Australian businesses paid an estimated $3.4 billion in merchant fees in 2023, according to RBA data — yet most small business owners have never compared their rate against what's actually available. The cheapest merchant fees in Australia range from 0.3% for eftpos debit to over 2.5% for international credit cards. Knowing which fees are negotiable, which pricing model suits your business, and how zero-cost EFTPOS works can save you thousands every year.

What Are Merchant Fees and Why Do They Matter?

Merchant fees are the charges your business pays every time a customer taps, swipes, or inserts their card. For a café turning over $800,000 a year, even a 0.5% difference in your merchant fee rate equals $4,000 back in your pocket annually.

For restaurants, retail shops, and market stalls, these costs compound fast. A busy Saturday at a farmers market might see 200 transactions. Multiply that across a year and you're looking at tens of thousands of dollars flowing through your payment terminal — every fraction of a per cent matters.

The problem is that most Australian business owners set up a merchant account when they launched, accepted whatever rate they were offered, and never looked at it again. Payment providers count on that inertia.

Understanding exactly what you're paying — and why — is the foundation of reducing your costs.

How Merchant Fees Are Calculated in Australia

Australian merchant fees are made up of three separate components, and only one of them is actually negotiable with your payment provider.

Here's how the breakdown works:

1. Interchange fees — Set by the card-issuing bank. This is the base cost of every transaction and is non-negotiable. Rates vary by card type (debit vs credit), card network (Visa vs Mastercard vs eftpos), and whether the transaction is card-present or card-not-present.
2. Card scheme fees — Charged by Visa, Mastercard, American Express, or eftpos Australia. These are small but contribute to your total cost and are also non-negotiable at your level.
3. Merchant services component — This is what your payment provider charges on top. It's their margin, and it's where you have real negotiating power. It varies significantly between providers.

Card-present vs card-not-present pricing also matters. When a customer taps their card in your store, the transaction is lower risk and attracts a lower rate. When you manually key in a card number (MOTO — mail order/telephone order), the rate is higher because there's no physical card verification. If your business takes phone orders, check your MOTO rate separately.

International cards attract higher fees than domestic Australian cards. A tourist paying with an overseas Visa card at your restaurant will cost you more to process than a local tapping their Commbank Visa. If your business attracts significant tourist traffic, this is worth factoring into your calculations.

Comparing Pricing Models — Flat-Rate, Interchange-Plus, and Tiered

The pricing model your provider uses determines how transparent — and how fair — your merchant fees actually are.

Which Model Is Best for Your Business Type?

• Cafés and restaurants with mixed card types: Interchange-plus gives you the most transparency and typically the lowest effective rate as your volume grows.
• Market stalls and pop-up vendors: Flat-rate is simpler to manage and budget for. Look for rates under 1.4% for card-present transactions.
• Retail shops with high debit card usage: Interchange-plus rewards you for your customer mix — cheap debit transactions stay cheap.
• Anyone on tiered pricing right now: You're almost certainly overpaying. Get a quote from APS Business to see what you'd actually save.

Tiered pricing is the least transparent model available. Providers group transactions into "qualified," "mid-qualified," and "non-qualified" buckets, then charge different rates for each. Most business owners have no idea which bucket their transactions land in — and providers have every incentive to downgrade transactions to a higher-cost tier.

Debit vs Credit Card Fees — What Australian Businesses Actually Pay

Debit cards are dramatically cheaper to process than credit cards — and understanding this gap is one of the fastest ways to reduce your effective merchant fee rate.

According to the Reserve Bank of Australia's Payments Data, average merchant fees by card network break down approximately as follows:

The RBA reports that eftpos transactions cost merchants an average of just 0.3% — making domestic debit by far the cheapest payment type to accept. This is a standalone fact worth knowing: if you're on a flat-rate plan charging 1.5% on all transactions, you're subsidising credit card customers with every eftpos tap.

Real-world example: A suburban bottle shop processes $60,000 per month. If 70% of transactions are eftpos or debit, their blended interchange rate should be well under 0.7%. If they're on a flat-rate plan at 1.4%, they're paying nearly double what their card mix justifies. Switching to interchange-plus pricing with the right provider could save them over $4,000 a year.

Zero-Cost EFTPOS — Is It Really Free?

Zero-cost EFTPOS plans are legitimate, legal, and growing in popularity across Australia — but "free for the merchant" doesn't mean "free for everyone."

Here's how it works: instead of the merchant absorbing the transaction fee, the payment terminal adds a surcharge to the customer's bill that covers the processing cost. You pay nothing per transaction. The customer pays a small percentage on top of their purchase.

Providers including Smartpay and Zeller offer this model. APS Business also helps Australian businesses evaluate whether this approach is right for their customer base.

When Zero-Cost EFTPOS Makes Sense

• High-volume, low-margin businesses like takeaway shops, convenience stores, or food market stalls where margins are tight
• Industries where surcharging is already normalised — hospitality businesses, taxi and ride-share adjacent services
• Businesses with price-insensitive customers where a 1.3–1.5% surcharge is unlikely to change purchasing behaviour

When It Might Not Work

• Retail environments where competitors don't surcharge — you risk losing customers to nearby stores that absorb the fee
• High-ticket item businesses where a 1.5% surcharge on a $2,000 purchase is a noticeable $30 addition
• Businesses with a significant proportion of eftpos transactions, where the fee being passed on is already low and customer resistance may exceed the benefit

Surcharging, Refunds, and the Hidden Costs Most Providers Don't Mention

Surcharging is legal in Australia, but it is regulated — and getting it wrong can expose your business to ACCC complaints.

Under the Australian Consumer Law and ACCC guidelines, businesses can only surcharge up to their actual cost of acceptance for that card type. You cannot profit from surcharging. If your Visa Credit processing cost is 1.2%, you cannot add a 2% surcharge and keep the difference.

Key surcharging rules to know:

• Surcharges must reflect your actual per-payment costs — not a blanket number that overcharges customers
• You must apply surcharges consistently — you can't waive them for some customers and charge others
• Signage is required — customers must be informed of surcharges before they pay
• American Express surcharges follow the same rules but Amex's cost of acceptance is typically higher, so your capped surcharge rate will be higher

What Happens to Fees on Refunded Transactions?

This is the hidden cost most business owners don't realise until it's too late. When you refund a transaction, most payment providers do not refund the processing fee you originally paid.

If a customer spends $200 at your store and later returns the item, you refund $200 — but you've already paid $2.40 in merchant fees and in most cases you won't get that back. At scale, for businesses with a moderate return rate (say, 5–10% in retail), this represents a real and recurring cost.

Ask any prospective provider directly: "Do you refund merchant fees on returned transactions?" The answer will tell you a lot about their pricing philosophy.

Do Merchant Fees Include GST? What You Can Claim Back

Yes — the merchant services component of your fees generally includes 10% GST, and if your business is registered for GST, you can claim this back as an input tax credit on your Business Activity Statement.

Here's what that means in practice:

• Your payment provider charges you, say, 1.2% per transaction
• Of that 1.2%, approximately 0.11% represents GST (on the provider's margin component)
• You claim that GST back on your next BAS

The interchange and card scheme components of your merchant fees do not include GST — these are set by banks and card networks and are treated as financial supplies exempt from GST.

For a business processing $500,000 per year in card payments at an effective rate of 1.0%, you're paying approximately $5,000 in merchant fees. If the merchant services component represents 0.4% of that rate, you're looking at roughly $200 in claimable GST per year — not enormous, but real money that belongs to you.

Always keep your monthly merchant fee statements and reconcile them against your BAS with your accountant or bookkeeper. Many small business owners miss this claim entirely.

How APS Business Helps Australian Businesses Get the Cheapest Merchant Fees

APS Business offers Australian businesses transparent, competitive merchant fee pricing with no hidden charges, no lock-in contracts, and 24/7 local support — purpose-built for the sectors that need it most.

Whether you run a busy restaurant, a retail shop, or a weekend market stall, the way you accept payments directly affects your bottom line. APS Business works with Australian restaurants, retailers, and market operators across the country to ensure they're not overpaying on every transaction.

Here's what sets APS Business apart from the alternatives:

• No lock-in contracts — you're not trapped if a better option appears
• Transparent fee structures — you see exactly what you're paying and why
• 24/7 local support — not an overseas call centre, not a chatbot
• Solutions for card-present, card-not-present, and zero-cost EFTPOS — matched to your business type
• Hardware flexibility — whether you need a countertop terminal, a mobile reader for markets, or an integrated POS solution

Comparing Common Australian Providers

The cheapest merchant fees in Australia aren't always the lowest headline rate — they're the combination of rate, transparency, refund policy, hardware cost, and support quality that adds up to the best total cost of ownership for your business.

Ready to Pay Less on Every Transaction?

The cheapest merchant fees in Australia come from understanding what you're actually paying, choosing the right pricing model for your business type, and working with a provider that's transparent about every component of your rate.

APS Business helps Australian restaurants, retailers, and market operators cut their processing costs with clear pricing, no lock-in contracts, and genuine local support available around the clock. If you haven't reviewed your merchant fees in the last 12 months, there's a strong chance you're overpaying.

Get a no-obligation quote today and find out exactly what you should be paying: https://aps.business