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Colorado to legalize credit card surcharges

If the bill passes, this will be the 47th state to allow merchants to assess extra fees for paying by card


If the Colorado bill gets signed, the state will permit merchants to charge extra fees for credit card payments starting July 1, 2022. And plenty of customers will not be happy, according to a recent Morning Consult survey commissioned by American Express.

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The Colorado House and Senate recently voted to allow credit card surcharges in the Centennial State.

Assuming Gov. Jared Polis signs the bill, that will make Colorado the 47th state to permit merchants to charge customers an extra fee for paying with a credit card. (Although the bill, if signed, won’t take effect until July 1, 2022.)

I know that merchants don’t like paying credit card processing fees – which often comprise between 2% and 2.5% of each transaction – but I think passing these fees to customers is short-sighted and does more harm than good.

Survey finds consumers don’t relish surcharges

More than 3 in 4 consumers (78%) agree that a surcharge makes them feel like a business does not appreciate their purchase, according to a recent Morning Consult survey commissioned by American Express. That’s up from 70% in 2020.

A similarly strong majority (77%) agreed if they have the option, they’ll take their business elsewhere rather than pay a surcharge. Americans clearly don’t like feeling nickeled and dimed.

The good news for cardholders is that while credit card surcharges will soon be legal in every state except for Connecticut, Maine and Massachusetts, they’re not implemented all that often.

And I hope it stays that way.

The COVID effect

Some businesses feel emboldened to tack on surcharges due to the pandemic. Whether they call it a COVID surcharge or a credit card surcharge, to them, it looks like they’re saving a few bucks at a time when they’re struggling and they rationalize it as a smart business strategy.

But many of their customers are struggling, too, and they get upset when they see surprise line items on their receipts.

Technically, surcharges are supposed to be disclosed ahead of time, but sometimes business owners don’t follow the rules and other times the customer just missed the sign.

Regardless, the customer is left with a negative feeling and they’re often not shy about telling their friends (or the world, on social media). And many vote with their wallets and take their business elsewhere. Their displeasure hurts the staff, too. The American Express Morning Consult survey found 59% of Americans would likely tip less for a service if they encounter a surcharge.

A sizable number of businesses that implemented COVID surcharges got rid of them after receiving swift criticism.

One of them, Missouri restaurant owner Billy Yuzar, told, “We were hoping to adjust the charge weekly based on the prices we get from our suppliers instead of raising all of our prices across the board on our menu … We can take the harassment on our social media, but when they start being ugly to our employees here, it really bothers us. This is why we decided to just eat the cost of printing new menu[s] and adjust it weekly.”

That thought process is telling

Business owners often don’t realize how negatively a surcharge will be perceived. As Yuzar said, they feel like they’re doing the right thing by assessing a surcharge (which they view as temporary) rather than passing along a price increase (which feels more permanent).

My advice is to read the room. Americans typically want to pay one clear, fair price. They don’t want fees tacked on for every little thing. What’s next – a fee for the air conditioning? Or using the bathroom? Even airlines (which have a much more captive audience) don’t do that.

An overwhelming majority (91%) said they expect to use their credit or debit card wherever they go, without having to pay a surcharge, according to the Morning Consult survey. And usage of digital payment methods – whether we’re talking e-commerce, mobile payments or physical credit and debit cards – has risen sharply during the pandemic. There’s also ample data that shows people spend more when they pay with a card than when they use cash.

(By the way, there are costs associated with accepting cash, too – everything from theft to handling fees, counting errors, time spent running to and from the bank, etc.)

Ultimately, consumers want to pay however they want, whenever they want. Businesses that make it harder to do this will suffer. The court of public opinion is extremely powerful. Just because surcharging is allowed doesn’t make it a smart business strategy.

Have a question about credit cards? E-mail me at and I’d be happy to help.

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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