shutterstock_559216945

Debit card surcharges

It’s not just credit cards that feature a surcharge on some transactions

Did you know that surcharges can also apply to debit card transactions? Surcharges are meant to cover the costs a merchant incurs for processing your payment, but recently introduced laws are designed to ensure that you won’t be hit with excessive fees the next time you pay with your debit card.

Credit card surcharges are one of the most annoying things about shopping with plastic. Depending on the type of card you use and the merchant you buy from, you could be slugged with a surcharge anywhere between 0.5% and 3% of your total transaction amount.

What are debit card surcharges?

Whenever you buy goods or services using a debit, credit or prepaid card, the merchant will incur its own bank costs for processing that payment. Some merchants will include those processing costs in the fee they charge for goods and services, but others will cover their costs by imposing a surcharge on card-based transactions.

A debit card surcharge is an additional amount a business charges when you pay for a purchase using your debit card rather than another payment method, for example, cash.

Compare Debits Cards below

Rates last updated October 17th, 2019
$
Name Product Debit Card Access ATM Withdrawal Fee Fee Free Deposit p.m. Monthly Account Fee Product Description
HSBC Everyday Global Account
Visa
$0
$0
Special offer: $100 bonus for new HSBC customers.
Earn 2% cashback on tap and pay purchases under $100.
Enjoy no foreign ATM or transaction fees and the flexibility to hold up to 10 currencies. Apple Pay and Google Pay available. T&C's apply to $100 bonus and 2% cashback offers.
Suncorp Everyday Options Account
Visa
$0
$0
Monthly account keeping fee waived for life.
$0 account keeping fee: Applies to all new accounts opened from 3 December 2018.
Save for your individual goals by linking to interest-earning sub accounts. Google and Apple Pay available.
Suncorp Everyday Basics Account
Visa
$0
$0
A simple everyday account with low fees.
$0 monthly account fee.
Enjoy no monthly account keeping fees as well as the option to pay using Google and Apple Pay. Free ATM withdrawals at 3000+ Suncorp and rediATMs.
NAB Classic Banking
Visa
$0
$0
Enjoy convenient, unlimited access to your money.
$0 monthly account fee.
Tap and pay with your NAB Visa Debit card or your phone using Apple Pay, Google Pay, Samsung Pay or NAB Pay for Android. Temporarily block your card at the touch of a button if you lose it.
MyState Bank Glide Account
Visa
$0
$0
Simplify your everyday banking with these sleek digital features.
$0 monthly account fee.
Choose the way you pay with access to Google, Samsung and Apple Pay plus Fitbit Pay and Garmin Pay. Send and receive money in less than 60 seconds with PayID.
CUA Everyday Account
Visa
$0
$0
Enjoy flexible payment options and access to a wide network of ATMs.
$0 monthly account fee.
Access to Google, Samsung and Apple Pay. Enjoy fee-free cash withdrawals from 10,000+ ATMs across Australia. Deposit $1,000+ into this each month and receive bonus interest on a linked CUA eSaver Reward Account.
CUA Everyday Snap Account
Visa
$0
$0
Refund of international ATM withdrawal fees and international card transaction fees (conditions apply).
$0 monthly account fee.
Apple Pay, Google Pay and Samsung Pay available. Savings Top Up tool automatically transfers a set amount of money into your linked CUA savings account with each purchase you make, to help you save.


St.George Complete Freedom Account
Visa
$0
$2,000
Special offer: $40 cash bonus for new customers (T&Cs apply). $5 waivable monthly account fee. Monthly account fee waived if you deposit at least $2,000 a month. No account fees for students and customers under 21.
Westpac Choice
Mastercard
$0
$2,000
Special offer: $40 cash bonus for new customers under 30 (T&Cs apply). $5 waivable monthly account fee. Monthly account fee waived if you deposit at least $2,000 a month, are under 21 or if you meet other eligibility criteria. Access more than 50,000 ATMs globally for free via the Global ATM Alliance.
Citi Global Currency Account
Mastercard
$0
$0
Hold up to 10 currencies.
$0 monthly account fee.
Enjoy one linked debit card to hold up to 10 currencies and receive foreign currencies for free. Earn up to 1.50% p.a. interest on your AUD balance.

Compare up to 4 providers

How much are debit card surcharges?

According to the Reserve Bank of Australia (RBA), the cost of processing a debit card transaction is usually quite low. Accepting a Visa or Mastercard debit transaction will typically cost a business around 0.5% of the transaction value.

However, prior to 2016, merchants were free to choose the surcharge amount they imposed on different card transactions, so there may have been instances where you’ve been slugged with a surcharge well above 0.5%.

The RBA also points out that processing credit card transactions usually results in higher expenses for businesses, with costs of up to 1–1.5% for Visa and Mastercard credit card transactions and 2–3% for payments made with an American Express credit card. As a result, credit card surcharges tend to be higher than debit card surcharges.

You may also be interested in

CUA Everyday Snap Account Review

CUA Everyday Snap Account Review

A bank account with no account-keeping fee and a suite of premium digital features, like mobile payments solutions to suit any OS, plus a Savings Top Up feature. Receive rebates on overseas and overdrawn fees when you meet certain deposit and transaction conditions. Read more…

What about if I use payWave or PayPass?

Where matters get even trickier is if you pay for purchases using Visa’s payWave or Mastercard’s PayPass feature. This is due to the fact that tap and go (or contactless) transactions are processed through the same system used for credit card transactions – so even if you tap and go using your debit card, you may be hit with a higher credit card surcharge.

For example, many shoppers are unaware that Aldi’s 0.5% credit card surcharge also applies to contactless payments made with a Mastercard or Visa debit card.

When shopping at a store that applies a surcharge to credit card transactions, you can avoid this additional fee by steering clear of contactless payments. Instead, make sure to swipe or insert your debit card at the payment terminal.

New legislation to ban excessive debit card surcharges

New legislation was introduced in February 2016 to stop businesses imposing excessive surcharges on debit, credit and prepaid card transactions. The Competition and Consumer Amendment (Payment Surcharges) Act 2016 is designed to stop businesses charging customers more than what it costs the business to process the payment.

Under the legislation, if a business chooses to impose a payment surcharge it is only legal to pass on to the customer the costs charged to the business for accepting that particular payment type. The ban has applied to large businesses (a business must satisfy revenue, asset or employee thresholds to be classified as large) since 1 September 2016 and will apply to all other businesses from 1 September 2017.

What payment types are included in the excessive surcharge ban?

The RBA standard outlines the payment types covered under the excessive payment surcharge ban. The covered payments are:

  • Eftpos (debit and prepaid)
  • Mastercard (debit, credit and prepaid)
  • Visa (debit, credit and prepaid)
  • American Express “companion cards” (these are American Express cards issued through an Australian financial institution, not cards issued directly through American Express)

Businesses are unable to get around the laws by giving surcharges a range of different euphemisms, for example handling or service fees. If a merchant imposes these types of fees and they are payable only on certain payment methods but not on others, the ban still applies.

However, there are some payment methods not covered by the ban, such as PayPal, BPAY, Diners Club cards, American Express cards issued directly through American Express, cheques and cash. The ban also doesn’t apply to payments made for taxi services, which are the responsibility of regulators in each individual state.

What do the changes to surcharge laws mean for me?

Under the new laws, banks need to provide clear information to businesses about the costs of accepting different payment methods. Businesses will then only be allowed to impose a surcharge that covers those costs and nothing extra.

There is no precise formula for calculating if you have been hit with an excessive surcharge. However, a fee of $7.50 for a $100 airline ticket from Sydney to Melbourne, for instance, would clearly be well in excess of the average cost to a business of processing a debit card payment (0.5% of the transaction value). If you think you’ve been hit with an excessive payment surcharge you can contact the Australian Competition and Consumer Commission (ACCC), which can issue infringement notices and penalties to businesses breaking the law.

The result of these law changes should mean sizable savings for consumers. Take the example of airfares, which have long been known to attract hefty payment surcharges. Prior to the new laws coming into effect in 2016, had you bought a Sydney to Melbourne ticket with Virgin for $100, a $7.70 booking and service fee would have applied. Under the new conditions, a 0.6% surcharge applies to debit card fares, so your fee drops to just $0.60 – a saving of $7.10.

Last but not least, remember that even if a surcharge is within reasonable limits, you can still avoid it if you wish. Simply choose a different payment method that doesn’t attract an additional fee, or take your business elsewhere.

Was this content helpful to you? No  Yes

Related Posts

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.

2 Responses

  1. Default Gravatar
    AliceJune 10, 2019

    When I went to hire a car today I was told at the cash register that there was a $400 “deposit” for using a debit card. This was nearly twice the amount of the original transaction. Information about this additional fee was on the website well it was on a page linked to the website via a link and a drop down or two. The account I was emailed did not advise me of the potential increase in cost.

    It seems both unfair and questionable to sneakily add on this fee. Can they do this?

    • Avatarfinder Customer Care
      NikkiJune 11, 2019Staff

      Hi Alice,

      Thanks for your inquiry.

      As it says on our page: whenever you buy goods or services using a debit, credit or prepaid card, the merchant will incur its own bank costs for processing that payment. Some merchants will include those processing costs in the fee they charge for goods and services, but others will cover their costs by imposing a surcharge on card-based transactions.

      A debit card surcharge is an additional amount a business charges when you pay for a purchase using your debit card rather than another payment method, for example, cash.

      According to the RBA, using a debit card will typically cost a business around 0.5% of the transaction value. Prior to 2016, some merchants were free to choose the surcharge amount they imposed on different card transactions, so there may have been instances where you’ve been given a surcharge 0.5%.

      Hope this was helpful. Don’t hesitate to message us back if you have more questions.

      Best,
      Nikki

Ask a question
Go to site