Credit Card Surcharges: Understanding Policies and Customer Preferences

Ever been caught off-guard by an extra fee at checkout? Credit card surcharges can surprise customers and sometimes even put a dent in their willingness to buy.

For businesses, these surcharges helped offset transaction costs, but they also came with risks—namely, alienating customers who feel penalised for paying with their preferred method.

If you’re a business owner working out what the end of card surcharges means for you, or a customer curious about why they were ever a thing, we’re here to demystify the details. In this article, we’ll explore how credit card surcharges worked, the rules that apply now, and how they affect customer preferences.

What Are Credit Card Surcharges?

Credit card surcharges are additional fees charged to customers who choose to pay with a credit card. Typically calculated as a percentage of the transaction amount, these surcharges help businesses recover the costs imposed by credit card companies. Card surcharges ended on 1 October 2026 for eftpos, Mastercard and Visa card payments, under the card networks' own rules. See the RBA and the ACCC for the detail.

While surcharges can be an effective way for businesses to cover transaction costs, they can also influence how customers perceive the brand. For many consumers, surcharges feel like an “extra cost,” which can negatively impact their experience.

Why Do Businesses Implement Credit Card Surcharges?

1. Recovering Transaction Fees

Every time a customer pays with a credit card, the business incurs a transaction fee. These fees are a percentage of each transaction, quoted from your statement, and can add up quickly, especially for small businesses. Surcharges are a way for businesses to offset these fees.

2. Encouraging Alternative Payment Methods

Before 1 October 2026, some businesses used surcharges to nudge customers towards lower-cost payment options. Now that surcharges on eftpos, Mastercard and Visa payments have ended, that lever is largely gone, and businesses manage card costs through pricing and their choice of payment provider instead.

3. Transparency with Costs

Surcharges also allow businesses to be transparent about their costs. By clearly communicating these fees, businesses can explain why a credit card purchase may cost a little extra, showing customers the real cost of convenience.

Credit Card Surcharge Policies in Australia

Card surcharges ended on 1 October 2026 for eftpos, Mastercard and Visa card payments, under the card networks' own rules. Weekend, public holiday and service fees are still allowed. For the detail, see the Reserve Bank of Australia and the ACCC.

Customer Preferences on Credit Card Surcharges

Surcharges may help businesses, but they can also influence customer purchasing behaviour and preferences. Here’s how surcharges can impact customers:

1. Price Sensitivity

Customers are highly sensitive to extra charges, even if they’re minor. When a surcharge pops up, it can create a negative impression, particularly if it wasn’t anticipated.

2. Perceived Value

Surcharges can affect the perceived value of the purchase. When customers see an added fee for using a credit card, they may feel the business is “nickel-and-diming” them, which can lead to a less favourable view of the brand.

3. Payment Preferences

Some customers may avoid credit card surcharges by choosing alternative payment methods. However, others are strongly attached to their preferred payment method, particularly for rewards or convenience. If a surcharge becomes a barrier, customers may consider switching to competitors.

4. Loyalty and Trust

A transparent surcharge policy can build trust if communicated openly. But hidden fees or poorly explained surcharges can damage trust and erode loyalty, especially if customers feel misled.

Strategies for Managing Credit Card Surcharges Effectively

If you still apply permitted fees, such as weekend, public holiday or service fees, these approaches help keep customers happy:

1. Be Transparent

One of the simplest ways to avoid frustrating customers is to be clear and upfront about any fees. Ensure customers are informed before they order, and show the fee on menus and receipts.

2. Offer Incentives for Alternative Payments

Encourage customers to use payment methods with no surcharge, such as direct debit, by offering small incentives. For example, a small discount on debit transactions can motivate customers to choose lower-cost options.

3. Check the Rules Before Adding Any Card Fee

Card surcharges ended on 1 October 2026 for eftpos, Mastercard and Visa card payments, under the card networks' own rules. Check the ACCC’s guidance on card surcharges before adding any card fee.

4. Consider Waiving Fees for Loyal Customers

For high-value or repeat customers, consider waiving permitted fees altogether. Offering a fee-free experience to loyal customers can help build stronger relationships and encourage repeat business.

Pros and Cons of Credit Card Surcharges

Here’s a quick look at the main advantages and disadvantages surcharges had for businesses before they ended:

Pros:

• Cost Recovery: Surcharges help businesses cover credit card processing fees.
• Alternative Payment Promotion: They gently nudge customers towards cost-effective payment options.
• Transparency: Customers get insight into the cost of credit card transactions.

Cons:

• Customer Frustration: Unexpected fees can lead to abandoned transactions and poor brand perception.
• Lost Sales: Price-sensitive customers may choose competitors who don’t charge surcharges.
• Potential for Mistrust: Poorly communicated surcharges can damage customer trust and loyalty.

Wrapping Up

Card surcharges were a practical tool for businesses looking to cover transaction fees, but they also affected how customers perceived the purchasing experience. With surcharges on eftpos, Mastercard and Visa payments now ended, the balance between covering costs and keeping customers happy comes down to your pricing and your payment provider. Be transparent about any permitted fees, and keep customer preferences in mind.

Want to understand your card costs? Get started with Payflo and get your number, quoted from your statement.

Frequently Asked Questions (FAQs)

1. Why do businesses charge credit card surcharges?

Businesses charge surcharges to offset the transaction fees imposed by credit card companies, helping to cover the cost of card processing.

2. Are credit card surcharges legal in Australia?

Card surcharges ended on 1 October 2026 for eftpos, Mastercard and Visa card payments, under the card networks' own rules. Weekend, public holiday and service fees are still allowed. See the RBA and the ACCC for the detail.

3. How much can a business legally surcharge?

Card surcharges ended on 1 October 2026 for eftpos, Mastercard and Visa card payments, under the card networks' own rules. See the ACCC’s guidance on card surcharges.

4. Do customers have to pay surcharges?

Card surcharges ended on 1 October 2026 for eftpos, Mastercard and Visa card payments, under the card networks' own rules. See the ACCC’s guidance on card surcharges.

5. Can businesses waive surcharges for some customers?

Card surcharges ended on 1 October 2026 for eftpos, Mastercard and Visa card payments, under the card networks' own rules. See the ACCC’s guidance on card surcharges.