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Jason Lavery \u2014 who owns a brewpub in Erie, Pennsylvania \u2014 paid $40,000 in credit card processing fees last year alone, forcing him to make a tough decision: Add a surcharge to credit card payments or raise prices across the board.<\/p>\n
\u201cWe didn\u2019t think it was fair for customers who pay with cash to raise prices, so we implemented the surcharge,\u201d the small business owner told USA Today<\/em> (1).<\/p>\n Customers who pay with a credit card now pay an additional 1.75% plus 20 cents per transaction. On an average $29 tab, that works out to about 87 cents.<\/p>\n Lavery is not alone. The number of businesses adding credit card surcharges has climbed to 35%, according to the J.D. Power 2026 U.S. Merchant Services Satisfaction Survey (2).<\/p>\n Some businesses, like Erie Events (3) in Pennsylvania, have gone even further, eliminating cash entirely to speed service and reduce labor costs.<\/p>\n On the other hand, Natalya Voyetz, who runs Natalya\u2019s Sewing Center, told USA Today<\/em> that she refuses to accept cards because she doesn\u2019t want to pay the processing fee.<\/p>\n \u201cMy customers are mostly regulars and they know that I don\u2019t take credit cards,\u201d she said.<\/p>\n The common thread? Payment costs are rising, and small businesses are looking for ways to protect already-thin margins.<\/p>\n Credit card processing fees may look small on paper \u2014 typically 2% to 3% of each transaction \u2014 but they add up fast.<\/p>\n Last year, the average swipe fee charged by Visa and Mastercard reached 2.35%, a record high, according to the Nilson Report (4). For a business doing $1 million in annual card sales, that\u2019s roughly $23,500 in fees before adding processor markups or per-transaction charges.<\/p>\n Read More: 5 essential money moves to make once you\u2019ve saved $50,000<\/strong><\/p>\n And small businesses often pay more than large corporations. That\u2019s because major retailers can negotiate directly with card networks. Smaller businesses usually work through payment processors like Square, Stripe or PayPal that tend to have fixed fees.<\/p>\n \u201cThere\u2019s really not \u2014 especially for a small merchant \u2014 a whole lot of negotiation,\u201d Andy Ellen, president and general counsel of the North Carolina Retail Merchants Association, told Axios<\/em> (5).<\/p>\n<\/p><\/div>\n When sales volumes rise, or inflation pushes up food, labor, and rent costs, those percentages hit even harder.<\/p>\n For a restaurant, brewery or retail shop operating on single-digit profit margins, a 2% to 3% fee can wipe out nearly all of their profits. And as processing costs rise nationwide, more businesses are making those fees visible to customers rather than quietly absorbing them.<\/p>\n For consumers, this rise in processing fees could mean they see credit card surcharges or cash discounts more often, especially at smaller businesses. To avoid paying the fee, consider opting for cash, debit or digital wallets if possible. Those payments are often cheaper to process.<\/p>\n Still, you don\u2019t automatically need to ditch your credit card. Here are a few other things to consider:<\/p>\n Cash-back math<\/strong>: If your card earns 2-3% cashback, you might still come out ahead even if you pay the surcharge.<\/p>\n<\/li>\n Travel points<\/strong>: Premium travel cards often offer higher-value points, so a few extra dollars might be worth it for the points.<\/p>\n<\/li>\n Credit building<\/strong>: If you\u2019re using a card to build credit, it might be worth a few dollars for long-term financial gain.<\/p>\n<\/li>\n<\/ul>\n The key is to be intentional: Compare the surcharge to the value of the points or protections your card might offer. Then, decide if it\u2019s worth it.<\/p>\n For small businesses, being transparent can help build customer trust. State laws vary on how surcharges must be disclosed, and merchants can\u2019t typically charge more than they pay in processing fees.<\/p>\n Also, consider exploring other payment methods (6), such as Automated Clearing House (ACH) bank-to-bank transfers and digital wallets, which tend to offer lower processing fees. Once considered niche, these payments are gaining widespread acceptance.<\/p>\n As swipe fees hit record highs, both businesses and consumers need to decide how much they\u2019re willing to pay, because these fees are unlikely to go away soon.<\/p>\n Join 250,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/strong><\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our<\/em> editorial ethics and guidelines<\/em>.<\/em><\/p>\n USA Today (1); J.D. Power (2); Erie Events (3); Nilson Report (4); Axios (5); U.S. Department of the Treasury (6)<\/p>\n\n