Why more small businesses are adding credit card surcharges — and what it means for your wallet

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.

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).

Some businesses, like Erie Events (3) in Pennsylvania, have gone even further, eliminating cash entirely to speed service and reduce labor costs.

On the other hand, Natalya Voyetz, who runs Natalya’s Sewing Center, told USA Today that she refuses to accept cards because she doesn’t want to pay the processing fee.

“My customers are mostly regulars and they know that I don’t take credit cards,” she said.

The common thread? Payment costs are rising, and small businesses are looking for ways to protect already-thin margins.

Why these fees add up, especially for small businesses

Credit card processing fees may look small on paper — typically 2% to 3% of each transaction — but they add up fast.

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’s roughly $23,500 in fees before adding processor markups or per-transaction charges.

And small businesses often pay more than large corporations. That’s 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.

“There’s really not — especially for a small merchant — a whole lot of negotiation,” Andy Ellen, president and general counsel of the North Carolina Retail Merchants Association, told Axios (5).

When sales volumes rise, or inflation pushes up food, labor, and rent costs, those percentages hit even harder.

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.

What this means for shoppers

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.

Still, you don’t automatically need to ditch your credit card. Here are a few other things to consider: