What happens when surcharging disappears?

Surcharging historically served two very specific purposes: 

• Recovering the cost of card acceptance 
• Influencing customer behaviour at checkout 

Both of those mechanisms are now gone. 

While interchange reductions will lower part of the cost stack, they do not remove it. Once scheme fees and provider margins are included, most businesses will still face all-in card costs in the range of ~1-2%. 

At scale, that becomes material: 

• $10M annual volume: ~$100K-$200K cost 
• $50M annual volume: ~$500K-$1M cost 

That cost has not disappeared. It has simply moved into the P&L. 

There is no single “right” answer emerging. Instead, businesses are clustering into a few clear response paths. 

Short-term stabilisation

• Absorb the cost to avoid disruption 
• Maintain pricing and checkout experience 
• Buy time to assess options 

Where this works:

• High price sensitivity environments 
• Complex operational setups 

Trade-off: 

• Cost grows directly with volume. 

Pricing adjustment

• Embed payment costs into product/service pricing 
• Remove visible payment differentiation 

Where this works: 

• Sectors with lower pricing transparency 
• Environments where simplicity matters 

Trade-off: 

• Reduced cost visibility 
• All customers effectively subsidise card usage 

Cost optimisation

• Renegotiate PSP/acquirer terms 
• Challenge blended pricing models (often ~1.8-2%+) 
• Increase scrutiny on fee pass-through 

Where this works: 

• Mid to enterprise merchants 
• Businesses with negotiating leverage 

Limit: 

• This improves cost, but does not fundamentally change the underlying card cost structure. 

Payment mix redesign

• This is where the conversation becomes more strategic. 
• Instead of focusing purely on reducing card costs, businesses are starting to ask: How much of our volume actually needs to sit on card rails? 

For many organisations, payment mix has evolved over time without deliberate optimisation. Now that cost is visible, it becomes a lever. 

Emerging: more control over acceptance

There are also early signs of a more active approach to acceptance itself: 

• Reviewing higher-cost card segments (e.g. premium tiers) 
• Managing how payment options are presented 
• Considering selective acceptance strategies (globally) 

This is still evolving locally, but the direction is: payment acceptance is becoming something businesses actively design. 

Removing surcharges changes how behaviour is influenced, but it doesn’t remove influence altogether. 

What replaces it is more subtle, but often more effective. 

Checkout design becomes a commercial lever

The position of payment methods has a measurable impact on customer choice. 

Evidence from live environments shows that: 

• Reordering payment options can drive multiple increases in adoption 
• This can occur without any pricing or incentive changes 

Practical takeaway: 

• Payment order is not a UX detail 
• It directly impacts cost and margin 
• Incentives become targeted 

Rather than blanket surcharges, businesses are using: 

• Small discounts 
• Cashback 
• Loyalty incentives 

These are applied selectively and designed to shift behaviour without eroding overall margin. 

Experience drives repeat usage

Behaviour is not solely driven by price. Reliability matters. 

Payment options that are 

• Fast 
• Clear 
• Consistent 

tend to see strong repeat usage. In some sectors, repeat usage of account-to-account payments is already above 90%.

The most proactive organisations are not overhauling everything at once. They are taking a structured approach. 

Step 1: Understand true cost

• Break down payment cost by method (not blended) 
• Identify real cost drivers (scheme, interchange, margin) 

Step 2: Audit checkout behaviour

• Where are payment options positioned? 
• What are customers actually selecting? 
• Where is friction or drop-off occurring? 

Step 3: Identify mix opportunities

• What % of volume could shift without disruption? 
• Which segments are most receptive to change? 

Step 4: Test and iterate

• Reposition payment options 
• Introduce light incentives 
• Measure shift in mix and cost 

Step 5: Scale what works

• Expand successful patterns 
• Align reporting to margin impact 
• Embed into ongoing optimisation 

Most businesses are not looking to replace cards outright. What is happening instead is a gradual rebalancing. 

More organisations are introducing or expanding real-time, account-to-account options alongside cards, with the goal of shifting part of their volume over time. 

The rationale is practical: 

• No international card scheme fees 
• Faster settlement 
• Simpler reconciliation 

At scale, even modest shifts matter. 

For example: 

• $1M monthly volume at ~1.5% card cost = ~$180K annually 
• Shifting a portion of that volume changes the cost curve quickly 

The bigger shift, one would assume would be the technology. But it is in fact the intent to actively manage payment mix as a cost driver. 

The removal of surcharging changes ownership. 

• Payments are no longer a recoverable cost. 
• They are now a controllable input into margin 

That brings them into: 

• CFO and finance discussions 
• Pricing strategy 
• Product and checkout design 

In many organisations, this is the first time payments are being treated as a strategic lever, rather than an operational necessity. 

The end of surcharging leaves businesses needing to decide how they’re going to respond. 

• Some businesses will absorb the cost. 
• Some will adjust pricing. 
• Some will renegotiate providers. 

The more forward-looking organisations are doing something slightly different. They are using this moment to rethink how payments actually work across their business. 

Because ultimately, payment cost is now something you design, not something you pass through.