More small businesses across Los Angeles and other parts of the U.S. are passing rising credit card processing fees onto customers, sparking complaints from consumers and raising concerns about transparency at checkout counters.
As processing costs continue to climb, some business owners are adding extra charges for card payments, while others are moving to either cash-only or fully cashless systems to manage expenses.
Jerry Baxsman, who operates an ice cream chain in Los Angeles, said he faced a difficult decision late last year as operating costs increased. He had to choose between raising menu prices across the board or adding a surcharge for customers using credit cards.
He ultimately decided to impose an additional 1.75% fee plus 20 cents per transaction on card payments.
“We spent about $40,000 on credit card processing fees alone in 2025,” Baxsman said. “Our operating margins kept shrinking, so we had to either raise prices for everyone or pass some of the cost on to customers who choose to pay by card.”
He added that it did not seem fair to increase prices for cash-paying customers in order to offset fees generated by card users.
Still, some customers expressed frustration after discovering the extra fees only after making a purchase.
“Some people don’t even realize business owners are allowed to add these charges,” one customer said. “It feels unpleasant when you notice the fee after the payment is already done.”
According to a 2026 merchant satisfaction study by J.D. Power, the percentage of businesses charging additional fees for credit card transactions has risen to 35%. At the same time, 96% of businesses still accept credit cards, highlighting how dependent consumers have become on electronic payments.
The report noted that some businesses have introduced alternatives, such as prepaid cards, to accommodate customers who carry only cash.
Meanwhile, a smaller number of merchants are eliminating card payments altogether.
A grocery store owner in Pomona said credit card processing costs became too burdensome for the business.
“Most of our customers are regulars, so operating as cash-only hasn’t created major problems,” the owner said. Signs posted throughout the store inform shoppers that card payments are not accepted.
Credit card processing fees vary depending on card type, industry category, monthly sales volume, point-of-sale systems and payment methods. Debit card fees are generally lower, ranging from about 0.5% to 1.5%, while corporate cards and premium cards such as American Express often exceed 2.5%. Restaurants and other businesses with frequent card transactions can end up paying tens of thousands of dollars annually in fees.
Industry experts say many small businesses are strategically adjusting payment policies as they struggle with rising operating costs.
“Businesses are making different choices depending on their industry and customer base,” one analyst said. “They are trying to balance processing costs, operational efficiency and customer convenience.”
