Restaurant Surcharges Are Changing the Math for Credit Card Rewards

A few weeks ago, I was about to pay the HVAC technician who had repaired my home’s heat pump. Out of habit, I pulled a credit card from my wallet — I figured I’d earn rewards on this pricey transaction — but then the tech warned me that his company assesses a 3% surcharge on credit card payments. Thankful for the heads-up, I wrote him a check instead.

Credit card surcharges aren’t new, but they’re becoming more common. According to J.D. Power’s 2025 U.S. Merchant Services Satisfaction Study, “34% of merchants are adding surcharges for customer purchases made using credit cards.” Compare that number to just a year before, when 20% of merchants reported assessing surcharges, per a 2024 State of the Industry Report from CMSPI, a payments consultancy firm.

Surcharging at restaurants, in particular, can at times feel like the rule, not the exception. One Reddit thread from August 2025 pointedly asked: “Since when did 3% CC [credit card] fees at restaurants become the new normal?” In other words, why now?

Several factors are at play, but a short version is that it’s simply become more expensive, over time, for businesses to accept credit cards, and surcharges help offset those costs.

The practice, though, is changing the math for users of rewards credit cards. While it used to be a no-brainer to pick up the tab with a card that earns a flat 2% back, now that same decision on a bill with a 3% surcharge could result in a loss.

“We’re approaching a tipping point where consumers are actively saying they won’t pay the surcharge,” says Don Apgar, director of the merchant payments practice at Javelin Strategy & Research.

In the moment — stuck in the restaurant booth when the check arrives — you don’t exactly have much of a choice. But you do have longer-term options.

The payment processing company Stripe defines a surcharge as “an additional fee that a business may add to a transaction when a customer pays with a credit card,” meant to recoup “the costs that the business incurs for processing credit card payments.” These costs to businesses, known as interchange fees, totaled more than $160 billion in 2022, according to Stripe.

Interchange fees are set by the payment networks that credit cards run on: Visa, Mastercard, American Express and Discover. The rewards that your credit card earns — cash back, points or miles — are largely funded by those interchange fees. As such, merchants generally pay more in interchange fees to accept rewards cards as a payment method. Apgar estimates that 75% of the credit cards that consumers pay with today earn rewards.

It’s become a flashpoint in the payments industry, pitting credit card companies against merchants. The former argue they’re providing an essential service and that interchange fees are simply the cost of doing business, while the latter argue that those costs are spiraling out of control.

Lawmakers, too, are paying attention. In 2022, the Credit Card Competition Act was introduced in Congress. It aims to create more competition in the credit card payment network market, which supporters argue would lead to lower interchange costs for merchants. The bill hasn’t passed, but supporters continue to push for it every year.

So for now, merchants are leaning on surcharges to defray interchange fees, when they can. Some states ban surcharging outright, while others allow it as long as merchants abide by certain rules.

For example, businesses must tell their customers — through written or verbal notices — if they impose a surcharge for credit card payments. And in general, surcharges cannot exceed the limit set by the payment network that the card runs on. (You may have encountered such language on a restaurant bill: “Non-cash adjustments are not greater than our cost of acceptance.”)

It’s a patchwork system that can be hard to follow for both customers and merchants. And on top of that, rewards credit cards are getting even more generous for consumers — and thus more expensive for businesses to accept.

“U.S. cardholders have an insatiable appetite for rewards and benefits,” says John Cabell, managing director of payments intelligence at J.D. Power. “We continue to see an upward spiral for rewards, cash back percentages [and] the number of rewards categories.”

Cabell also believes the COVID-19 pandemic accelerated the surcharging trend. “Since the pandemic, additional fees and charges have become more commonplace,” he says. For instance, some restaurants that remained open during the pandemic tacked on a COVID-related surcharge to make up for the extra costs required to operate safely.

Today, restaurants may be more inclined to surcharge with the recent memory that their patrons were willing to pay extra fees before.

“Surcharging was few and far between … but now it’s becoming de facto,” Apgar says.

When faced with a surcharge, you could opt to pay the bill with cash, check or debit card, instead of credit. You won’t be alone. J.D. Power’s 2025 U.S. Merchant Services Satisfaction Study found that “41% of credit card users … decided not to use a card payment method at a large or small business because of a surcharge.”

If you insist on paying with a credit card, try to use one whose rewards outweigh the surcharge. And remember, it’s not always about the percentages. To come out ahead on a restaurant tab with a 3% surcharge, a card that earns 3% cash back on dining would cover you — but so might a card that earns 2 points back per $1 at restaurants, depending on how much those points are worth. For that matter, so might a card with a large welcome bonus that you’re trying to snag.

“You have to do the math to figure out if it’s worth it based on the type of rewards and benefits you’re pursuing,” Cabell says.

Use a card that earns bonus rewards on dining, then “stack” those savings with a cash-back app or card-linked offer.

Chain restaurants and local eateries alike are often featured in both.

If you suspect a restaurant is illegally surcharging, you can dispute the charge by filing a complaint with the card issuer, who will escalate it to the payment network and then the payment processor for that particular merchant.

You could also file a complaint with the Better Business Bureau or your state’s attorney general. To recover a surcharge, you could ask for a refund from the restaurant, or go to small claims court. However, Cabell warns that it could “take a real effort for a very small amount of money.”

If you see a sign on the door or menu mentioning a “non-cash service fee” or a “discount for all cash purchases,” you could walk out and take your business elsewhere.

That’s cold comfort to, say, foodies who love trying out the latest trendy spots, surcharges be darned. In that case, it may help to keep in mind that rewards are only one benefit of paying with a credit card. You’ll also get stronger fraud protections, easier budget tracking and opportunities for credit-building. Depending on the card and the purchase, you may also get insurance coverage or extended warranties.