If you’re like most people, you probably have a few credit cards. You might use one for everyday purchases, one for emergencies, and another for big expenses. But do you know what a credit card surcharge is?
Credit card surcharge explained
If you often use your credit card, there are specific locations where you’ll be charged an additional fee. For example, using a credit card at some cafes will cause the overall purchase to cost more.
However, a credit card surcharge is an additional fee that businesses can charge customers when they pay using a credit or debit card. This fee is intended to help merchants recover the costs associated with processing card transactions, known as the “cost of acceptance.” The cost of acceptance varies depending on the type of card used, such as Visa, Mastercard, or American Express, and typically ranges from less than 0.5% for eftpos to over 1% for credit cards
Understandably, most people despise credit card surcharges. It might appear unjust to be penalized as a customer for selecting one payment method over another. Nevertheless, you’ll find that many merchants charge a fee on credit card payments.
It’s comforting to know that your favourite café doesn’t profit from charging a surcharge on credit card payments. They are only passing on the fee charged by major credit card networks for processing these types of payment. If you don’t have a credit card and are thinking of getting one, finding out if credit card applications need a credit check is important to know first.
Rules for card surcharges
- Permitted cards: Surcharges can be applied to payments made by Mastercard, Visa, eftpos, and American Express cards issued by Australian banks. However, they do not apply to American Express cards issued directly by American Express, Diners Club, JCB, or Discover Card.
- Limitations: Businesses are not allowed to charge more than the actual cost of processing the transaction. For example, if the cost of acceptance for Visa Credit is 1%, the surcharge cannot exceed 1%
- Transparency: Businesses must clearly display any surcharge to customers before they make a payment.
Impact and regulation
The Australian Competition and Consumer Commission (ACCC) enforces these rules to prevent excessive surcharging. Penalties can be significant for businesses that violate these regulations. The Reserve Bank of Australia (RBA) also plays a role in regulating payment systems and ensuring that surcharges are cost-based.
In recent years, there has been a significant increase in businesses applying surcharges, partly due to the rising costs of processing card payments and the decline in cash usage. The government has announced plans to ban debit card surcharges from January 2026, subject to further consultation.
