Notes
The surcharge maths, and what stops on 1 October
You may only pass on what card acceptance actually costs you — and from 1 October the card networks stop letting you pass on anything at all.
For eleven months a laminated card sat next to the terminal reading Card payments incur a 1.5% surcharge. I made it in Pages on a Sunday and printed it at Officeworks. In those eleven months I had, conservatively, a dozen conversations about that card, one of which ran close to four minutes. The surcharge on a $4.80 flat white is seven cents.
The card came down in March. Not because of the conversations — fourteen years in IT teaches you to absorb an unpleasant conversation — but because on 31 March the Reserve Bank published the conclusions of its Review of Merchant Card Payment Costs and Surcharging, and the short version is that from 1 October 2026 you will not be surcharging anyone. Three of my four advisory clients have asked me what to do about it since.
The rules until October
You may surcharge. You may not surcharge more than it costs you. The ACCC calls that limit your cost of acceptance, and the ban on excessive surcharging covers eftpos, Mastercard and Visa — debit, prepaid and credit. It does not cover cash, BPAY, PayPal, Diners Club, American Express or taxi fares, a list that tells you roughly how old the framework is.
Cost of acceptance is not just the percentage on your merchant statement. The ACCC lets you include terminal rental and maintenance, gateway fees and fraud prevention costs, provided you can produce a contract, statement or invoice for each one. What you cannot do is bundle costs across payment types. The fee you pay to accept a Visa credit card is not a cost of accepting eftpos.
The rule that catches people is blending. If you want one number on one sign — and everybody does, because a sign with five numbers on it is not a sign, it is a menu — that number must be no higher than the lowest surcharge you could have set for any single card type. The ACCC’s own example: Visa debit costs you 1%, Visa credit costs you 1.5%, your blended surcharge is 1%. Not 1.25%. There are penalties for getting this wrong.
Then on 1 October it becomes moot. Visa, Mastercard, American Express and eftpos are introducing no-surcharge rules across prepaid, debit and credit. The mechanism is unusual and worth understanding: the RBA’s decision removes the protection that let you surcharge on the designated eftpos, Mastercard and Visa systems, but the rule that binds you sits in each network’s scheme rules and in your merchant contract. The ACCC has said plainly that the networks and the payment providers enforce this, not the ACCC. The body that comes after you is the company that sends you your statement.
Some things survive. Weekend and public holiday surcharges in hospitality are unaffected, as are booking, service and delivery fees. You can still discount for paying a particular way, which is the same arithmetic in a nicer jacket.
Your real cost is on page two of a statement you do not read
At the freight company in Laverton I lost the better part of a fortnight to a vendor reconciliation because our “all-inclusive” managed services rate had eleven line items underneath it, four of which we were paying twice. Nobody had been dishonest. The invoice was simply built so that the total was the only legible number on it. Merchant statements are built the same way.
The honest method takes fifteen minutes. Take one month, add every fee your provider charged you — the percentage, the terminal rental, the gateway line, the chargeback admin, the monthly minimum — and divide by the total value of card transactions. That is your blended cost of acceptance, and it is almost never the headline rate. The RBA puts a business under $1 million in card turnover at roughly 0.85% to 2% for debit and eftpos and 1% to 2% for credit. Above 2% you are not surcharging too little, you are on the wrong plan.
Here is what the flat-rate providers cost on two transactions we actually run: a flat white, and a $185 deposit on a half-day studio booking.
| Plan | Rate | $4.80 coffee | $185 deposit |
|---|---|---|---|
| Zeller, tap (all cards, incl. Amex) | 1.4% | 7c | $2.59 |
| Zeller, integrated POS | 1.2% | 6c | $2.22 |
| Square, in person | 1.6% | 8c | $2.96 |
| Square, online or keyed | 2.2% | 11c | $4.07 |
Hardware belongs in the calculation too. A Zeller Terminal 2 is $99 on promotion at the moment, down from $199, with no monthly rental; a Square Reader is $65 and a Square Terminal is $329. Spread $329 over three years of coffees and it is a fraction of a cent a cup, which is not a number that deserves a sign.
The sign was also slightly illegal
Done properly, with the terminal amortised in, our blended cost of acceptance is a shade over 1.4%. The card said 1.5%. That is a surcharge above cost of acceptance, which is the one thing the rule actually prohibits. Eleven months, about a cent a coffee in the wrong direction, and it took me until March to run on my own business the arithmetic I would have billed an advisory client to run on theirs.
The deeper problem with a single percentage is that the wholesale costs underneath it are not a percentage. Interchange — the slice your provider passes to the card issuer — has been capped on debit and prepaid cards at a weighted average of 8 cents, with a ceiling on individual rates of 10 cents or 0.20%. Note the cents. A 10 cent interchange fee on a $4.80 coffee is 2.08% of the sale; on the $185 deposit the same fee is 0.05%. A flat percentage plan therefore has the studio bookings quietly subsidising the coffees, and a flat surcharge on top repeats the trick on the customer under a sign that implies precision. Not a scandal. A bad look on something that was never going to move the P&L.
The caps tighten in October: debit and prepaid to 0.16% or 8 cents, consumer credit to a hard 0.30% and commercial cards to 0.80%, with the weighted-average benchmark for credit dropped altogether. Foreign-issued cards get their own 1.0% cap from 1 April 2027, alongside more disclosure of what the networks and the large acquirers actually charge. That last one is the change I would have wanted most, ten years ago, at the freight company.
Least-cost routing, which nobody rang you about
Most debit cards in this country are dual-network: the same piece of plastic can be sent through eftpos or through Debit Mastercard or Visa Debit, and the three do not cost you the same. Least-cost routing sends each transaction down whichever is cheapest for you. It is free money and it takes one phone call.
The RBA expects every acquirer and payment facilitator to offer and promote LCR for in-person transactions, and makes them report on it every six months. Online is well behind — the Bank’s most recently published figure, from June 2024, had six of twelve providers offering it to all their merchants — and mobile wallet routing, which the Board wanted built by the end of 2024, is still not where it should be given how many people now tap a phone.
Ring your provider. Ask whether least-cost routing is switched on for card-present, for online and for wallet transactions, and ask them to confirm it in an email. If the person on the phone does not know what you are talking about, that is information about your provider, and better to have it before October than after.
Putting it in the price instead
We went the other way in March. The flat white went to $4.80 and the sign went in the drawer.
Card is about 94% of our takings and our blended cost is that shade over 1.4%, so to stand still I needed roughly 1.3% across the board. On a $4.60 coffee that is six cents, and six cents is not a price, so it became twenty. I over-recovered. I know I over-recovered. The correct response to that is not to feel clever, it is to leave the flat white alone next time something else goes up.
The argument for building it in is that it is legible. A customer can compare $4.80 to $4.80. They cannot compare $4.60-plus-1.5%-on-card to $4.75-flat while a queue forms behind them. The argument against is that it makes your board look dearer than the place two doors down that is still surcharging for another six weeks, and there is no way around that except waiting.
The laminated card is still in the drawer under the till, with the old menus. I am keeping it. Some time next year somebody will write a piece about how removing surcharges pushed up café prices, and I would like the evidence that I was early.