In Australia you can charge a customer a surcharge for paying by card, but the surcharge must not exceed your cost of acceptance for that card type. Charging more than it costs you is excessive surcharging and is banned under the Competition and Consumer Act, enforced by the ACCC. The rules come from a Reserve Bank standard, and the RBA has been reviewing card payment costs and surcharging — check rba.gov.au and accc.gov.au before you set or change a surcharge.
What "cost of acceptance" actually includes
This is the number the whole rule turns on, and it is narrower than most people assume. It is the average cost per dollar transacted, for that card type, of the fees charged to you by your payment provider:
| Counts | Does not count |
|---|---|
| The merchant service fee your provider charges on each transaction | Your own time spent processing payments or reconciling |
| Terminal rental and gateway fees charged by your payment provider | The cost of your point-of-sale software or hardware bought elsewhere |
| Scheme fees and fraud prevention fees passed through by the provider | General business overheads, insurance or bank account fees |
| Chargeback fees charged to you by the provider | The value of a chargeback itself, or bad debt |
Your acquirer or payment provider is required to give you a statement showing your cost of acceptance for each card type, expressed as a percentage. That statement is the evidence you rely on — not an estimate, and not the headline rate on their pricing page.
Per card type, not one flat rate
The cost of accepting an eftpos debit card is typically far lower than a premium credit card, and the rule applies to each separately. Two ways to do this legitimately:
- Different rates per card type, each at or below the cost for that type. The most accurate, and the most work to display.
- One rate for everything, set at or below the lowest of your costs across the card types you accept. Simple, and it means you absorb the difference on the expensive cards.
What you cannot do is average them and apply the average to everything. A single 1.5% surcharge across debit and credit is excessive on the debit transactions if debit costs you 0.4%, and that is the most common way a small business ends up in breach without meaning to.
How it has to be disclosed
- Before the customer commits. A surcharge revealed at the payment screen after they have chosen and agreed a price is a problem under the consumer law as well as the surcharging rules.
- Inside the advertised price, if everyone pays it. A surcharge every customer incurs whatever method they use has to be in the single total price you quote. Where it applies only to some payment methods the customer can avoid it, so it may sit outside the quoted price — but only if it is disclosed clearly before they commit.
- As a separate line on the invoice or receipt, so the customer can see what they were charged and why.
- Clearly enough to be understood — "a surcharge may apply" is not disclosure of a rate.
There is also a practical point: the ACCC can require you to substantiate a surcharge. Keep the provider statement that supports your rate, and revisit the rate when your pricing changes.
What is not a card surcharge
The surcharging rules apply to designated card systems. Other payment methods sit outside them, which does not mean anything goes — the general prohibitions on misleading conduct and on component pricing still apply.
- Bank transfer, PayID and BPAY are not card payments. Most small businesses charge nothing for these, which is exactly why offering them is the cheapest way to avoid the whole question.
- Buy now, pay later arrangements have their own contractual rules, usually including a prohibition on passing the cost to the customer.
- Payment processing fees you absorb are simply a business expense, deductible like any other.
Balaana's payment collection passes transaction fees through at cost, and offers PayID and bank transfer alongside cards, so the no-surcharge route is always available to your customer.
GST on the surcharge
A surcharge takes the GST treatment of whatever it is attached to. If the underlying sale is a taxable sale, the surcharge is part of the price of that taxable sale and carries GST in the same way — so a $100 taxable sale with a $1.50 surcharge is a $101.50 taxable sale, and the GST is worked out on the total.
Show it as a line on the tax invoice rather than netting it off. See how to invoice with GST, and the GST calculator if you want to check a figure.
Should you surcharge at all?
For a one-person business it is a judgement call rather than an obvious win. Surcharging recovers a real cost, and on low-margin work that cost is the margin. Against that: it is friction at the exact moment the customer is paying you, it invites a conversation about $1.80, and it has to be maintained as your provider's rates change.
The common middle path is to build the average card cost into your prices, offer bank transfer or PayID as the default, and accept cards without a surcharge for the convenience it buys. Whichever you choose, be consistent — the worst option is an inconsistent surcharge nobody can predict.
Related reading
- Payment collection — card, PayID and bank transfer on every invoice
- How to get paid on time — the wider getting-paid problem
- What is an invoice? — where the surcharge line goes
- Hourly rate calculator — for pricing the cost in instead
Frequently asked questions
Yes, provided the surcharge does not exceed your cost of acceptance for that card type. Charging more than it actually costs you is excessive surcharging and is prohibited under the Competition and Consumer Act. Your payment provider must give you a statement showing your cost of acceptance for each card type — that is the figure you work from.
Only if the single rate is at or below your cost of acceptance for the cheapest of them. Debit typically costs far less than credit, so a flat rate set at the credit card cost would be excessive on every debit transaction. Either set separate rates per card type, or set one rate at the lowest cost and absorb the difference.
Yes, and before they commit to the purchase. If you advertise a single total price it must already include the surcharge, and the surcharge should appear as its own line on the invoice or receipt. A vague "surcharges may apply" is not adequate disclosure of a rate.
The surcharge follows the GST treatment of the sale it relates to. If the underlying sale is taxable, the surcharge forms part of that taxable sale and carries GST, so the GST is calculated on the total including the surcharge. Show it as a line on the tax invoice rather than netting it off.
The card surcharging standard does not cover them, because they are not card payments. That does not make any fee acceptable — the general prohibitions on misleading conduct and on advertising a price you will not honour still apply. In practice most small businesses charge nothing for bank transfer or PayID, which is the simplest way to give customers a fee-free option.
Sources
The surcharging standard and the definition of cost of acceptance come from the Reserve Bank of Australia; enforcement and the excessive surcharging ban from the ACCC; GST treatment from the ATO. These rules are under active review — confirm the current position with those sources before setting a surcharge. Balaana is bookkeeping software, not a legal or tax adviser — this article is general information, not advice about your situation.