Posted: October 27, 2026
When a client makes a payment with a credit card, the business that accepts the payment is charged. For small business owners with slim profit margins, these charges may become significant, especially if a high percentage of transactions are paid by card. To offset these expenses, some companies add additional fees to the amount owed by customers paying by credit card. While this small business surcharge could benefit the business, it might drive away some customers and hurt sales.
The 2026 J.D. Power U.S. Merchant Services Satisfaction Study reports that 35% of small businesses surveyed add a credit card fee. For roughly one in three businesses surveyed, paying by card costs the customer extra. The findings show that the restaurant industry and newer enterprises are seeing the most growth in surcharging practices.
However, passing payment processing charges to customers has its risks. In the study, 32% of respondents reported that customers canceled a purchase at some point after being informed of additional charges.
These results pose a serious challenge for small business owners, who must balance the costs of processing payments with customers’ willingness to pay extra fees at the time of purchase.
So what are the implications of the extra fee for paying by credit card trend for both the customers and merchants, why are restaurateurs at the forefront of this movement, and what factors should business owners weigh in before implementing one?
According to the 2026 J.D. Power U.S. Merchant Services Study, 35% of small businesses add a surcharge to credit card payments, up from 34% a year earlier. This figure represents the percentage of merchants surveyed who reported adding a surcharge for customers who pay with credit cards.
The study surveyed 4,407 small business customers of merchant services providers. Fielded from August through October 2025, it examined customer satisfaction with several elements of the payment process, including processing fees, payment technology, security, and customer service.
The results suggest that small businesses are raising surcharges to protect themselves against payment-processing costs. Small business owners continue to embrace a variety of digital payment methods, and payment providers facilitate these transactions.
The results suggest that 96 percent of small businesses accept debit or credit cards, while 92 percent accept digital wallets. The results illustrate how small businesses are adapting to the rising demand for cashless payments. Overall, customers demand greater convenience when paying, and businesses are relying more on technology to meet that demand.
However, as more payment methods are introduced, businesses face higher risks of additional fees, system costs, and customer expectations. In many cases, businesses can introduce a surcharge to cover the additional costs.
The figures do not suggest that all small businesses should adopt a surcharge, as the decision depends on processing costs, profit margins, customer expectations, and legal compliance.
Restaurants are businesses that usually operate on low margins and high volume. A single extra penny swallowed by processing fees can significantly cut profits when you are talking about thousands of transactions.
Credit card transaction charges are one of those expenses that business owners try to avoid or at least keep as low as possible. When accepting cards, restaurants (or any other business) pay fees to the processor, and those fees depend on the product, the card, and the type of transaction.
For restaurants with high credit card sales volume, these charges may add up. So some owners are choosing to pass the cost on to consumers as a surcharge rather than pay it themselves.
A J.D. Power report shows that restaurants and new businesses had among the largest increases in surcharging. However, the study cannot conclude that processing fees are driving restaurants to surcharge.
Restaurants should also consider the customers’ reactions to additional charges. When deciding where to eat, a customer may weigh several factors, such as prices, service charges, taxes, tips, and payment fees. A surprise additional charge at the end of the bill may prompt a customer to reconsider dining at the establishment.
For this reason, restaurants should evaluate not only how much they could reclaim through a surcharge, but also how the surcharge is presented on the bill, when customers learn about it, and whether it discourages customers from returning.
A surcharge can effectively offset some costs, but customers don’t always welcome it.
According to the 2026 JD Power study, 32% of merchants that introduced surcharges for using credit cards (on top of the regular card processing fee) noted that their clients frequently or occasionally canceled transactions when they saw the additional charge. This does not mean that 32% of customers canceled, but that 32% of merchants (who answered the question) witnessed cancellations.
The finding highlights a possible trade-off. A business may recover some payment costs from customers who complete their purchases, but it may also lose sales when customers decide the extra fee is not worth paying.
For example, when a customer orders food online, they expect to be charged the amount they selected; if an additional extra fee for paying by credit card appears only on the last step, the buyer might feel it is not transparent. As a result, the customer could decline to pay or change the selected payment method.
The effect can vary by business and customer. Some customers are fine with a clearly stated surcharge, while others prefer a business that bundles the costs into the price.
Businesses should therefore be mindful of how they present charges. If the rules allow a surcharge and a business chooses to apply one, it should make it clear to the customer before they reach the final payment step.
The J.D. Power research provides valuable information for small business owners, helping them decide on surcharges. However, not every merchant may find the report a definitive guide, as they should consider different factors before implementing a surcharge program.
A surcharge alters the amount a customer pays at the moment of sale. Even a minimal charge can affect buyer behavior.
Consider your customer base and their preferred payment method. If they pay mostly by credit card, the surcharge’s impact will be significant, especially if they are sensitive to small price increases.
Also consider repeat business. A customer surprised by a charge may be less likely to return, even if the surcharge was necessary to offset your processing costs for that transaction.
Compare the potential fee recovery against the risk of loss of sales in an effort to determine the overall impact on your business, rather than focusing on the amount of money you may be able to recover by implementing surcharges.
If you decide to add a surcharge, disclose it to the customer before finalizing payment. It should never come as a surprise when a customer is about to give out their payment details.
The website, menu, order page, or checkout must state or indicate the amount or surcharge. Additionally, the surcharge will depend on the payment method the business has set up.
This will save the customer the bother of going back to change whatever is prompting the extra charge.
Legal and regulatory issues often drive credit card surcharging rules. Requirements vary by state and by the type of card used to pay. Note that debit cards may have different terms and regulations.
Firms may need to notify their processor, post required disclosures, and comply with other rules, such as caps on surcharge amounts. Note also that certain regulations may apply depending on the networks used.
Do not assume you can add the same fee to all card transactions. Contact your payment processor and understand the official rules for the card networks you accept.
The latest J.D. Power merchant services study shows that small businesses are increasingly adopting credit card surcharging. Of the surveyed small businesses, 35% added surcharges to credit card purchases in 2026, and 32% of merchants who implemented surcharges said buyers occasionally or frequently canceled purchases because of the charge.
An extra fee for paying by credit card should be adopted judiciously to recover processing-related expenses. Although this move might reduce some processing costs, it could also lead to dissatisfied consumers and lower sales.
Before introducing a surcharge, evaluate processing costs and consider the potential impacts of surcharging. When introducing this charge, ensure buyers are sufficiently informed and monitor its effect on sales.
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According to the 2026 J.D. Power study, 35% of small businesses add additional fees when customers pay by credit card.
Yes. The study found that 32% of merchants who add surcharges said customers cancel purchases after seeing the extra charge.
Businesses can review their processing fees, negotiate better rates with their provider, or offer alternative ways to pay, such as ACH.
