Can a business refuse credit card payments?
You can usually pay with a credit card, but businesses don't have to accept cards. Here's what the law says.
Paying with a card is fast, easy and more common than paying with cash. Around 75% of all transactions in Australia were made with debit and credit cards in 2021/22, according to data from the Reserve Bank of Australia (RBA).
But there are still some businesses that may prefer cash, or not accept card payments at all.
Can a business legally refuse to accept credit card payments?
Yes, 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.
Businesses also need to let you know what payments are accepted – and the total cost – before you make a purchase. This is usually done through signs at the checkout or in-store.
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 strict 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 cards in particular charge higher interchange fees than other cards (1.5-2.0% compared to 1.0-1.5% for Mastercard or Visa). 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 that takes time and energy. Fraud with cash is much less of an issue for the merchant.
3. Operational reasons
Payment terminals and card transactions are usually more involved than cash, so businesses that use them have to provide extra training for their staff. Beyond that, partnering with a credit card lender to accept payments involves more administrative load, including account balancing, recording purchases and communicating with the partner, which might be considered not worth the cost for a small business.
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.
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