Credit card surcharges are everywhere and consumers know it.
PYMNTS research found that overall cardholder awareness of merchant surcharges is high, with 84% of cardholders saying they know merchants can charge processing fees.
These charges have not always been legal in the United States – and indeed are still prohibited by some states – but cardholder awareness of credit card surcharges is high across all financial lifestyles, income levels and age brackets we surveyed, with millennials and middle millennials showing the highest awareness at 91% and 90% respectively.
Cardholders who earn more than $100,000 per year are the most aware at 88%, and cardholders who earn less than $50,000 are the least aware of surcharges at 77%.
We found little variation in awareness of card surcharges among the three financial lifestyles we examined. Cardholders not only know that surcharges are possible, but also said they usually check their receipts for them.
Our research found that 90% check their merchant receipts for surcharges, while 71% of cardholders check their receipts for all or most of their purchases for fees.
And with that awareness comes an effort to avoid those fees.
We found that cardholders turn to almost every other payment method when faced with a credit card surcharge, although 71% of cardholders used cash in such scenarios.
Credit users have extensive experience with multiple payment options and often rely on credit card alternatives to avoid surcharges. Forty percent of credit card holders said they used debit cards as an alternative, 22% used PayPal, and 19% turned to digital wallets.
The data also shows generational preferences: 78% of baby boomer and senior cardholders and 72% of Gen X cardholders who switched payment methods chose to use cash as a substitute for credit , but cash was somewhat less popular with younger cardholders.
Instead, these consumers chose payment alternatives based on digital platforms, such as PayPal, which 42% of Gen Z cardholders used to avoid surcharges.
Our research found no significant differences between each of the four facilities
categories we tracked – local retailers, national and regional retail chains, local restaurants and restaurants that are part of national or regional chains – with cash and debit cards remaining the most frequent alternatives.
To learn more about how far these charges are for cardholders, download the new Credit Card Fees Report from PYMNTS, produced in collaboration with payroc.