Understanding Surcharging in Australia

Surcharging — adding a fee to card transactions to cover processing costs — has become increasingly common in Australia. Here's what you need to know.

The Legal Framework

The Reserve Bank of Australia (RBA) allows merchants to surcharge card payments, but the surcharge must not exceed the cost of acceptance for that payment method. This means you can pass on the actual processing cost, but you can't profit from the surcharge itself.

How to Calculate Your Surcharge

• Merchant service fee (processing rate)
• Terminal rental costs (amortised per transaction)
• Any gateway fees

For Tap Payments merchants, your cost of acceptance is 1.1%. If you choose to surcharge, Tap Payments charges the full 1.1% processing fee and rebates the 0.55% advertising revenue back to you at settlement. A surcharge of up to 1.1% covers your cost of acceptance, and the 0.55% rebate means your net processing cost is effectively zero — plus you earn advertising revenue. Remember, you cannot surcharge above your actual cost of acceptance.

Customer Communication

• Signage at the point of sale
• Clear indication on receipts
• If different card types attract different surcharges, each must be disclosed

The Tap Payments Advantage

With a net processing rate of just 0.55% (after the advertising rebate), Tap Payments merchants who surcharge their 1.1% cost of acceptance can achieve zero net processing costs — and earn the 0.55% advertising rebate as revenue. Compare this to a merchant paying 1.2% who surcharges — their customers pay more, and the merchant earns no additional revenue.

Should You Surcharge?

This depends on your business. Consider your customer demographics, competitive landscape, and average transaction value. Many cafes and quick-service restaurants avoid surcharging to maintain customer flow, while professional services and higher-value retailers find customers accept it readily.