Each time a consumer pays with a credit or a debit card (this includes physical cards or devices such as smart phones or watches), your business incurs fees or costs associated with processing that transaction. As a business, it’s your choice whether you want to absorb these costs or recover them by passing some or all of the cost onto the customer in the form of a surcharge.

This guide is intended to help you decide whether surcharging is right for your business. We also outline your responsibilities as a merchant when surcharging, and tips on how to surcharge compliantly according to the Reserve Bank of Australia standards.

The decision to surcharge

When deciding, ask yourself the following questions;

• Is surcharging regular practice in your industry?
• Do your competitors surcharge?
• Do you typically process lots of card transactions that incur a low or high cost? If it’s the latter, surcharging may be more beneficial for your business.
• Is surcharging likely to detract customers from purchasing from you?

An alternative to surcharging could be to include the costs of all business expenses (including transaction fees, rent, equipment etc) into the pricing for your product or services, or by finding ways to reduce other business expenses.

Surcharging responsibly

If you choose to surcharge, there are three important things that you should keep in mind to ensure that you surcharge compliantly:

1. Ensure that your surcharge does not exceed your Cost of Acceptance

The Reserve Bank of Australia (RBA) standard states that merchants can only pass on the average cost of what it costs them to accept each type of card transaction. Surcharging more than your Cost of Acceptance may constitute ‘excessive surcharging’ and can be investigated by the Australian Competition and Customer Commission.

Your ‘Cost of Acceptance’ is the cost to you as a business for accepting a particular card type. According to the RBA, surcharging calculations can cover:

• Costs such as merchant service fees, machine fees, and any other fees incurred in processing card transactions
• Gateway fees paid to a payment service provider
• The cost of fraud prevention services paid to an external provider
• Fraud-related chargeback fees (but not the cost of any actual chargebacks).

We provide more information on your options for calculating Cost of Acceptance later in this article.

It is worth noting that the RBA’s surcharging standard does not apply to card payments for taxi fares. This is the responsibility of State and Territory regulators. If you accept payments for taxi fares using an EFTPOS machine, please check the applicable rules in your State or Territory.

2. Display signage in a place that is visible to your customers

• It is important (and a RBA requirement) to be transparent to your customers what surcharges may apply to their transaction.

3. Review your Cost of Acceptance at least every 12 months

• You may choose to review and reset your surcharge rates frequently based on your average Cost of Acceptance. However, the RBA standard requires that you at least review it every year to ensure that your surcharge rates remain compliant as they may have changed over the course of 12 months.

How to calculate and apply a surcharge

Depending on your payment provider, there are two ways to calculate and surcharge:

1. Manually apply a surcharge to each product or service that you sell. To do this:

• Look at the fees you pay to accept payments from various card types. All acquirers and payment facilitators must provide merchants with an annual statement that clearly sets out their average cost of acceptance for each of the card payment systems regulated by the RBA. You can read more here
• Acceptance costs will be expressed in percentage in your annual statement – you should ensure that you only surcharge up to your Cost of Acceptance for that card type.

2. Choose a payment provider with an automatically applied surcharge service.

• Tyro’s Dynamic Surcharging feature allows you to set a surcharge rate across a range of card types¹ via your Tyro Portal.
• It is up to you what rate you choose to surcharge but you should keep in mind that the RBA only permits you to surcharge up to your Cost of Acceptance for that card type.
• To assist you, Tyro provides your Cost of Acceptance in your Tyro Portal. This means you can make a more informed decision on surcharging whilst staying within the boundaries of the Reserve Bank of Australia’s (RBA) surcharging guidelines.
• Tyro calculates your cost of card acceptance by taking an average of the cost of all transactions that you have processed for each eligible card type,¹ over the previous 12 months, and provides you with the option to include the cost of machine rental fee.
• Once set, your EFTPOS machine² is then able to dynamically identify the card presented by your customer and automatically apply the configured surcharge, allowing you to recover your fees easily.
• Tyro also provides editable signage so your rates can be easily visible to customers. help.tyro.com

For more information on Tyro’s Dynamic Surcharging feature visit tyro.com/surcharging.

If you’re a Tyro customer and would like to review or adjust your Tyro surcharge preferences, log into the Tyro Portal and go to Self-service > Surcharging.

More surcharging resources for you

To learn more about surcharging, such as applying refunds (e.g. the surcharge must be refunded too), take a look at the following links to the ATO, RBA and ACCC.

ATO – GST and surcharging

RBA – Card payment regulations explained

ACCC – Merchant and consumer information

^{1 Tyro’s Dynamic Surcharging feature enables you to set a surcharging amount for Mastercard, Visa, eftpos, UnionPay and American Express, JCB, and Diners Club}

^{2 Tyro’s Dynamic Surcharging feature is available on Tyro CounterTop (Yomani) and Mobile (Yoximo) EFTPOS machines.}