Apr 2, 2026
Jason Lavery — who owns a brewpub in Erie, Pennsylvania — paid $40,000 in credit card processing fees last year alone, forcing him to make a tough decision: Add a surcharge to credit card payments or raise prices across the board.
“We didn’t think it was fair for customers who pay with cash to raise prices, so we implemented the surcharge,” the small business owner told USA Today (1).
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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.
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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.
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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.
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Still, you don’t automatically need to ditch your credit card. Here are a few other things to consider:
- Cash-back math: If your card earns 2-3% cashback, you might still come out ahead even if you pay the surcharge.
- Travel points: Premium travel cards often offer higher-value points, so a few extra dollars might be worth it for the points.
- Credit building: If you’re using a card to build credit, it might be worth a few dollars for long-term financial gain.
The key is to be intentional: Compare the surcharge to the value of the points or protections your card might offer. Then, decide if it’s worth it.
For small businesses, being transparent can help build customer trust. State laws vary on how surcharges must be disclosed, and merchants can’t typically charge more than they pay in processing fees.
Also, consider exploring other payment methods (6), such as Automated Clearing House (ACH) bank-to-bank transfers and digital wallets, which tend to offer lower processing fees. Once considered niche, these payments are gaining widespread acceptance.
As swipe fees hit record highs, both businesses and consumers need to decide how much they’re willing to pay, because these fees are unlikely to go away soon.
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
USA Today (1); J.D. Power (2); Erie Events (3); Nilson Report (4); Axios (5); U.S. Department of the Treasury (6)
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Danielle is a personal finance writer whose work has appeared in publications including Motley Fool and Business Insider. She believes financial literacy key to helping people build a life they love. She’s especially passionate about helping families and kids learn smart money habits early.
