Who should really cover the cost of card surcharges—businesses or consumers?

If you’ve ever been caught off guard by a sneaky little ‘card surcharge‘ tacked onto your morning coffee or dinner bill, you’re not alone. 

In fact, a recent survey commissioned by Mastercard reveals that a whopping 69 per cent of Australians believe these card payment surcharges should be banned altogether. 

And it’s not just a passing grumble—most Australians think businesses should simply absorb these costs as part of doing business, rather than passing them on to us, the loyal customers. 

The surcharge saga: What’s really going on?

Let’s break it down. When you tap your card to pay for a $5 coffee, you might notice an extra 8 cents added as a ‘surcharge’. It’s a small amount, but it adds up over time—and it’s a source of frustration for many. 

According to the survey, 85 per cent of Australians reckon these fees should be considered a normal business expense, just like rent, wages, or the cost of coffee beans. 

Some (40 per cent) want the cost factored into the advertised price, while others (45 per cent) say merchants should just absorb it.

But here’s the twist: accepting card payments is actually cheaper for businesses than handling cash. 

Mastercard’s Richard Wormald points out that while a card payment might add 8 cents to your coffee, handling cash can cost a business around 20 cents per cup. 

That’s right—cash is the pricier option! Yet, businesses rarely (if ever) pass on the cost of cash handling to customers.

Why do surcharges exist?

Businesses argue that digital payments come with real costs—merchant service fees, equipment, and security measures, to name a few. 

Mr Wormald likens it to any other business input. ‘Digital payments are another cost of doing business, like coffee beans, rent or wages, and there are real costs involved in providing them,’ he says.

But if card payments are actually the cheapest way for retailers to get paid, why not just build the cost into the price of goods, as they do with everything else? 

Wormald suggests that doing so would make pricing clearer and build trust with customers. After all, no one likes a surprise at the checkout.

The watchdog weighs in

The Australian Competition and Consumer Commission (ACCC) is also keeping a close eye on this issue. 

Last month, the ACCC reminded businesses to be upfront about any surcharges and to ensure they’re only charging what it actually costs them to process card payments. 

Deputy chair Mick Keogh warned that misleading surcharge practices will be a top priority for consumer law enforcement in the coming year.

‘Businesses need to ensure their customers know about any card payment surcharges upfront, and that they are only charging what it costs them to accept those card payments,’ Mr Keogh said. 

Excessive surcharges and lack of transparency can drive customers away—and in today’s competitive market, that’s a risk few businesses can afford.

Government action on the horizon

With the cost of living on everyone’s mind, Prime Minister Anthony Albanese and Treasurer Jim Chalmers have announced plans to crack down on excessive card surcharges as part of broader reforms. 

Any changes will be made in consultation with the Reserve Bank of Australia, but the message is clear: the days of hidden surcharges may be numbered.

What happens if surcharges are banned?

If Australia follows the lead of countries like the UK, where surcharges have been banned, businesses will likely adapt by building payment costs into their advertised prices. 

Wormald dismisses concerns that this would be inflationary, arguing that consumers are already paying these costs—just in a less transparent way. In fact, if businesses shop around for better payment deals, it could even lead to lower prices.

‘The idea that factoring in payment costs would be inflationary does not really stack up. Consumers are already paying these costs through surcharges, so including them in the advertised price does not change what people are paying,’ Mr Wormald said.

‘It just makes the cost more transparent. And in instances where businesses find a better deal that meets their needs elsewhere, factoring in a lower payment cost could lead to lower prices and be deflationary, not inflationary.’

The bottom line: Transparency and trust

At the end of the day, what most Australians want is simple: honesty and clarity at the checkout. No one likes feeling tricked by hidden fees, especially when every dollar counts. 

By including payment costs in the advertised price, businesses can build trust and make life a little easier for everyone.

Your turn: Have your say!

As the conversation around card surcharges continues to evolve, it’s clear that the issue touches on both business operations and consumer expectations. 

Understanding the balance between transparent pricing and the costs of payment methods remains an important consideration for all parties involved.

What are your thoughts on how businesses handle payment surcharges? Have you been stung by a surprise surcharge lately? Do you think these costs should be included in advertised prices, or is it fair for merchants to pass them on separately? Have you noticed any impact on your own spending habits due to surcharges? Feel free to share your views and experiences in the comments below.

Also read: Chemist Warehouse’s new scheme helps Aussies dodge surcharges and earn rewards