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As credit card surcharges become more common, banks and merchants are facing a growing problem: customers are walking away from purchases. New research from JD Power shows that nearly three out of five cardholders have abandoned at least some transactions when hit with a fee for using their card.
The Rising Tide of Surcharges and Abandoned Sales
Surcharging isn’t just changing how people pay—it’s directly impacting merchant revenue. “Surcharging isn’t just affecting the kind of payment people are using, but they are also affecting merchant sales,” says John Cabell, managing director of payments intelligence at JD Power.
Meanwhile, related issues like frequent tipping prompts at checkout are also pushing consumers to take their business elsewhere.
Key Data Points from JD Power Research
- Prevalence is Growing: Over one-third (35%) of small businesses now impose credit card surcharges, up from 34% in the previous year. Consumers are encountering these fees more frequently.
- Widespread Consumer Impact: In the 2026 U.S. Credit Card Satisfaction Study, 64% of respondents faced surcharges. This includes 4% who always see them, 12% who usually do, and 48% who sometimes do.
- Abandonment is Significant: 59% of cardholders say they have abandoned a purchase in progress when a surcharge was applied. Federal law prohibits such fees on debit transactions.
- Vulnerable Consumers Hit Hardest: Abandonment is even more common among the financially stressed. 69% of those who classify themselves as “overextended” have abandoned purchases due to surcharges, along with 63% of those who feel “vulnerable.”
Where Surcharges Occur and Who Abandons Purchases
Surcharges appear most often in sectors like gambling, dining, and travel. They are also more prevalent among newer, smaller businesses with annual sales under $250,000, as they lack the negotiating power to secure lower interchange rates.
According to JD Power’s 2026 U.S. Merchant Services Satisfaction Study, 32% of retailers now report that customers occasionally or frequently cancel purchases when a surcharge is added. Abandonment tends to happen more with discretionary spending, such as travel and entertainment, rather than necessities.
This creates a “rising tension,” notes Cabell, between a business’s need to offer multiple payment options and its desire to pass processing costs onto customers—a shift that can harm the overall customer experience.
Beyond Surcharges: Tipping Fatigue Exacerbates the Problem
Surcharges aren’t the only factor driving customers away. Aggressive tipping prompts at point-of-sale screens are causing significant frustration. Research for Oobit found that over three-quarters of U.S. adults believe tipping culture is out of control.
Consumers object to being prompted for tips on purchases that didn’t traditionally involve them and to seeing suggested tip amounts that are higher than expected. They also dislike screens that make it obvious to staff if they choose a lower custom tip.
This frustration has financial consequences. 37% of respondents in the Oobit study have stopped frequenting a business because of overly aggressive tip requests. Notably, two-thirds of consumers would rather see merchants raise base prices to pay staff more, eliminating the need for tip screens altogether.
The Broader Implications for Payment Ecosystems
For banks, the core issue is a potential loss of transaction volume and customer loyalty. As consumers abandon purchases or switch to other sellers, the entire payment flow is disrupted.
Merchants also risk losing sales; 24% reported losing a sale in the previous three months due to a customer abandoning because their preferred payment method wasn’t accepted—a figure that has risen by four percentage points.
In an era with expanding payment options, from cards to buy now, pay later, maintaining a positive customer experience at checkout is critical for retaining business and ensuring a steady transaction stream.
Source: thefinancialbrand.com