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Written by Cyndie Martini
on January 26, 2021

Surcharging consumers is not a standardized practice across merchants. Some charge their customers while others do not. How the surcharge is applied also varies. However, to charge or not charge is a debate that has come back into focus.

Credit card processing fees that merchants must pay have more than doubled over the last decade. With the pandemic forcing so many changes in how business is conducted, merchants are now consdiering how to best apply surcharges.

There are federal and state regulations on charging consumers a surcharge. This means merchants have parameters that they'll have to stay within. But otherwise, there is some flexibility in how they may apply a surcharge. 

Some of the surcharge debate is being driven by credit card rewards programs. Those incentives must be paid for and that's generally through increased processing or interchange fees, which are passed on to merchants. Many merchants have simply been eating those fees. As processing fees continue to increase, merchants are looking at what makes the most sense for recouping those costs. 

While consumers may like their rewards programs, at the end of the day, there is no free lunch. Consumers may unknowingly end up paying for those rewards, which lowers the net benefit of any rewards, even potentially to a negative number. Meaning, consumers end up paying more for rewards than they are worth.

With their lower-cost fees, debit cards are not likely to enter into the surcharge debate. But certainly, credit cards will. Merchants will have to figure out if it makes sense to add a surcharge on every purchase, those that don't meet a certain dollar amount, large purchases, etc. They'll also need to factor in if their customers are willing to pay a surcharge. But there may be a silver lining for merchants who are pondering that last question.

“There’s definitely a greater acceptance of paying a surcharge, and so I think consumers can understand why there may be a new surcharge applied in certain cases," Payroc Chief Financial Officer Kevin Hodges said to

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