Tim Freeman is both a small business owner and a consumer who regularly uses his credit card.
Freeman, who owns Altima Tan in Springfield Township, recently reached out to complain about a growing number of businesses he’s noticing that are charging customers to use their credit cards.
It happened to him and his wife twice recently at what he considers high-end restaurants.
When the bill came and Freeman paid with his credit card, there was a notice on his credit card receipt that there would be a 2.5% charge for any purchases made entirely with a credit card.
“It was a little late in the game for me to run to the ATM and get some money,” said Freeman, who said he doesn’t carry more than $20. “We’ve been trained for years to use a credit card because it’s so convenient.”
As a business owner, Freeman understands rising costs of doing business. But he doesn’t think passing along credit card surcharges is the way to go.
“Credit card fees have always been a cost of doing business. It’s something we’ve absorbed and included in our pricing, like electricity,” said Freeman. “Because I own a tanning salon, we don’t have a surcharge for electricity when our price goes up.”
Freeman said he understands that businesses costs are going up. But as a consumer, he’d rather the business raise the price of goods and let consumers decide if they want to pay for the goods instead of what he calls sneaking in surcharges for the use of credit cards.
“These businesses clearly have no compassion for what people are going through with inflation attacking their disposable income at every turn. Apparently, they also have no understanding of how fragile their relationship is with their customers,” Freeman said.
He said he will stop going to businesses that charge surcharges.
Consumers don’t want to be ‘nickel and dimed’
There is nothing in Ohio’s laws that prevents businesses from adding a surcharge for credit card fees or requiring a minimum purchase in order to charge a purchase, according to a spokeswoman for the Ohio Attorney General’s office.
The practice is allowed in most states, said Ted Rossman, a senior industry analyst at Bankrate.com. The exceptions are Connecticut, Massachusetts and Maine, he said.
Consumers “don’t want to be nickeled and dimed for everything,” said Rossman. “You don’t want to have a certain line for credit card processing and a line item for heating or air conditioning and the rent and the employee’s health insurance and using the bathroom. It gets kinda of silly at some point.”
Rossman said a Morning Consult survey commissioned by American Express study in 2021 showed 78% of consumers agree that a surcharge makes them feel like a business does not appreciate their purchase.
A similarly strong majority (77%) agreed if they have the option, they’ll take their business elsewhere rather than pay a surcharge, Rossman wrote in an article he shared on the subject.
Surcharges have “proven to be an unpopular concept, but it’s one that seems to be catching on more broadly. I think it’s short-sighted on the part of the businesses that implement it and I think it could turn off their employees,” Rossman said.
Some retailers, but not many, have also turned to offering discounts for paying cash to try to discourage credit card use, said Rossman.
In Ohio, many gas stations have moved to offering some type of “discount” or lower price if the customer registers for a program to pay via a direct payment from a checking account — which doesn’t come with a fee to the customer or retailer — instead of credit card payments.
Rossman said he feels like gas stations that post different prices for credit card and non-credit card purchases aren’t viewed as critically by consumers.
“What I think people really don’t like are surprise fees,” Rossman said.
“The point is, I think people don’t like these ‘gotcha’ fees on a bill,” he said. “When you discover that your receipt has this extra line item that you weren’t anticipating, it just rubs people the wrong way. That leads a lot to an outcry on social media and I’ve heard of companies that have had to backdown and sometimes the business owner was well-intentioned.
“Sometimes I hear the business owner thought ‘the surcharge was better from a PR (public relations) standpoint because it signifies that it’s temporary or it signifies that I’m not profiting or gouging..but in reality, though, I just don’t think it sits well.”
Beacon Journal staff reporter Betty Lin-Fisher can be reached at 330-996-3724 or email@example.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ To see her most recent stories and columns, go to www.tinyurl.com/bettylinfisher