Most Consumers Aware of Card Surcharges, and Try to Avoid Them

Credit card surcharges are everywhere, and consumers know it.

PYMNTS research has found that cardholders’ overall awareness of merchant surcharges is high, with 84% of cardholders reporting they know merchants can charge fees for processing.

These charges have not always been legal in the United States — and indeed are still outlawed by some states — but cardholders’ awareness of credit card surcharges is high across each financial lifestyle, income level and age group we surveyed, with millennials and bridge millennials showing the most awareness at 91% and 90% respectively.

Cardholders who earn more than $100,000 per year have the greatest awareness at 88%, and cardholders who earn under $50,000 have the least awareness of surcharges at 77%.

We found little variation in the awareness of card surcharges among the three financial lifestyles we examined. Cardholders not only know that surcharges are possible but also said they typically check their receipts for them.

Our study found that 90% of examine their receipts from merchants for surcharges, while 71% of cardholders check their receipts for all or most of their purchases for fees.

And with this awareness comes an effort to avoid these fees.

We found that cardholders turn to almost any other payment when faced with a credit card surcharge, though 71% of cardholders used cash in such scenarios.

Credit users have a wealth of experience with multiple payment options and frequently rely on credit card alternatives to avoid surcharges. Forty percent of credit card holders reported using debit cards as an alternative, 22% used PayPal and 19% turned to digital wallets.

The data also shows generational preferences: 78% of baby boomer and senior cardholders and 72% of Generation X cardholders who switched payment methods opted to use cash as their substitute for credit, but cash was somewhat less popular with younger cardholders.

Instead, these consumers chose payment alternatives based on digital platforms, such as PayPal, which 42% of Generation Z cardholders have used to avoid surcharges.

Our research found no meaningful differences between each of the four establishment

categories we tracked — locally owned retailers, national and regional retail chains, locally owned restaurants and restaurants that are part of national or regional chains — with cash and debit cards remaining the most frequent alternatives.

To learn more about cardholders reach to these charges, download PYMNTS’ new Credit Card Surcharges report, done in collaboration with Payroc.