Mike Said He Didn’t Want to Charge His Clients. Then He Saw the Annual Number.

Mike runs a pest control company in Portland. Twelve years in business. Good reputation. Steady residential book, a handful of commercial accounts. He called me because he wanted to look at his processing costs — he had heard that a merchant surcharge program might be worth considering, and wanted to understand it before dismissing it.

His rate was already excellent. 0.16% plus $0.10 per transaction over interchange. For a service business doing his volume, that is about as clean as it gets — well below what most merchants pay when they negotiate their processing rate. I told him so.

He said, “So there’s nothing you can do for me?”

I said there was one thing worth considering. A merchant surcharge program — passing the card processing cost to clients who pay by card while keeping cash and check payments at the standard price.

He went quiet for a moment.

“I don’t want to charge my clients extra,” he said. “I’ve had the same families for eight years. I’m not nickel-and-diming them.”

I hear this often. The merchants who resist a merchant surcharge program the most are usually the ones with the strongest client relationships — which is exactly backwards from what you might expect. You would think a merchant with loyal long-term clients would have more latitude to make a pricing change, not less. But the relationship is precisely why it feels risky. These are not anonymous transactions. They are people Mike knows by name.

What Mike was really saying was: I have built something here and I do not want to damage it over a few percentage points.

That is not irrational. That is someone who understands what their business actually runs on.

The Reframe

So I did not argue with it. I asked him a different question.

“When your supply costs go up, what do you do?”

He said he raises his service price. He had done it twice in twelve years. Both times, he called his long-term clients personally before the change went into effect. Not one of them left.

“Right,” I said. “Because you told them why, and they trust you. This isn’t different.”

Adoption has accelerated sharply: 34% of US small businesses added a credit card surcharge in 2025, up from 1–2% in 2019, according to the J.D. Power 2025 U.S. Merchant Services Satisfaction Study. The 2026 study put the figure at 35%, with 32% of surcharging merchants reporting that customers cancel purchases at least some of the time when a surcharge appears at checkout.

Mike’s average transaction is around $180. At 0.16% plus interchange — call it 1.9% blended — he is absorbing roughly $3.40 per job in processing costs. Across 400 jobs a month, that is $1,360 quietly leaving his business every thirty days. Over a year, $16,320.

That is not nothing for a twelve-person operation.

A merchant surcharge program does not eliminate that cost. It reallocates it. The client who pays by card covers the processing fee — typically displayed as a separate line item at checkout. The client who pays by check or cash pays nothing extra. The fee is disclosed upfront, before the transaction is confirmed, which is the card brand requirement for a compliant program.

Most service businesses find that roughly half their clients pay by card and half by check or cash. Which means the surcharge does not apply to everyone — just to the clients who are already costing Mike the most to serve from a processing standpoint. For a full comparison of how surcharging fits alongside other pricing options, see our dual pricing and surcharge program pages.

Mike’s concern was not just philosophical. He had a practical one too.

“A lot of my residential clients pay with debit,” he said. “They’re not running up rewards points. They’re just paying their bill. It feels wrong to charge them the same as someone paying with an Amex.”

This is where the structure of a well-designed merchant surcharge program matters. Under interchange-plus pricing — which Mike already had — the actual cost of a debit transaction is meaningfully lower than a credit card. A regulated debit card under the Durbin Amendment costs around 0.05% plus $0.22 per transaction. A premium rewards credit card might cost 2.1% or more.

The Solution: Surcharge Credit, Absorb Debit

The option I put in front of Mike was this: surcharge credit cards at the full processing cost. Absorb the debit fee entirely. His debit clients pay nothing extra. His credit card clients cover their own processing cost. His out-of-pocket drops to almost nothing on the credit side, and he absorbs a small, predictable cost on debit that is a fraction of what he was absorbing before.

He could call it whatever he wanted in how he explained it to clients. What it meant in practice was that the clients he was most worried about — the longtime residential families paying by debit — would never see a surcharge line on their invoice. The Federal Reserve’s interchange data makes the debit cost difference concrete — regulated debit fees are capped by law, making debit absorption genuinely affordable.

He did not say yes immediately. He said he wanted to think about it, which is the right answer. A decision that touches how you present pricing to eight-year clients deserves more than thirty seconds on a phone call.

He called back four days later.

“I talked to my wife about it,” he said. “She asked me if I would rather raise my prices by three percent across the board or do this. When she put it that way, it was obvious.”

A price increase affects every client, every invoice, every contract renewal conversation. A merchant surcharge program affects only the clients who choose to pay by credit card — and it is disclosed to them before they pay, giving them the option to use a different method if they prefer. The transparency is built into the structure. For business-to-business accounts the calculus shifts — a surcharge a B2B buyer notices can cost you the account, so lowering the cost is often the better move.

Mike went live with the surcharge on credit cards and debit absorption two weeks later. He sent a short note to his residential client list explaining the change — same tone he used when he raised his service price, same directness, same personal touch. Three clients asked questions. None of them left.

The Result

His processing cost for the following month: $187. Down from $1,360. The CFPB’s guidance on merchant fees confirms that surcharge programs, when properly disclosed, are a legitimate and legal way for merchants to manage processing costs in most states.

He told me later he wished he had done it three years earlier. I told him most people say that.

More on cost-shifting programs and how they fit different businesses

Mike Was Absorbing $16,320 a Year. Are You?

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