Surcharging a complex challenge for merchants, J.D. Power finds

Credit card surcharging poses a tough balancing act for business owners. Better than a third (35 percent) of card-accepting businesses now assess surcharges when customers pay using credit cards, according to a new study from J.D. Power. However, nearly a third (32 percent) report that customers occasionally or frequently cancel purchases and walk away rather than pay the surcharge.

Surcharging is most common among new small businesses as well as restaurants, according to J.D. Power's study.

"The data in this year's study spotlights the rising tension between business owners' growing pressure to offer multiple payment options and their increased desire to pass processing costs onto retail customers, a shift that can negatively impact the customer experience," said John Cabell, managing director of payments intelligence at J.D. Power.

Credit card surcharging is permitted under the laws of 47 states. Just Connecticut, Maine and Massachusetts, along with Puerto Rico, prohibit surcharging.

Recently, lawmakers in Massachusetts began considering legislation that would reverse that state's ban on surcharging. A state senate committee earlier this month voted to approve the legislation, which still must be voted on by the full senate as well as the state house of representatives.

Under the proposed Massachusetts law merchants could not assess more than the actual cost of processing credit card transactions as a surcharge. Merchants also would be required to prominently disclose the fact that they surcharge card payments through signage, and print the exact amount of any surcharge on receipts.

New payment methods, new pressures

Rising consumer interest in digital wallets, buy now pay later and cryptocurrencies has small business owners accepting more forms of payments than ever before. And that puts more pressure on merchant services providers.

The J.D. Power 2026 Merchant Services Satisfaction Study, released Jan. 13, 2026, found that the manner and speed with which transactions are processed, as well as the ability to manage costs and avoid hardware and software glitches, have become critical drivers of merchant satisfaction.

"Merchant services providers have become a vital link in the way small businesses manage payments and are a critical customer touchpoint, which can create opportunities and challenges for the companies providing the necessary technology services and hardware," Cabell said.

Overall, 92 percent of U.S. merchants surveyed now accept payments via digital wallets, an increase of 4 percent over 2024. BNPL has also gained, with 58 percent of U.S. small businesses now offering BNPL, up from 54 percent in 2024. In fact, BNPL is now the fourth most common form of payment.

Credit, debit still popular

Credit and debit cards still are the most accepted form of payment (accepted by 96 percent of small businesses). Digital wallets are accepted by 92 percent of small businesses. Personal checks are the least commonly accepted form of payment, with just 57 percent of U.S. small businesses indicating they take checks, down from 63 percent in 2024.

Nineteen percent of small businesses accept cryptocurrencies, up 4 percentage points from 2025. Sentiment about cryptocurrencies is also improving; 37 percent of merchants participating in the study said they have a favorable view of crypto, and a third of non-accepting merchants said they would likely accept crypto payments if their merchant services providers enabled the option.

Tip, donation and surcharge screens are disrupting the sales process, J.D. Power's study revealed. Nationwide, 61 percent of merchants use at least one default screen, such as tip, donation or surcharge prompts, on their POS hardware. While these screens make it easier to apply extra charges, they also contribute to higher transaction abandonment rates, the firm found.

BofA tops satisfaction rankings

The J.D. Power study found that large U.S. banks lead specialists and processors in overall merchant satisfaction. That's because often payment processing is integrated with existing banking relationships.

In contrast, newer, software-driven specialist processors close the satisfaction gap among startup small businesses. These specialist providers perform well among startups due to their rewards programs and technology-driven guidance that can help businesses operate more efficiently.

Bank of America ranks highest survey respondents in merchant services satisfaction, with a score of 750 on a 1,000-point scale. Shopify ranks second (733) and Chase Payment Solutions comes in at third place (725).

The J.D. Power Merchant Services Satisfaction Study is based on a survey of just over 4,000 small business customers of merchant services providers. It measures satisfaction across six dimensions. These are:

• Advice and guidance on running a business,
• Cost of processing payments,
• Data security and protection,
• Account management,
• Payment processing, and
• Quality of technology.

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