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A credit card surcharge is a fee that's charged by some businesses when you pay with your card. This charge typically costs you between 1% and 2% of the transaction's value or a set amount, such as 10 or 20 cents.
Surcharges help businesses cover the cost of processing a card payment but not all businesses apply a surcharge. There are also strict regulations around how much they can cost.
What is a credit card surcharge and when is it applied?
A credit card surcharge is a fee that merchants can apply to your credit card transactions on top of the advertised retail price.
This surcharge helps them cover the cost of accepting credit cards as a payment method. Some businesses also add a surcharge for debit cards and other types of payments that cost them money. These surcharges can't be worth more than what it costs the business to use a particular payment method.
Surcharge example
To put this in perspective, let's say a cafe owner decides to set up their EFTPOS system to accept all American Express, Mastercard and Visa card payments.
Every time someone pays with a card, the cafe is charged a fee of between 0.5% to 2% for processing the payment. To help cover this cost, the cafe owner could choose to apply a surcharge or increase the prices on their menu.
How much is a credit card surcharge?
Credit card and debit card surcharges typically range from 0.5% to 2% of a transaction's value. But businesses can set their own surcharge amount as long as it is based on the cost of accepting a particular type of payment. Surcharges can't be worth more than that cost.
As a general guide, the Reserve Bank of Australia (RBA) and the Australian Competition and Consumer Commission (ACCC) outlined the following costs based on the type of card being used:
Visa and Mastercard credit cards: 1% to 1.5%
American Express (average cost, June 2023): 1.35%
EFTPOS: Usually less than 0.5%
Visa and Mastercard debit cards: 0.5% to 1%
While most surcharges fit within this range, it still varies. Factors that can influence the cost include the size of the business, payment method and the technology that's involved, as well as whether the business chooses to set a percentage fee, flat-cost fee or different fees for different types of cards.
For example, RBA data shows the merchant fees for accepting Australian American Express credit cards was 1.34% in December 2022. But the Australian Taxation Office has a surcharge of 1.45% for Amex cards.
The ACCC also notes: "Small businesses usually have higher processing costs than large businesses".
Card costs when you pay for a taxi: Why they may be different
The ACCC regulations around surcharges don't apply to taxi services, as the industry has its own state and territory regulators.
The surcharge applied when you use your credit card to pay for a taxi varies from state to state and can be as much as 10% of your fare price. But authorities in Victoria, NSW, WA, SA and the ACT have limited taxi surcharges to no more than 5% of the fare price.
Payments that attract a surcharge
While credit cards often attract a surcharge, businesses can choose to apply this fee to a range of different payment methods including:
American Express (credit card and prepaid)
Mastercard (credit card, debit card and prepaid)
Visa (credit card, debit card and prepaid)
Eftpos (debit and prepaid)
Some businesses also apply a fee for other payment options, such as BPAY or PayPal. For example, both Qantas and Virgin Australia apply a fee when you pay for a flight with a credit card, debit card or PayPal.
Keep in mind: You could pay a surcharge for spending with everyday businesses, as well as utility companies and even government bodies. For example, paying the the Australian Taxation Office (ATO) with a card attracts a fee based on the type of card you use and the amount you pay.
How to avoid surcharges
Look for a surcharge notice before you pay. Any business that includes a surcharge must let customers know before they pay. If you're in a store, you should see signs before you get to the register. If you're shopping online, this cost will be added before you go through the payment process.
Use a debit card. Under the latest surcharge laws, debit card payments will typically attract a lower fee than credit cards.
Pay with cash. If you've got cash in your wallet, it's a very simple way to avoid extra charges on purchases you make in person. You could also check if there's an ATM nearby, especially if you have a debit card that offers fee-free withdrawals. Just remember any ATM withdrawals with a credit card will attract cash advance fees and charges, which are likely to cost more than a surcharge.
Consider other businesses. In some cases, you may be able to shop around to find a business that charges reduced or no credit card fees. For example, some taxi companies charge as much as 10% for credit card payments, while Uber doesn't apply any credit card surcharge and even allows you to link your card through the app for faster payment.
Link your card to PayPal. You can link your credit card account to PayPal and then use your PayPal account to make payments if the merchant provides this option as a fee-free alternative.
Book flights with points. When booking flights with Virgin Australia and Tiger Air, you can avoid surcharge fees by booking your flight with Velocity Points rather than cash.
Vouchers. Some airlines and institutions don't charge fees when you use a voucher to make the purchase or booking.
POLi. POLi is an online payment option used by some airlines and other businesses when you shop online. If you have Internet banking enabled on your credit card, you can choose to pay through POLi to avoid a credit card surcharge. Just keep in mind that a POLi payment from a credit card could be processed as a cash advance transaction and attract additional fees from your card provider.
If you think you've paid a surcharge that was too high, or you weren't notified of the surcharge before you made a payment, contact the ACCC on 1300 302 502.
Frequently asked questions
A surcharge is typically legal in Australia, as long as the merchant can prove that it covers the reasonable cost of acceptance and has clear notices about the surcharge before you pay.
This ban applies to payments made by EFTPOS, Visa, Mastercard and American Express "companion cards" (Amex cards that used to be issued by some banks). It does not technically apply to American Express cards directly issued by American Express, as well as Diners Club, BPAY, PayPal, UnionPay, cheques or cash. But it does help protect you against high surcharge costs.
If you think a business is charging too much for card payments or other payment methods, talk to the business or contact the ACCC on 1300 302 502.
If you’re paying using cash, the hotel should not apply a surcharge, but it is worth checking directly with the hotel.
The money you pay for a credit card surcharge falls under purchases, so you could have to pay interest on it if you carry a balance.
Amy Bradney-George is the senior writer for credit cards at Finder, and editorial lead for Finder Green. She has over 14 years’ experience as a journalist, with a particular focus on personal finance, and has been featured in publications including ABC News, Money Magazine and The Sydney Morning Herald.
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