Surcharging: The biggest threat facing the card industry in the US market and the measurement frameworks needed to address it

For decades, merchants in the US absorbed the “swipe fees,” or merchant discount rates, associated with accepting credit and debit card payments. It was accepted as the cost of doing business.

This has changed. Since the pandemic, US merchants are increasingly imposing surcharges (2-5%) on consumers to make up for MDR fees, which hit a record high of $187 billion in 2024.

This practice is now prevalent among small merchants, with 34% admitting to surcharging in a 2024. This is down from an estimated 5% of SMBs in 2021, highlighting a massive increase in just the past four years.

There is evidence that large merchants are doing this too. The $50+ million yearly revenue resort where I got married in June tried to surcharge me on my catering contract. PayJunction, a PSP that enables surcharging for merchants, mentions car dealerships as a specific vertical appropriate for surcharging. Online ticketing platforms, public sector agencies and utility companies frequently charge a “convenience fee” for payment with cards.

Surcharging is maddening consumers. The card industry doesn’t have a strategy

As merchants feel empowered to surcharge, consumers are responding in negative ways. 73% of cardholders claimed they would use their credit cards less frequently if they had to pay a surcharge. Among women, that number jumped to 84%. Additional evidence is damning:

• In a 2025 survey by J.D. Power, credit card satisfaction dropped by 39 points among cardholders who have been surcharged
• 81% of cardholders who were told about surcharges have tried to avoid them via an alternative payment method
• More than half (56%) of cardholders surveyed by LendingTree say it should be illegal for retailers to charge extra for using a credit card. 30% reported switching to cash to avoid surcharges (35% among Gen Z)

This is an exceedingly dangerous trend for the card industry, especially with the proliferation of low payment methods, including Venmo, Zelle, and CashApp, and the advance (albeit slow) of FedNow. The data shows that surcharging is already taking away revenue from card networks, issuers, and acquirers. It is also limiting the opportunity for credit cards to penetrate new verticals including utilities and recurring payments: PYMNTS reports that 60% of Americans are using P2P apps to pay bills.

Surcharging implications: A war on credit cards

If unchecked, in the medium term, rampant surcharging will have an impact on card growth volumes. Here are several potential implications, ranging from the shortest term to longer term.

These implications create a megatrend whereby credit card issuers and networks gradually abandon the mass market and concentrate their investment on the affluent. Visa and Mastercard have thrown money behind enhanced affluent value propositions this year (the World Legend Mastercard¹ and refresh of the Visa Infinite card in Asia Pacific and Brazil and the launch of Visa Private in the UAE) and are investing heavily in value added services. Interestingly though, these initiatives are defensive in nature, not designed to specifically tackle the surcharging threat.

These trends could also signal the resurgence of the debit card for everyday spend and a rush to improve the practicality and UX of A2A solutions at the POS. In both cases, the result is a reduced obtainable market size and diminishing profitability for credit cards.

The industry must MEASURE this trend to respond appropriately

The surcharging phenomenon itself is not the most dangerous part of this threat; the hesitation to respond is. When faced with large threats, corporations often freeze due to uncertainty and the challenge to change. They spend too much time observing while the problem slowly gets worse. Faced with a shortage of good information and strong leadership, many companies feel incapable of addressing threats in a way that guarantees their competitiveness.  

When calling on external expertise for guidance, the card industry can’t afford another generic research effort. Many research attempts—even those conducted by the most prestigious brands—regurgitate already known information and deliver underwhelming, superficial results. Instead, executives need a specialized measurement process that allows them to make performance-based decisions. At PCMI, our insights measure the factors that impact human ambition and produce data that inspire performance. This empowers decision makers to take action, not just consume a pretty PowerPoint. 

Below are the PCMI frameworks that can help the card industry respond to surcharging and the other competitive threats impacting it today.

PCMI analytical framework and surcharging metrics: measuring consumer response, merchant compliance, and strategies to inform decision-making.

Metric to measure	PCMI Analytical Framework	Decisions enabled
Consumers’ response to surcharging	• PCMI Voice of the Customer Analytics	• How many resources to invest to combat surcharging • Whether surcharging can be combated with marketing and communications, or new product development is required
Merchant compliance with surcharging rules	• PCMI End User Perception and Readiness Analysis	• The needed government engagement actions • The support and thought leadership needed to engage enablement partners
Merchant surcharging incidence, strategies and motivations	• PCMI User Persona and Behavior Incidence Metrics	• The thought leadership narrative needed to convince merchants that surcharging is bad for business • Prioritization of merchant value-added services • The appropriate fintech/digital partnership approach to drive maximum value to merchants

Surcharging in the US is the manifestation of the competitive pressure that low-cost A2A solutions have presented in emerging markets for years. In developed markets, this competitive pressure expresses itself in the form of merchants passing cost on to the consumer, while welcoming cash payments and low-cost alternatives.  

The question remains, how will card industry stakeholders respond to this specific phenomenon? The US market alone represents around 45% of the card networks’ revenues. Interchange in the US might represent 5-15% of full-service retail banks’ revenues. This trend could make a significant dent in these numbers over the long term if not addressed strategically, first from an industry messaging standpoint, and secondly from a product development and partnership standpoint. Getting clarity on the questions above is a prudent starting point.

Contact us to obtain that clarity via our powerful measurement frameworks.

Footnotes:

1. “Elevating Cardholder Experiences Worldwide with the Mastercard Collection and Introduction of World Legend Mastercard.” Mastercard.com, 2020. Accessed 2 Nov. 2025. ↩︎