Nearly Three-Quarters of Cardholders Negatively View Retailers and Restaurants That Add a Credit Card Surcharge

Consumers have long ignored or simply lived with merchant surcharges, but that’s changing as bills and statements undergo intense scrutiny in the current economic crisis, bringing about questions as to when surcharge prompts could start eating away at loyalty.

This is analyzed in the report “How Consumers Perceive Surcharge Prompts,” a PYMNTS and Payroc collaboration based on a survey of close to 2,900 U.S. credit card users.

As to which merchant types are more likely to levy these surcharges, typically used to offset credit card swipe fees, the study stated: “Just as people with less purchasing power are more likely to have paid a surcharge, merchants with fewer resources than ubiquitous chains — local restaurants and retailers — are more likely to use surcharges to cover processing expenses than national or regional brands.”

The research found 14% of credit card transactions at local restaurants and local retail shops involved consumers paying surcharges, while 11% of national or regional restaurants and 7.9% of national or regional retailers also imposed them.

While surcharges may help balance sheets, they don’t do much for the reputation of merchants that charge these fees. Given the finding that roughly two-thirds of consumers said none or very few merchants they visit had posted signs informing them of surcharges, or that cashiers had communicated surcharges before purchases, consumers have become more wary of what many consider a hidden fee.

Among Gen Z consumers who are less likely than average to dissect receipts, 86% still do so at least part of the time, as do 72% of baby boomers and seniors who check receipts for most or all purchases, making them the most likely to do so. A status quo in which consumers need vigilance to recognize surcharges is far from ideal.

And although the research showed that relatively few consumers will drop a merchant outright over surcharges, the study stated: “On a national and regional scale, 70% of cardholders transacting at retailers and 72% at restaurants said facing a surcharge negatively impacts their perception of the merchant. Again, shares rise among those who have never paid a surcharge — to 86% and 85%, respectively. Overall, nearly 40% of these cardholders are highly likely to be on the lookout for competing merchants that do not charge fees for credit card transactions.”

Get the study: How Consumers Perceive Surcharge Prompts