Managing economic uncertainty with surcharging: a strategic solution to rising business costs
In today’s volatile economic landscape, businesses face unprecedented challenges from multiple economic pressures and uncertainty. It’s notable that, just yesterday, the Federal Reserve cut its benchmark rate by 25 basis points, the first rate cut since December 2024, largely as a response to a slowing job market, and despite ongoing inflationary pressures. Our comprehensive analysis examines current market conditions, identifies key business challenges, and presents surcharging as one strategic solution to manage economic uncertainty while maintaining operational stability.
Macro forces at play: what’s squeezing business margins
- Interest rates stay elevated. The Federal Reserve has made the first rate cut since December 2024. Even though markets expect some easing, borrowing remains costly for many businesses.
- Inflation is broad-based and sticky. Consumer Price Index (CPI) rose 2.9% year-over-year in August 2025, and core inflation (excluding food & energy) is around 3.1% in July 2025, meaning price pressures aren’t just in volatile categories.
- Labor costs are rising faster than prices.Wages and salaries increased about 3.9% YoY (12 months ending June 2025), outpacing inflation.
- Government debt and fiscal constraints. U.S. federal debt is at approximately 124.3% of GDP in Q4 2024, limiting how much government policy can step in to relieve business cost pressures.
Micro impacts: what this means day to day
- Margins get tight quickly. A business that sees input costs, wage bills, rent, or interest rise can’t always pass those costs along via base price increases – customers resist, contracts are fixed, and re-pricing is slow.
- Payment processing fees add up. With credit card interchange and network fees rising, absorbing those fees can eat into already thin margins – especially for SMBs that can’t negotiate as aggressively. A recent Reuters analysis notes that merchants are increasingly turning to surcharging to offset these costs, but must navigate a patchwork of state and federal laws and card network rules that complicate compliance.
- Customer expectations favor transparency. Today’s customers expect clarity. Fees that are disclosed, fair, and tied to real cost drivers are often accepted. Hidden or surprise fees, not so much.
- AI & tech disruption are double-edged. On one hand, automation and AI promise productivity gains. On the other, they require investment – software, training, infrastructure – all of which come at a cost. Without a reliable way to recoup rising general overheads, heavy tech investment becomes riskier.
Why traditional cost-cutting backfires
| Cost cutting strategy | Where it can fail |
|---|---|
| Layoffs, benefit cuts, operational downsizing | Damages services, turns over staff, harms reputation |
| Raising base prices broadly | May lose price-sensitive customers; less flexible |
| Taking on more debt or looking for subsidies | Expensive, risky, and often lagging behind current cost pressures |
The case for surcharging – why it works now
Surcharging means adding a transparent, percentage-based fee on credit card transactions (only when credit cards are used). It’s not perfect, but done right, it checks a lot of boxes:
- Targets only the transactions that impose extra cost – you collect fees on those whose payment method incurs higher fees
- Keeps core pricing stable – base product prices stay predictable; surcharge is a visible and optional add-on
- Allows sensitivity to regulatory, network, and cost changes – as processing fees, state laws, or card network rules change, surcharges can adjust
- Supports investment in tech/AI- those extra small fees across many transactions can fund improvements rather than cutting things that customers notice
Where Yeeld fits in: making surcharging work without the headaches
For certain businesses, surcharging can make a lot of sense. We build solutions so businesses can implement it confidently and without massive development work.
- YeeldPay. Announced in August 2025, YeeldPay lets businesses deploy a hosted payment page that is designed for compliant surcharging without delving into engineering work or complex integrations.
- Yeeld Surcharging API. Released in Feb 2025, this API gives merchants real-time access to updated state regulation rules, card brand policies, and proper disclosures. Automatic updates help avoid continuous monitoring.
- Regulatory tracking and advisory support. Yeeld keeps tabs on changes to laws (for example, Oklahoma recently changed rules to allow surcharging starting Nov 1, 2025) so merchants don’t get caught off guard
Example: What a surcharging strategy looks like
Imagine a small e-commerce retailer:
- They see credit card fees averaging ~3% on many sales
- They implement a 3% surcharge on credit card payments, only where allowed (state laws, card network rules)
- They clearly disclose the surcharge pre-checkout
- They use Yeeld’s solutions to automate surcharges in real-time
Result: They retain customers who prefer using credit cards at a known cost, protect margins, and gain cash flow to invest in tech or customer experience
Final take
In 2025, businesses face pressure from every direction: elevated interest rates, rising labor costs, and persistent overhead. At the same time, customers expect transparency, and competitive dynamics demand ongoing investment in technology and service.
Surcharging isn’t a cure-all, but it is a practical, proven way to stabilize margins without eroding customer trust. With Yeeld’s solutions – YeeldPay, the Surcharging API, and advisory support – businesses can implement surcharging cleanly, stay ahead of regulatory changes, and protect the financial flexibility needed to grow.
