Card Surcharges and Fees

What you may recover

Accepting card payments costs you money — the merchant service fee your provider charges on each transaction. Australian rules allow you to pass that cost on to the customer as a surcharge, but the principle is strict: a surcharge must not exceed your actual cost of accepting that payment type. It is cost recovery, not a profit centre.

'Actual cost' includes the genuine fees you incur to accept the card, not a round number you picked because it sounds reasonable. Different card types can cost different amounts, so a blanket high surcharge across all of them risks over-recovering on the cheaper ones. If you are unsure of your true cost, your payment provider can give you the figures.

Disclosure is mandatory

A surcharge the customer only discovers after paying is a complaint waiting to happen. The customer must be able to see the surcharge before they commit to the payment. On an invoice, that means stating clearly that a card surcharge of a stated amount or percentage applies, ideally with the resulting total spelled out.

The cleaner approach is to show both options: the amount payable by fee-free methods such as EFT or BPAY, and the amount payable by card including the surcharge. That lets the customer choose with full information and removes any sense of a hidden cost. Transparency here protects you and tends to nudge customers toward the cheaper-to-process methods anyway.

GST and the total

A surcharge does not sit outside your tax treatment. Where you are GST-registered and the underlying supply is taxable, the surcharge generally forms part of the consideration and is treated accordingly. In practice that means it should be reflected properly in the invoice total and your records rather than tacked on as an untaxed extra.

Because the interaction between surcharges, fees and GST can be fiddly, set your approach once and apply it consistently — and confirm the correct treatment with your accountant for your circumstances. The key point for the customer-facing invoice is simple: the total they are asked to pay, including any surcharge, should be unambiguous and correctly calculated.

Should you surcharge at all?

Surcharging is a choice, not an obligation. Many businesses absorb the merchant fee as a cost of doing business, judging that a frictionless 'tap and pay' experience wins more than the fee costs. Others surcharge to steer customers toward cheaper methods and keep card fees off their margin. Both are legitimate; the right answer depends on your margins and your customers.

If your goal is faster, cleaner payment, consider promoting fee-free options prominently instead of, or alongside, a surcharge. Listing EFT and BPAY details clearly — and pointing customers to your invoice templates that present those options well — can reduce card use without the disclosure burden a surcharge brings.