A standard part of doing business in Australia, customers paid roughly $1.2 billion Australian dollars (AUD) in surcharges in fiscal year 2023/2024. Businesses in Australia can pass on the cost of card payments to customers, but only within strict limits tied to processing costs. Understanding how credit card surcharge rules work in Australia is essential for staying compliant and avoiding penalties.

Below, we’ll explain what counts as credit card surcharges in Australia, which payment methods can be surcharged, and how to calculate fees and stay compliant.

What’s in this article?

• What are credit card surcharges in Australia?
  
• Why are credit card surcharges regulated in Australia?
  
• Which payment methods can be surcharged in Australia?
  
• What costs are businesses allowed to recover through credit card surcharges?
  
• What rules must Australian businesses follow for card surcharges?
  
• How can Australian businesses keep their card surcharges compliant?
  
• How Stripe Payments can help
  

What are credit card surcharges in Australia?

A credit card surcharge is an extra fee a business adds to help cover its payment costs when a customer pays by credit card. In Australia, if a fee applies only when a customer pays with a particular type of payment card (e.g., Visa, Mastercard, or EFTPOS), the law treats it as a payment surcharge, even if it’s labeled as a “processing fee” or “administration fee.”

Why are credit card surcharges regulated in Australia?

Businesses in Australia can recover card payment costs. While some businesses historically charged customers more than true processing costs, regulators stepped in to set limits, stop excessive fees, and limit surcharges to the cost of acceptance. Allowing reasonable surcharges helps cover cost differences between payment methods, while discouraging overreliance on higher-cost cards.

Regulators have also stipulated that the minimum surcharge must be included in the displayed price when no surcharge-free payment option exists. This lowers the risk of consumers faced with increased headline prices at checkout.

Which payment methods can be surcharged in Australia?

The rules for passing on card surcharges to consumers vary by card network. Even where the law allows surcharging, some payment providers prohibit it through merchant agreements, which businesses must follow regardless of regulatory coverage.

Credit, debit, and prepaid cards on Visa, Mastercard, and eftpos Australia networks can be surcharged, as long as the fees do not exceed the business’s costs. EFTPOS processing costs are typically lower than those of credit cards. Cards issued by Australian banks in partnership with American Express are covered by the surcharge rules, though these products are now uncommon.

Digital payment methods, such as BPAY and PayPal, and non-card payment options, such as cash or check, are not subject to excessive surcharge rules, though transparency and contract terms still apply.

What costs are businesses allowed to recover through credit card surcharges?

Australian rules allow businesses to recover the real, verifiable costs of accepting card payments. General overheads such as wages, rent, utilities, or administrative expenses cannot be rolled into a surcharge.

Credit card surcharges can cover the following:

• Card network and acquiring fees: Charges passed through by card schemes or acquirers, including international transaction or switching fees.

• Payment processor and gateway fees: Per-transaction or percentage-based payment processor and payment gateway charges tied specifically to card processing.

• Terminal and equipment costs: Rental and maintenance fees for card-processing equipment, provided they’re allocated proportionally to card transactions.

• Fraud and chargeback-related costs: Fees for fraud prevention tools, chargeback handling, and card-specific risk management services.

• Documented, card-specific expenses: Any additional costs must be clearly linked to card payments and supported by contracts, invoices, or statements.

What rules must Australian businesses follow for card surcharges?

The rules focus on fairness, accuracy, and making sure customers understand what they’re being charged and why. A surcharge becomes illegal the moment it goes beyond what it actually costs the business to accept that payment.

Here are the rules for keeping card surcharges compliant in Australia:

• Costs must be reviewed over time: Businesses are expected to update surcharge amounts when their payment processing costs change. They can’t leave outdated fees in place.

• Customers must be clearly informed: Any surcharge must be disclosed before payment, in plain language, and not hidden in fine print or revealed only at the final step.

• Prices must reflect unavoidable surcharges: If every available payment method carries a surcharge, the minimum total price including that surcharge must be clearly displayed upfront.

• Fees cannot be disguised: A charge that applies only to certain payment methods is treated as a surcharge regardless of what it’s called, and must follow surcharge rules.

• Surcharges must be applied consistently: Businesses cannot charge different surcharges for the same card type in a way that results in some customers being overcharged.

• Evidence must be kept: Businesses need documentation, such as payment provider statements and invoices, to justify surcharge amounts if regulators ask.

How can Australian businesses keep their card surcharges compliant?

Businesses should follow a clear, repeatable process for evaluating their card surcharges and revisit it regularly to avoid penalties.

Follow these steps to develop your process:

• Start with your actual cost data: Use your payment provider or acquirer statements to identify your average cost of acceptance for each card type. This is calculated over the previous 12 months.

• Include only permitted additional costs: If you add gateway fees, fraud tools, or terminal costs, make sure they’re card-specific, proportionally allocated, and backed by documentation.

• Set surcharge rates conservatively: If you charge different rates by card type, each rate must stay under that card’s cost. If you use a single blended rate, it must not exceed the lowest-cost card in the group.

• Be cautious with flat fees: Flat surcharges must stay within cost limits even on small transactions. This often makes percentage-based surcharges easier to keep compliant.

• Build surcharges cleanly into checkout flows: Point-of-sale (POS) and online systems should apply surcharges consistently and clearly, with customers able to see the fee before they commit to paying.

• Review surcharge levels regularly: Costs can change due to pricing updates, provider switches, or volume shifts. Surcharge settings should be reviewed at least annually.

• Prepare for regulatory scrutiny: Keep records that show how surcharge amounts were calculated. The Australian Competition and Consumer Commission (ACCC) can request evidence and issue penalties for excessive surcharging.

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