A credit card surcharge is a fee some businesses charge when you pay with your card. They typically charge between 0.5% and 2% of the transaction's value, or even a little more if paying by Amex. Sometimes for debt card transactions, the fee is a set amount, like 10 or 20 cents.
Businesses charge these fees to help them cover the cost of processing a card payment – but where they used to rare a few years back, these charges are everywhere these days. While there are strict regulations around how much they can charge, these rules are not always followed. Here's what you need to know.
First: what is a credit card surcharge?
A credit card surcharge is a fee that merchants ie. businesses can charge when you pay by credit card.
Businesses have always paid banks a fee for accepting credit cards, but in the past, credit card and debit card transactions were only a small part of their income.
Now in 2024, card transactions are the most common form of payment. RBA data shows that in March 2024, $84.6 billion was transacted on cards in retail – $35.6b on credit cards, and almost $49b on debit cards. This is up from $63 billion in March 2021 - a whopping $21 billion increase.
Businesses are looking for ways to recoup this cost, so they're increasingly charging customers this surcharge.
How much is a credit card surcharge?
Credit card and debit card surcharges range from 0.5% to 2.5% of a transaction's value. Businesses can set their own surcharge amount as long as it is based on the actual cost of accepting a particular type of payment.
The Reserve Bank of Australia (RBA) and the Australian Competition and Consumer Commission (ACCC) offers the following guidelines:
- Visa and Mastercard credit cards: 1% to 1.5%
- American Express (average cost, December 2023): 1.32%
- EFTPOS: Usually less than 0.5%
- Visa and Mastercard debit cards: 0.5% to 1%
Things that can influence the cost include the size of the business, payment method and the technology that's involved, as well as whether the business chooses to set a percentage fee, flat-cost fee or different fees for different types of cards.
For example, RBA data shows the merchant fees for accepting Australian American Express credit cards was 1.32% in December 2023. But the Australian Taxation Office has a surcharge of 1.45% for Amex cards.
The ACCC also notes: "Small businesses usually have higher processing costs than large businesses".
Finder survey: How often are Australians charged extra for paying by card?
| Response | |
|---|---|
| Less often | 27.19% |
| Not sure | 24.3% |
| At least once a week | 19.62% |
| 2-3 times a month | 15.44% |
| Once a month | 8.47% |
| Daily | 4.98% |
Source: Finder survey by Pure Profile of 1004 Australians, December 2023
What are the rules, legally, for credit card surcharges?
The surcharge a business charges can't be worth more than what it costs the business to accept a particular payment method.
But here's the kicker: they can also account for things like the cost of staff to process the payments, accounting staff to reconcile payments and other costs to do with "managing payments" as part of that fee.
For example...
Let's say a cafe owner decides to set up their EFTPOS system to accept all American Express, Mastercard and Visa card payments.
Every time someone pays with a card, the cafe is charged a bank fee of 0.8% for Visa and Mastercard and 1.8% for Amex processing the payment.
They then charge customers a fee of 1.2% for Visa and Mastercard and 2.2% for Amex as a credit card surcharge. This is 0.04% more than what it actually costs them, but this is legally allowed as it covers their cost of "processing payments".
Also: any business that charges a surcharge must let customers know before they pay. Their must be a clear notice of the payment, such as at the register or on the menu. While this is helpful in theory, in practice, not all businesses abide by this. If they don't display the appropriate notice, you do have a right to request the fee is removed, but it's at their discretion at to whether they will wipe it or not.
Did you know? You can report excessive payment surcharge to the ACCC here
Card costs when you pay for a taxi: Why are these different?
The ACCC regulations around surcharges don't apply to taxi services, as the industry has its own state and territory regulators. The surcharge applied when you use your credit card to pay for a taxi varies from state to state and can be as much as 10% of the fare. Authorities in Victoria, NSW, WA, SA and the ACT have limited taxi surcharges to no more than 5% of the fare price.
Payments that attract a surcharge
Businesses can choose to apply a surcharge on any form of payment that incurs a cost for them to process:
- American Express (credit card and prepaid)
- Mastercard (credit card, debit card and prepaid)
- Visa (credit card, debit card and prepaid)
- Eftpos (debit and prepaid)
Some businesses also apply a fee for other payment options, such as BPAY or PayPal. For example, both Qantas and Virgin Australia apply a fee when you pay for a flight with a credit card, debit card or PayPal.
Keep in mind: You could pay a surcharge for spending with everyday businesses, as well as utility companies and even government bodies. For example, paying the the Australian Taxation Office (ATO) with a card attracts a fee based on the type of card you use and the amount you pay.
What about other fees?
You may have also noticed some sneaky fees showing up on your receipt when you dine at a cafe or restaurant, especially when using QR code ordering platforms. These platforms often charge a fee of 1.5% to 1.7% for the "convenience" of purchasing through the app.
Again, the business can choose whether to absorb this cost or pass it on to the customer. If they pass it on, you can end up paying a double fee, such as 1.7% processing fee and a 1.5% credit card fee. All of these little fees add up! Which brings us to our next point...
How to avoid sneaky card surcharges
- Look for a surcharge notice before you pay. You should see signs on or near the cash register. If you're shopping online, this cost should be added before you go through the payment process.
- Use a debit card. Under the latest surcharge laws, debit card payments attract a lower fee than credit cards.
- Pay with cash. It's the most straightforward way to avoid fees, but you have no digital record of purchase.
- Shop around. Don't want to pay a premium for your morning cuppa? Find a cafe that doesn't charge credit card fees.
- Link your card to PayPal. When you use your PayPal account to make payments, the fees are often lower than paying with a credit card directly.
- Pay with vouchers. Some airlines and institutions don't charge fees when you use a voucher to make the purchase or booking.
If you think you've paid a surcharge that was too high, or you weren't notified of the surcharge before you made a payment, contact the ACCC on 1300 302 502.
Frequently asked questions
-
A surcharge is typically legal in Australia, as long as the merchant can prove that it covers the reasonable cost of acceptance and has clear notices about the surcharge before you pay.
See AlsoWhat bills can I pay - Sniip -
In 2016, the Australian government introduced an excessive surcharge ban to make sure customers weren't paying more than what it cost to process the payment: the Competition and Consumer Amendment (Payment Surcharges) Act 2016.
This ban applies to payments made by EFTPOS, Visa, Mastercard and American Express "companion cards" (Amex cards that used to be issued by some banks). It does not technically apply to American Express cards directly issued by American Express, as well as Diners Club, BPAY, PayPal, UnionPay, cheques or cash. But it does help protect you against high surcharge costs.
If you think a business is charging too much for card payments or other payment methods, talk to the business or contact the ACCC on 1300 302 502.
-
If you’re paying using cash, the hotel should not apply a surcharge, but it is worth checking directly with the hotel.
-
The money you pay for a credit card surcharge falls under purchases, so you could have to pay interest on it if you carry a balance.
Back to top
Was this content helpful to you?
Thank you for your feedback!
As an authority on all things personal finance, Sarah Megginson is passionate about helping you save money and make money. She is an editor and money expert with 20 years’ experience and an extensive background in property and finance journalism. Sarah holds ASIC RG146-compliant Tier 1 Generic Knowledge certification, and she's a regular media commentator, appearing weekly on TV (Sunrise, Channel 7 news, Nine news), radio (KIIS FM, Triple M, 3AW, 2GB, 6PR) and in digital and print media. See full bio
Sarah's expertise
Sarah has written 193 Finder guides across topics including:
- Home loans
- Personal finance
- Budgeting and money-saving tips
- Managing the cost of living
