March 9, 2023

A common question we hear from business owners wanting to implement a credit card surcharge program: How do customers feel about surcharging and how will that impact my business?

Most merchants we speak with realize surcharging can help them save on interchange fees by passing the cost to the consumer. But, they also wisely ask about the subsequent implications on consumer buying decisions and perception.

It’s fair to say there are legitimate challenges in convincing consumers that surcharging benefits them, too. The more common perception is that surcharging is unfair to the customer’s wallet.

Frankly, the opposite is true. To understand the disconnect between perception and reality, we should analyze data collected directly from consumers.

The Perception: Credit Card Surcharging for Customers

78% of consumers believe surcharging is unfair. And even though consumers know their business indirectly helps merchants to cover operating costs, people tend to balk at the idea of doing so directly.

However, as surcharging becomes more commonplace, consumers are beginning to better-understand the “why” behind surcharging —and slowly starting to see it as fair.

So, what do consumers do when presented with credit card surcharging?

There is often a distinction between what people say and what they actually do. Many consumers may say they are against surcharging and that it is an unfair practice, but their actions often say otherwise.

The reality is the vast majority of consumers check their receipts for a surcharge fee line item and 85% agree to pay a surcharge fee when presented with one.

Why still do consumers still pay in credit? Simply because it is more convenient for them. The “conveniency factor” of paying with credit outweighs the cost in intrinsic value. Additionally, customers must consider the opportunity cost of missing out on the benefits and rewards programs.

The Benefits of Credit Card Surcharging

It’s not always obvious to the consumer at first, but there actually are several benefits to surcharging.

For one, it helps merchants keep prices low for all customers, as they are able to offset the fees they are charged by credit card companies. Instead of preemptively raising prices across the board to account for interchange fees, merchants can employ surcharging to ensure only those who pay in credit encounter a fee in addition to sales price and tax.

It can also help customers make more informed decisions about how their payment method of choice affects their favorite merchants. By providing information about the added fee for using a credit card, customers can decide:

• Whether they would rather pay with a different method or
• If they are willing to pay the surcharge in favor of their credit card benefits and rewards.

Some consumers find that the cash back benefit makes paying with credit cheaper in the long run, even with the added fee.

Final Thoughts: Should You Implement Surcharging?

Surcharging is a helpful tool for merchants, but it’s also a topic of controversy among consumers.

The silver lining for your business: While many people may feel surcharging is unfair, their actions often show that they are willing to pay the added fee for the convenience of using a credit card.

Additionally, surcharging can also provide benefits to both merchants and consumers, such as encouraging the use of cash or debit cards and helping customers make more informed decisions about how they pay for their purchases.

Need Help Getting Started with Credit Card Surcharging?

CardX is the industry leader in surcharging-first payment processing, allowing businesses of all sizes to fairly and compliantly reclaim their processing fees while still offering customer satisfaction without any added worries.

Interested in learning more about how surcharging can work for your business? Let’s chat!