How to Avoid Credit Card Merchant Fees

Information verified correct on October 7th, 2015
Avoid paying extra to maximise your credit card use. Avoid paying extra to maximise your credit card use.

Credit cards are a convenient way to pay, particularly if you wish to delay payment on your purchases. However, retailers often charge you – the customer – a surcharge or fee for the convenience of paying with your credit card.

The Australian Reserve Bank, in 2003, implemented a number of credit card reforms to lower the costs for merchants accepting credit card payments. One of these reforms was the abolishment of the “no surcharge” rule, which had previously not allowed merchants to charge their customers a fee for processing credit card payments.

In other words, the reforms allow merchants to choose whether or not to pass on the cost of accepting credit card payments directly or indirectly to consumers.

Why would merchants charge their customers a fee to use credit cards?

When retailers set up their computerised payment systems, they have a variety of options to choose from…Cash, credit, debit?

Banks and credit card companies charge a fee to merchants for the use of their payment methods. Especially in the case of smaller businesses, those fees can significantly impact the bottom line. This means it may be in the business’s best interests to charge a fee.

How do you know if you’re being charged a fee?

With the reforms came an obligation on the part of the merchant – all customers must be told, in advance, if a processing fee applies and what the amount is. Unfortunately, many stores do not post a notice, but rather have the customer press the “accept” button at the moment of processing their payment.

While this act is prohibited by the Reserve Bank, many merchants do it. This method can make customers feel “trapped” into making the purchase and accepting the surcharge. Don’t be fooled! You can cancel a purchase right then and there and walk away if you so choose.

What can you do to avoid paying merchant fees?

There are three choices every consumer can make to avoid spending more than the purchase price on an item.

  1. Choose another means of payment.

Paying with your debit card, which pulls funds direct from your account, may be an option. While some businesses have begun charging a fee for using debit cards, not all do this. Of course, there are no fees for shopping with cash.

  1. Choose another retailer.

There are few items that can only be purchased at a particular store. Thanks to department stores, shopping malls, and outlet stores, consumers have more options than ever when it comes to where you shop.

Smaller businesses are more likely to charge a fee, as their revenues may not be high enough to cover the charges for processing credit cards. Larger businesses, chain stores, well-known franchises, and department stores have higher revenues and, as such, are more likely to “eat” credit card processing fees as a part of their operating expenses.

Shopping online may be another way to avoid paying merchant fees, as many online retailers don’t charge them. This is because, operating online can be much lower cost to the business than having a physical store. The catch is, for the majority of online orders, a shipping and handling fee will apply. For online purchases, try to find retailers that offer free shipping and no merchant fees.

  1. Choose to be a bargain shopper.

As a consumer, you do have some say in what fees and charges you are willing to pay. For smaller shopping trips, chances are you’re stuck paying whatever surcharge the merchant requires. But when shopping for big-ticket items, such as appliances, furniture, vehicles, and the like, you can (and should) negotiate.

Your salesperson is likely to tell you that s/he has no control over the charges set by management. This is probably true. But ask to speak to the manager, and you’re dealing with someone who does have the authority to eliminate those merchant fees.

Does it matter which credit card I have?

It just might! Different cards frequently charge merchants a different fee or percentage for processing. According to a report by CBS Money Watch, it may cost Americans (and eventually, other first-world nations such as Australia) more to use an American Express card than it will to use Visa or MasterCard.

If you want to save money, watch out for those merchant fees! You can save even more by choosing the best credit card for you.

Was this content helpful to you? No  Yes

Related Posts

Ask a Question

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the privacy policy, receive follow up emails related to and to create a user account where further replies to your questions will be sent.

One Response to How to Avoid Credit Card Merchant Fees

  1. Default Gravatar
    David | June 21, 2011

    As a merchant, why does it take (over a weekend) up to 4 days to process my card transactions.Why can purchases or refunds not be credited to nominated accounts immediately.Weekdays there is a delay of one day.Does this same system exist in the US and other countries.

Credit Cards Comparison

Rates last updated October 7th, 2015
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee Cash advance rate (p.a.)
NAB Low Rate Credit Card
Low ongoing interest rate on purchases and balance transfers.
0% p.a. for 12 months (reverts to 13.99% p.a.) 4.99% p.a. for 6 months $59 p.a. 21.74% p.a. Go to site More info
Westpac 55 Day Platinum Card - Exclusive Offer
Exclusive Offer to
No annual fee for the first year (and subsequent years) if you spend over $10,000 per annum. Platinum benefits including a platinum concierge service, overseas travel insurance, extended warranty cover and purchase security cover.
0% p.a. for 12 months (reverts to 19.84% p.a.) 3.99% p.a. for 6 months with 1% balance transfer fee $0 p.a. annual fee for the first year ($90 p.a. thereafter) 21.29% p.a. Go to site More info
HSBC Platinum Credit Card
Earn rewards points plus a balance transfer offer. Access to Platinum benefits including a personal concierge service and VISA Platinum reward program.
19.99% p.a. 0% p.a. for 8 months $0 p.a. 21.99% p.a. Go to site More info
Citi Rewards Credit Card - Classic Card
Get the chance to earn 1.00 points for every dollar you spend on the first three months (up to 20,000 bonus points). Also enjoy a 0% p.a. on balance transfers for 12 months and up to 55 interest-free days on purchases.
20.99% p.a. 0% p.a. for 12 months $0 p.a. annual fee for the first year ($89 p.a. thereafter) 21.74% p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

Ask a question