Can a business refuse credit card payments?

The ACCC is clear on this: businesses don't have to accept any form of payment, including credit cards. They just need to be clear about this, and list any surcharges.

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By

Amy Bradney-George

Edited by

Richard Whitten

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Key takeaways

  • Businesses are not obligated to accept any particular form of payment. This includes cash or credit cards.
  • The ACCC says that businesses "should be clear and upfront about the types of payments they accept" and display any minimum payable price or surcharges.
  • Businesses may refuse to accept credit card payments due to card processing costs or other reasons.

Why can a business legally refuse to accept credit card payments?

Businesses can refuse to accept credit card payments in Australia because they set their own payment terms. This means a business can choose to only accept cash or only accept cards. But most businesses offer a few ways to pay.

The Australian Competition and Consumer Commission says:

  • Businesses are not obligated to accept cash payments.
  • Businesses can choose which payment types they accept or don't accept.
  • Businesses should be clear and upfront about which types of payment they accept, and specify any terms and conditions, such as the total cost.
  • Businesses can charge a surcharge on card payments, but it must not be more than the business's cost of accepting that payment type. If there's at least 1 way to pay without a surcharge, the business should display the surcharge clearly and prominently. But if there's no way to pay without paying a surcharge, the business must include the minimum total cost in the displayed price.

If a business won't accept your preferred payment method, the ACCC says "you may have to take your business elsewhere."

3 reasons a business may not accept credit cards

1. Credit card processing fees

Whenever a business (merchant) accepts card payments, they have to pay fees. The two most common fees are:

  • Interchange fees. An interchange fee has to be transferred from the merchant's bank to the cardholder's bank with every transaction, depending on the type of card (e.g. Mastercard or Visa). Interchange fees usually fund rewards programs for cardholders.
  • EFTPOS and payment terminal costs. Payment terminals aren't free either, and businesses have to either rent or buy the terminal and associated software. Many payment terminal schemes will mean an extra fee on every transaction.

Businesses can apply a surcharge on card payments to cover these costs. But there are conditions on surcharges, so the added costs and/or admin can lead some businesses to avoid or not accept different cards.

Why do some businesses not accept American Express cards?

American Express transactions in particular cost merchants more to process than Mastercard or Visa transactions. This means that the merchant ends up losing more money on transactions with American Express cards than with other cards, so they may choose to refuse them.

2. Security concerns

Fraud and theft are always a concern for businesses. If a credit card has been stolen but not reported yet, for example, the criminal could use it at a business without them realising. Especially if it's a contactless payment that doesn't need a PIN or other verification.

If that happens, the business manager or owner will have to go through a chargeback process. Fraud with cash is much less of an issue for the merchant.

3. Operational reasons

Payment terminals and card transactions require time and money for a business to set up. Some small businesses decide the cost and time isn't worth it.

What can I do if my credit card is not accepted?

  • Use a different card, or pay with cash. If the business accepts debit cards, you could offer to use one to pay. If it's cash-only and you're happy to withdraw money from an ATM first, remember that cash advance interest rates and fees will apply when you use your credit card.
  • Use a third-party payment service. For example, if you use PayPal and have added your credit card as a payment method, you may still be able to pay with a credit card. The same goes for other digital wallets like Apple Pay or Google Pay, if they are accepted but your credit card isn't.
  • Shop somewhere else. It may seem obvious, but this is always an option if a business doesn't accept the card you want to pay with. You could search online or look for other stores that accept your card and also offer what you're buying.

What are my rights?

If you think a business has acted unreasonably, you can make a complaint to management. Alternatively, contact the Australian Competition and Consumer Commission (ACCC) to find out about your legal rights and/or lodge a complaint.

Sources

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To make sure you get accurate and helpful information, this guide has been edited by Richard Whitten as part of our fact-checking process.
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Amy is an experienced journalist with over 16 years of experience, contributing to major publications like Money Magazine, The Sydney Morning Herald, and ABC News Australia. Specialising in personal finance, she frequently appeared in media outlets and on radio. Amy holds a Bachelor of Arts in Journalism and Drama from Griffith University and earned RG146 certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products, ensuring her expertise is grounded in current financial regulations. Amy was Finder's Senior Writer for Credit Cards from 2016 to 2024. See full bio

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2 Responses

    Valory's avatar
    ValoryNovember 5, 2016

    What is time limits apply for Mastercard from transaction processing date?

      May's avatarFinder
      MayNovember 10, 2016Finder

      Hi Valory,

      Thank you for your inquiry.

      We’d be happy to assist you further if you could confirm or clarify your question.

      Thanks and cheers,
      May

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