Credit card processing fees are an unavoidable reality for most businesses. Every time a customer taps, swipes, or inserts a credit card, a small percentage of the sale goes to card networks, banks, and payment processors. Over time, these fees add up—especially for high-volume or small-margin businesses.
That’s where credit card surcharging comes in. (Or you might have seen this called “passing off the fees” or “free credit card processing” or “0% payment processing").
By passing the cost of credit card acceptance back to the customer, surcharging can help business owners protect their bottom line. But as with any business decision, it’s not without trade-offs.
In this post, we’ll dive into the key pros and cons of credit card surcharging, share some examples, and help you determine whether it’s a good fit for your business.
Credit card surcharging is the practice of adding a small fee to a customer’s transaction when they choose to pay with a credit card. The goal is to recover the cost of processing the card payment. So instead of absorbing the fee as a cost of doing business, the customer pays a bit more at checkout.
You can learn more about it in our comprehensive guide to understanding credit card surcharging.
Surcharging can be a helpful way to manage costs, but whether or not it makes sense for your business depends on several factors:
Now let’s break down the key benefits and drawbacks.
For many businesses, especially those operating on thin margins (like restaurants, gas stations, or service providers), every percentage point matters. Surcharging allows you to offset rising processing costs, without raising prices across your entire menu or product lineup.
Instead of absorbing 2-3% on every card transaction, you recover that cost and maintain your margins. Over time, that could mean thousands of dollars saved or reinvested into your team, marketing, or product improvements.
Example: A coffee shop processing $50,000/month in credit card sales could be losing $1,250 or more to processing fees. A surcharge model could recoup most of that without raising the price of a latte for everyone.
When customers are aware that paying by credit card comes with a small fee, many will opt to use debit, cash, or EFT transfers instead—all of which tend to carry much lower processing costs.
This behavioral shift can lead to long-term cost savings and reduce your reliance on expensive card networks. For some businesses, even a 10–20% reduction in credit card volume can make a meaningful difference in monthly costs.
Example: A boutique fitness studio might find that regulars start paying via debit to avoid the fee, saving the business hundreds each month without needing to change pricing.
Rather than baking card fees into your prices and raising them for everyone, surcharging gives customers a clear view of the true cost of using a credit card. In a world where consumers increasingly value transparency, this can actually build trust—when communicated well.
Instead of quietly increasing all prices by 2–3%, you’re saying: “We’re giving you a choice—pay with debit, cash, or card, and only card payments carry a fee.”
It can also help you differentiate from businesses that obscure costs by raising base prices universally.
One of the most overlooked benefits of credit card surcharging is the potential to reallocate the money you would have spent on processing fees toward meaningful improvements in your business. When those savings start to add up—especially for businesses with high transaction volumes—they can be put toward things that directly enhance the customer experience.
That might mean upgrading equipment to speed up service, refreshing your store layout or decor, investing in staff training, or even launching new products or services. Instead of letting processing fees quietly eat into your margins, surcharging can help you redirect that money into tangible upgrades your customers will notice and appreciate.
Example: A restaurant might use the savings to improve kitchen efficiency or upgrade to better POS technology. A salon could reinvest in more luxurious chairs, better lighting, or a streamlined booking system. These enhancements can ultimately improve service quality, increase satisfaction, and even boost long-term loyalty.
Credit card surcharging allows you to keep your base prices lower for all customers by only passing processing costs to those who choose to pay with credit cards. This can be especially valuable in price-sensitive markets or industries where even small price increases could impact customer decisions.
Rather than raising prices across the board to cover fees—which affects everyone, including those paying with debit or cash—you can maintain your advertised prices and stay competitive, while still protecting your margins.
This approach can be particularly effective for businesses that rely on competitive pricing, like quick-service restaurants, local retailers, or online shops. It offers a way to stay lean without sacrificing profit or compromising your brand.
Let’s be honest—most people don’t love paying extra fees. Even if the amount is small, it can still negatively affect the customer experience, especially if they weren’t expecting it.
If competitors in your area or industry don’t apply surcharges and you do, some customers may take their business elsewhere. Others might not complain directly, but may feel less loyalty toward your brand over time.
Tip: Communicate clearly and upfront. Use in-store signage, checkout notices, and staff training to make sure customers understand why the fee exists and what their options are.
Surcharging isn’t just something you can turn on overnight. It comes with a set of legal requirements that vary by location and card brand—including:
On top of that, you’ll need to make sure your payment processor supports surcharging and can configure your system correctly. (Paystone offers multiple pricing options, so we’ve got you covered whatever you decide)
Note: Small teams or independent operators may find the compliance burden a bit overwhelming depending on the level of support offered by their payment processor.
In some industries—like home services, contractors, or professional services—introducing a credit card surcharge may push customers toward alternatives like cheques or bank transfers.
While that might sound great from a processing cost standpoint, it can slow down cashflow and add friction to your operations. Depositing cheques, waiting for funds to clear, and tracking manual payments all require more admin time and delay revenue recognition.
Example: A plumber who typically gets paid same-day via card might now wait a week to deposit a cheque and see it clear—creating cashflow gaps and more paperwork.
While surcharging may make financial sense, it can subtly impact how your brand is perceived—especially if your business is positioned as premium, high-touch, or customer-first. Some customers may associate surcharges with "nickel-and-diming" or feel like they’re being penalized for using their preferred payment method.
This perception can be particularly damaging for brands that emphasize luxury, hospitality, or white-glove service. Even if the fee is small, it introduces an extra point of friction in an otherwise seamless customer experience.
Example: A high-end salon or boutique hotel might risk undermining the polished, all-inclusive feel they’ve worked hard to create—just by adding a small surcharge at checkout.
If you operate in a competitive market where brand image matters, it’s worth thinking about how this change might feel to your most loyal customers—and whether it aligns with the experience you want to deliver.
Even small changes to pricing can affect how customers feel about your brand over time—especially if they perceive a surcharge as unfair or unexpected. While one fee might not drive customers away immediately, repeated exposure to small “extra” costs can gradually erode loyalty and make shoppers more willing to explore alternatives.
This is particularly true in industries where switching costs are low, or where competitors offer similar products and experiences without the added fee. If you rely on repeat business, it’s essential to consider how surcharging fits into your overall customer retention strategy.
Tip: If you’re concerned about losing loyalty, this could be a great opportunity to strengthen your relationship with customers through a rewards or loyalty program. Showing customers that you’re giving something back—whether it’s points, perks, or exclusive offers—can help balance the impact of a surcharge and reinforce the value they get from doing business with you.
At the end of the day, credit card surcharging isn’t inherently good or bad—it’s a tool. And like any tool, it’s most effective when used in the right context.
For some businesses, especially those with thin margins or high card usage, surcharging can unlock meaningful savings that fuel growth, improve operations, or enhance the customer experience. For others, especially those in industries where brand perception or loyalty is critical, the risks might outweigh the rewards.
The key is to think holistically: How will your customers react? What are your competitors doing? Does your brand positioning support a move like this? And do you have a plan to keep the customer experience strong—like a loyalty program, pricing transparency, or staff training?
There’s no one-size-fits-all answer. But if you’re exploring ways to reduce costs without compromising on service, surcharging could be a powerful lever—and we’re here to help you pull it in a way that makes sense for your business.
Want to learn more about credit card surcharging? Check out our comprehensive guide for more information.