Vendor Surcharges Just Repriced Your Card Float

A founder I work with runs a 41-person specialty manufacturer at $11M revenue. Her controller built a vendor card-payment program in 2023 that pushed roughly $180K a month onto two corporate cards. Twenty-five days of float on average. A points program worth about $42K a year against rewards she actually used for travel and statement credits.

In April she pulled the rewards line item and ran it against vendor surcharges that started showing up on invoices in Q1. Three of her top ten vendors had added 3% in the last six months. The net program was now costing her cash, not generating it.

What changed

Surcharging crossed an adoption threshold this year. About 22% of small businesses are now adding a credit card surcharge to invoices, with a J.D. Power survey in early 2026 pegging the broader number at 35%. Two years ago it was a fringe practice. In 2026 it's policy at a meaningful share of the vendors a growing company already buys from.

The mechanics also shifted in a way that hurts buyers. Premium rewards card interchange averaged 3.25% in 2025, which is what funds the points programs your finance team is optimizing. Visa caps surcharges at 3% and Mastercard at 4%. A vendor adding the maximum surcharge can effectively claw back the entire interchange you were earning rewards on, plus a sliver.

For B2B specifically, only Connecticut and Massachusetts still attempt to limit the practice, and recent court rulings made those statutes mostly cosmetic. Vendors that paused on legal grounds resumed.

Where the math breaks

Look at your top fifteen vendors by AP volume. Three questions per vendor.

Are they surcharging today. Most surcharge notices arrive as a one-line addition to the invoice or a quiet update to the supplier portal. Your AP system reconciles to the invoice total and nobody flags the new line item. Pull the actual paid amount on the last three months of card-paid invoices against the original PO. If the variance is 2 to 3%, you're paying the surcharge and didn't see it.

What rail you'd pay them on otherwise. ACH is cheap and slow. A wire costs $25 and clears the same day. If the vendor only added a surcharge on the card rail, the rewards math now compares your card program against your free or near-free alternative, not against the cost of capital.

What your rewards program actually returns net of fees. On a 1.5% cash-back card paired with a 3% vendor surcharge, you lost 1.5% on the transaction. A 2x points card valued at 1.8 cents per point breaks even on a 3% surcharge before you account for the float. The float is real. It's worth less than the rewards line item used to suggest.

The card-pay vendor program made sense when the vendor absorbed the interchange. Once the vendor passes it back, you're paying for float at the prime rate plus a margin you didn't agree to.

What to do this quarter

Tag every vendor that surcharges in your AP system. The line item is usually called convenience fee, processing fee, or service fee. Most growing companies don't track it because it didn't exist before.

Route surcharging vendors to ACH or wire. Save the card rail for the vendors who don't surcharge or who give you 1% off for paying by card, which a small number of large suppliers still do. The rewards program runs on the unsurcharged tail of your AP file.

Recompute the program's net return at the end of the quarter against the new surcharge bill. If the result is still positive, keep going. A flip to negative on more than a third of your vendors means the program is now a finance decision, not an AP automation decision.

Your card program didn't change. The vendors moved.