Credit Card Surcharges Turn Shoppers Away

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Nineteen percent of consumers have been asked to pay a surcharge but decided to use another payment method instead. “Credit Card Surcharges,” a PYMNTS and Payroc collaboration, found that cash is the most common alternative payment, but debit cards are preferred by Generation Z cardholders. About one in five consumers wind up using alternative payments to get around paying a credit card surcharge. 

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That’s one of several experiences consumers have had with surcharges, according to “Credit Card Surcharges,” a PYMNTS and Payroc collaboration based on a survey of 2,507 U.S. credit card users. 

Get the report: Credit Card Surcharges 

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The survey found that while 19% of cardholders have been asked to pay a surcharge but decided to use another payment method, 37% knowingly paid a surcharge, 20% paid a surcharge and realized only after making a payment and 18% are not sure if they paid. 

Another 24% have never been asked to pay a credit card surcharge. 

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Credit Card Surcharges, PYMNTS study, Payroc

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Among the cardholders who have chosen to use a payment alternative after being asked to pay a surcharge to use a credit card, the most common payment they use instead is cash. Seventy-one percent have chosen that option. 

Other common payments they use instead of the credit card are a debit card (40%), PayPal (22%), a digital wallet (19%) or a check (19%). Thirteen percent have used another credit card. 

Credit Card Surcharges-Payroc-PYMNTS Study-Figure 5

The choice in alternative payment methods varies between consumers in different age groups. 

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Baby boomers and seniors are more likely than average to use cash, with 78% of this generation choosing that option.  

Generation X cardholders are slightly more likely than average to use cash, at 72%. 

Among younger consumers, debit cards are a popular alternative. 

Bridge millennials are most likely to use cash, with 63% having done so, but a debit card is another common choice, with 51% having used that. 

Similarly, 66% of millennials have used cash and 53% have used a debit card. 

Generation Z cardholders are different from the other generations in that their No. 1 payment alternative is a debit card. Seventy-two percent of the consumers in this generation have used a debit card, while 57% have used cash and 55% have used a digital wallet. 

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NEW PYMNTS DATA: THE TRUTH ABOUT BNPL AND STORE CARDS – APRIL 2022

About: Shoppers who have store cards use them for 87% of all eligible purchases — but this doesn’t mean retailers should boot buy now, pay later (BNPL) options from checkout. The Truth About BNPL And Store Cards, a PYMNTS and PayPal collaboration, surveys 2,161 consumers to find out why providing both BNPL and store cards are key to helping merchants maximize conversion.



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