Can a business refuse credit card payments?

Paying with a card is fast, easy and more common than paying with cash. Cash makes up less than a third of all consumer payments – and the Reserve Bank of Australia (RBA) has reported that the Covid-19 sped up the cashless trend.

But there are still some businesses that may prefer cash, or not accept card payments at all. Here are some of the most common reasons your card won't be accepted, and what to do about it.

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 that a business can choose to accept only cash payments or only card payments. But most businesses offer a mix of different payment methods.

Businesses should also let you know what payments are accepted (and the conditions for acceptance) 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 are allowed to recoup these fees through surcharges on payment types or certain cards, but the added costs can give them a reason to avoid or not accept some types of cards.

2. Security concerns

Fraud and theft are always a concern for any business. It is possible that someone could use a fake credit card with a damaged magnetic strip, forcing the merchant to enter the details manually. A credit card like this could have been stolen and used for tap and pay, where verification isn't needed.

In these cases, the business will have to go through a chargeback process that takes time and energy. Fraud with cash isn't impossible, but it's 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 like PayPal or Afterpay. If you use PayPal, you may still be able to pay with your credit card if you have added it to your PayPal account. 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 offer what you want. You can try searching for other nearby stores that do accept cards, or It may seem obvious, but this is always an option if a business doesn't offer what you want.

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.