Backgrounder on Payment Surcharges in Australia

What is a payment surcharge?

A payment surcharge is a fee paid by customers, in addition to the price of a good or service, allowing merchants to pass on the cost of the customer’s chosen payment method.

What are the current rules about surcharging in Australia?

Currently, merchants have the right to apply a surcharge on card payments, but this surcharge is limited to the amount it costs the merchant to accept that type of card for that transaction. There are three key elements to the surcharging framework, which are broadly as follows:

  1. Card acceptance costs are limited to fees paid to the merchant’s payment service provider (acquirer or payments facilitator) and other observable costs paid to third parties for services directly related to accepting particular types of cards.
  2. Payment service providers must provide merchants with an annual statement that clearly sets out their average cost of acceptance for each of the card payment systems regulated by the RBA. Acceptance costs must be expressed as a percentage of transactions.[1] Merchants need to calculate for themselves any other observable costs paid to third parties and that are directly relatable to accepting particular cards.
  3. The Competition and Consumer Act 2010 (Cth) prohibits merchants from applying excessive card payment surcharges – this is defined as charging a higher amount than what it costs the merchant to use any particular card payment type. The Australian Competition and Consumer Commission (ACCC) has powers to investigate and take enforcement action in the case of possible excessive surcharging.

The Australian Consumer Law (ACL), enforced by the ACCC along with state and territory consumer protection agencies, includes requirements which mean that merchants need to provide clear pricing to customers. The merchant must not mislead customers about their prices and must display the minimum total cost of a product or service, inclusive of any unavoidable or preselected fees.

The ACL also requires:

  • merchants to display any surcharges prominently so that consumers are aware of any potential additional costs before payment
  • merchants to include the minimum surcharge in the total single figure price displayed for any product or service if they do not provide a surcharge-free payment method.

Are the rules around surcharging changing?

The RBA conducted a Review of Merchant Card Payment Costs and Surcharging (the Review) from 2024-26. It decided that removing surcharging on designated card networks (eftpos, Mastercard and Visa) would be in the public interest. This is to take place on 1 October 2026.

You can read more about the decision to remove surcharging in the Conclusions Paper published as part of the Review. For frequently asked questions about the removal of surcharging, please see Frequently Asked Questions.

Endnotes

Twelve payment systems are subject to the surcharging framework. The RBA has designated eight card schemes and they are covered by surcharging standards: Visa (credit, debit, prepaid), Mastercard (credit, debit, prepaid) and eftpos (debit, prepaid). The RBA also has undertakings from American Express, Diners Club and UnionPay that permit merchants to apply surcharges. PayPal revised its User Agreements in 2016 to allow merchants to surcharge PayPal transactions. [1]