Eliminate additional credit card fees
The stress of the pandemic has pushed merchants and consumers to their limits. Additionally, as inflation has spread throughout the economy, credit card processing fees are adding to the financial burden on merchants. Some have decided to recover the additional costs with card surcharges, but how do consumers react to surcharges? PYMNTS research reveals that US cardholders who have never had to pay a surcharge generally raised objections when asked to consider paying one. Cardholders who paid for them were often more accepting of the additional charges.
These are among the main results of Credit Card Surcharges: How Cardholders Respond to Extra Costsa PYMNTS and payroc collaboration, by examining and analyzing the behaviors and reactions of credit card users to surcharges imposed by merchants on credit cards. We surveyed 2,507 US credit cardholders from December 8, 2021 through December 22, 2021, about how they view surcharges and their actions in response to the surcharge request. We asked cardholders whether the surcharges hurt their opinions of retailers charging the fee or encouraging them to shop elsewhere or use another payment method to avoid the surcharge.
Some additional key findings include:
• Eighty-five percent of credit cardholders who are asked to pay extra for a transaction will pay it. Data from PYMNTS found that supplement request and acceptance rates were consistent across local and national or regional restaurants and retail stores, although slight trends emerged. Local restaurants and stores impose surcharges more frequently than national and regional restaurant and retail chains, but national and regional sites have slightly higher rates of accepting surcharges from cardholders than their own. local counterparts.
• Fifty-eight percent of credit card users who have never been asked to pay a surcharge say they wouldn’t pay it if a merchant tried to charge one. This indicates the high level of resistance to surcharges among cardholders who have not had to pay them. At the same time, PYMNTS research reveals that cardholders who have faced surcharges are significantly less negative about them than credit card users who view them hypothetically.
• Seventy-one percent of cardholders who use alternative payment methods to avoid surcharges opt for cash. Cardholders have plenty of experience using a wide variety of payment methods, and they’ll rely on virtually any available to them if they’re trying to avoid paying a card surcharge. credit. Forty percent of credit card holders used debit cards as an alternative, 22% used PayPal, and 19% used digital wallets.
The economic fallout from the pandemic has made surtaxes more attractive to business owners, especially those representing local restaurants and retailers. When asked about surcharges as a hypothetical issue, cardholders generally resist the prospect of paying them for the first time. However, our data consistently reveals that the reality of paying fees is less grim.
Consumers will be more likely to pay the surtax than refuse to pay it when the time comes. Merchants that leverage solutions that provide increased control over surcharges and fees may be able to better communicate the impacts of surcharges and thread the needle, minimizing harm to regular cardholders while buffering their bottom line during a difficult period.
To learn more about how merchants can embrace credit card surcharges while maintaining high levels of customer satisfaction, download the report.