The Data Point: 85% of Consumers Pay Credit Card Surcharges Without Issue

A source of controversy over the years, credit card surcharges are accepted as fair — and fairly set — by law, and by a surprising percentage of consumers as well. That’s a ripe opportunity for merchants to recoup card processing fees that eat into profits, and well worth a closer look.

For the study “Credit Card Surcharges: What Merchants Can Do to Maximize Income,” a PYMNTS and Payroc collaboration, PYMNTS surveyed over 2,500 United States credit card users, analyzing the sentiments triggered when consumers are faced with a surcharge, if they’re even aware of it.

• Eighty-five percent of the cardholders who faced surcharges agreed to pay them.

With more than eight in 10 consumers surveyed having paid a surcharge on their most recent credit card purchase, a big difference is seen if cardholders were aware of the surcharge or not.

“The high rate of acceptance markedly contrasts from how cardholders who have not had to pay surcharges or are unaware if they have paid them say they would react if faced with such fees,” the study stated, with 58% of such cardholders saying they would not pay surcharges at all, compared to only 12% saying they would. The other 30% are unsure.

• Seventy-on percent of cardholders have used cash to avoid surcharges; 40% have used debit cards.

Seniors and baby boomers were the most averse to paying credit surcharges, perhaps due to more frugal views on finances that older cohorts are known for. We found that 65% of older generational groups said they would not pay credit card surcharges, asked or not.

To avoid surcharges, 71% of consumers defaulted to paper money. Generation Z cardholders used debit cards 72% of the time to escape these fees, “as have 53% of millennial cardholders and 51% of bridge millennial cardholders,” while 13% switch to other credit cards with lower fees.

• Just 21% of cardholders asked to pay a surcharge said satisfaction with a business fell.

Whether viewed as a necessary evil or a fair deal, most consumers didn’t penalize the business they were purchasing from because of credit card surcharges.

PYMNTS data show that 21% of users asked to pay a surcharge felt “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. The fear of hypothetical surcharges is most prevalent among baby boomers and seniors and higher-income cardholders.”

Get the study: Credit Card Surcharges