Credit Card Surcharges Are Rising — Here’s a Better Way Forward for Restaurants and Retailers

Rising costs are hitting businesses everywhere, but restaurants and retailers are feeling the pressure especially hard. Food costs are up. Labor costs are up. Utilities, rent, insurance — all up. And quietly, one of the fastest-growing expenses continues to be credit card processing fees.

To offset those costs, more businesses are turning to credit card surcharges. But while surcharging may seem like a solution, it often creates new problems — especially at the point of sale.

That’s why many merchants are now shifting toward a smarter, more customer-friendly alternative: Dual Pricing.

Why Credit Card Surcharges Are Becoming More Common

When customers pay with a credit card, businesses incur processing costs set by card networks like Visa and Mastercard. To recover those costs, some merchants add a separate surcharge to credit card transactions.

These surcharges:

• Are typically capped at 4%, depending on state law

• Are illegal in Connecticut, Massachusetts, and Puerto Rico

• Must be clearly disclosed with specific language at the register or on receipts

  
  

According to J.D. Power’s 2025 U.S. Merchant Services Satisfaction Study, 34% of merchants now surcharge credit card transactions. Just a few years ago, that number was under 5%.

The reason is simple: processing costs have exploded.

The Nilson Report shows that total swipe fees reached $187.2 billion in 2024, up 70% since the pandemic. Visa and Mastercard alone accounted for $111.2 billion, a more than 10% increase in a single year.

Merchants are paying more — and customers are noticing.

The Customer Experience Problem With Surcharging

From a customer’s perspective, surcharges often feel like a penalty.

Imagine a guest pulls out a rewards credit card expecting 2% cash back — only to be hit with a 3.5% surcharge. Instead of earning rewards, they’ve just paid more to dine with you. That friction shows up at the table, at checkout, and sometimes in online reviews.

Customers now:

• Pause before paying

• Ask staff to explain fees

• Feel surprised or frustrated at checkout

• Associate the added charge with the business — not the card networks

Even when surcharges are legal and properly disclosed, they can create awkward moments and negative perceptions that hurt loyalty.

Dual Pricing: A Smarter Alternative to Surcharging

This is where Dual Pricing offers a major advantage.

Instead of adding a fee at checkout, Dual Pricing:

• Displays a cash price and a credit price upfront

• Builds card acceptance costs into the credit price transparently

• Eliminates surprise fees

• Keeps the checkout experience clean and predictable

• 
  

With Dual Pricing, customers see the price difference before they pay — not after. That transparency builds trust and avoids the “gotcha” moment that often comes with surcharges.

How Dual Pricing Benefits Merchants

For merchants, Dual Pricing delivers what surcharging tries to achieve — without the friction.

Key benefits include:

• Offsetting 90–100% of credit card processing costs

• Avoiding surcharge bans in restricted states

• Reducing customer complaints and staff explanations

• Remaining compliant with card network rules

• Protecting margins without raising base prices

  
  

Rather than passing a fee to the customer at the end of the transaction, Dual Pricing allows businesses to price payments appropriately from the start.

How Dual Pricing Benefits Customers

Customers benefit just as much:

• No surprise fees at checkout

• Clear, honest pricing

• Freedom to choose cash, debit, or credit

• No feeling of being penalized for using a card

  
  

And unlike surcharges, Dual Pricing doesn’t force customers to do mental math to decide whether their rewards outweigh the fee. The choice is simple and visible.

The Reality: Processing Costs Aren’t Going Away

Swipe fees aren’t shrinking. Card rewards aren’t disappearing. And customer expectations for card acceptance aren’t changing.

What can change is how businesses handle these costs.

Surcharging may be increasing, but it’s not the only option — or the best one.

At SignaPay Direct, we help merchants implement Dual Pricing the right way: transparently, compliantly, and with the customer experience front and center.

Because the goal isn’t just to survive rising costs — it’s to do it without alienating the people who keep your doors open.

If you are ready to scale AND grow your restaurant business. We make that happen. contact us today.