Leaders often treat payments as a price decision, but customers see them as a trust decision. Every investment sends a signal about how the company thinks about the relationship – whether it’s trying to remove friction from customers or, sadly, monetize it.
Some fees sound reasonable, while others sound like punishment, fraud or laziness disguised as policy. The difference is more important than most leaders realize.
Let’s take a look at the fees companies charge, why they charge them and how they ultimately shape the customer experience.
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Payments customers don’t always like
Certain fees trigger almost universal customer frustration because they shift the burden of the company’s operating options to customers. Here are some of the more common ones.
Restocking or restocking fees: Sometimes these include legal fees. Often, they exist because product descriptions, sizing or orientation were inadequate. Customers are penalized for the uncertainty created by the company.
Surprising fees at checkout (shipping and beyond): Customers bear the shipping costs. They can’t wait to find them after committing to a purchase. The same applies to obscure processing or administrative fees that appear later in the game.
Additional restaurant costs (eg, “service,” “wellness,” “health care”): The intention may be good, but the execution is poor. Labor is the main cost of doing business, so build it into prices. Don’t separate it and force customers to put it together at the table. I once ate at a restaurant that charged a garnishment fee. I asked about it. The restaurant was undergoing renovations and was passing the cost on to its customers. My reaction: It’s not my problem. There was no option to refuse payment, unlike the employee service charge, but then again, that’s the cost of doing business – or bad planning.
Easy payments: This is a masterclass in irony. Customers are billed for using the company’s most efficient, lowest-cost channel. If it’s convenient for you, then so be it.
Early termination or cancellation fees: This does not build loyalty — it traps customers. If someone wants out, the relationship is already broken.
Automatic renewal penalties: Forgetting to cancel should not be a revenue strategy. Send reminders and give customers a chance to opt out before charging them.
Replacement or replacement costs: Life happens. Charging customers to adapt, especially when operating costs are small, sounds punitive.
Paper payments: Charging customers for their preferred format, while pushing yours, is short-sighted.
Payment processing fees: These are the basic costs of doing business. Self-referrals tell clients that you are a business, not a relationship.
Combined support fees: Charging more to fix problems with your product shows that support is a profit center. It shouldn’t be – it’s table stakes.
Unemployment or layover payments: Punishing customers by not engaging or using ensures they won’t come back. If the usage is low, the experience has failed.
On their own, all these amounts may seem small. Together, they show that the company promotes transactions rather than building relationships. Ask yourself:
- Are you nickel-and-diming for short-term income or building trust and long-term relationships?
- Do payments improve the customer experience or compensate for being broken?
Payments that customers generally accept
Not all payments generate that unpleasant response you’d expect from paying more, unexpectedly. Customers are willing to pay if the payment is reasonable, transparent and tied to real value.
- Optional upgrade: Priority shipping, premium services and enhanced experiences are choices, not penalties.
- Expedited or special handling: If customers are asking for something fast or complex, paying for it makes sense. If your costs don’t go up, theirs shouldn’t either.
- Pricing based on usage: Paying for what you use is often considered fair, especially if customers can predict debt without needing an accountant and a lawyer.
- Professional services: Fees for consultation, installation and custom work are accepted if the price is clear. Call it what it is: technology.
- Reasonable late payment penalties: Customers accept accountability when expectations are clear and kindness is present.
- Government or regulatory fees: This is tolerable if it is clearly written, so don’t hide it.
- Premium access or membership categories: Customers will pay for quality and uniqueness when the experience is delivered.
Customers will pay for price, choice or actual incremental cost. They resist paying for conflict, ambiguity or business convenience. When payments compensate for broken processes, rigid policies or internal cost structures, customers revolt. If payments are clear, predictable and avoidable, customers are compliant.
Why do companies charge these fees?
Despite the frustration they create, most unpopular payments do not come from malicious intent. They often arise from practical business pressures and reasonable efforts to cover real costs.
Reimbursement of expenses: Many fees start as legitimate efforts to reduce real costs, eg, handling returns, processing payments or handling special requests. The problem is that companies often push these costs directly onto the customer rather than developing the process that creates the cost in the first place.
Behavior management: Late fees, cancellation fees and change fees are designed to shape behavior. Often, they feel like being punished.
Risk management: No-shows, refunds and unused bookings create uncertainty. Fees transfer that risk to customers. Often times, there are real, non-refundable costs associated with these fees.
Margin protection: In highly competitive industries, base prices are automatically kept low while profits come from add-ons and extra charges, eg, baggage charges, concert ticket luxury charges, hotel charges. Done badly, this becomes price gouging.
Industry familiarity: “Everybody’s doing it” is one of the smallest – and most common – reasons for the existence of money.
Financially driven decision making: Most payment structures come from spreadsheets rather than experience design discussions. Finance sees cost recovery and margins, while customers see conflict and lack of transparency.
That gap (between finance and customers), which explains all the other reasons, is what ultimately destroys trust.
Why this discussion is important
Fees aren’t just a pricing strategy — they’re a customer focus and culture problem. It really reveals how a company thinks and answers this important question: When a conflict arises, do we remove it or make money from it?
They also reveal broken processes upstream – return payments often indicate poor product experience, fixed system fees and support fees indicate poor investment in service.
In other words, many currencies are symbols rather than solutions and end up building trust over time. Customers rarely leave because of a single payment, but repeated conflicts and minor perceived injustices add up.
Products that focus on short-term income generation endure that erosion. Brands focus on the long-term credibility question of whether those funds belong to the information at all. (See the article I wrote for MarTech last year about value creation vs. value extraction.)
What service do customers have?
Customers are not completely powerless when faced with unpopular fees, although their options vary. Sometimes the easiest way is to ask for the money to be withdrawn. Frontline staff are often empowered to do something different, especially with relevant requests.
Customers can also vote with their wallets. Companies that rely heavily on penalty payments often find that competitors willing to design better experiences quickly gain loyalty.
Public feedback channels such as online reviews and social media can force change, especially if the payments feel deceptive. In regulated industries, formal complaint channels provide additional powers.
But the most powerful force remains market pressure. When enough customers procrastinate, companies respond. A few examples of where this has happened include: reduced bank and ATM overdraft fees, the elimination of airline switching fees and increased scrutiny of event ticketing fees.
Sadly, change rarely comes from internal thinking but from external pressure. Let’s change that.
Questions leaders should ask
The real issue isn’t whether the fees generate revenue. Whether they reflect the type of relationship the company intends to build.
A few helpful questions leaders should ask (for that inner reflection):
- If we were designing this experience from scratch today, would this payment exist? And why?
- What of our money would we be forced to remove if we had a better competitor tomorrow? And why?
The conversation should then move from protecting money to fixing the reason for existence. Ultimately, payments are rarely just about money – for customers, they’re about trust.
