalty-linked payment platforms that can reduce perceived cost friction.

Communication and Strategy: Mitigating Backlash

Experts and data from PYMNTS underscore the importance of clear communication and transparent pricing if merchants choose to implement surcharges. Cardholders are far less likely to view merchants unfavorably when charges are disclosed up front — whether on menus, online prices, or at the point of sale — than when fees appear unexpectedly at checkout.

Beyond transparency, some businesses are experimenting with differentiated strategies to retain loyalty, such as offering payment incentives (e.g., small discounts for debit or preferred payment methods), integrating surcharge information into loyalty program benefits, or improving flexibility through value-added services that offset the perceived pain of extra fees.

What This Means for Retail

As retailers navigate a tight margin environment and evolving consumer expectations, the question of how to handle rising payment costs becomes central to pricing and loyalty strategy. The surge in credit card surcharges highlights a broader shift in how consumers evaluate total cost of purchase — not just the sticker price but also the cost of the payment method itself.

For retail leaders and marketers, the key takeaway is that payment experience is now a frontline loyalty battleground: how fees are communicated and managed can shape not only a single transaction but the customer’s perception of and future relationship with the brand. Successfully balancing cost recovery with customer trust will be crucial in an era where digital payment choices and consumer sensitivity to fees are both on the rise.