Most business owners can tell you their hourly rate to the dollar and have no idea what it costs them to get paid. It is usually somewhere between one and two per cent of everything that comes through the terminal, it is quietly deducted before the money lands, and almost nobody checks it.
The short version
The rate you were quoted is not the rate you pay. There are fixed costs sitting on top of it that never appear in the sales pitch.
You can work out your real number in about five minutes from one statement, and it is nearly always higher than people expect.
Once you know it, you have something to negotiate with. Before that, you are arguing about a percentage neither of you has defined.
What is actually inside the fee
When a customer taps a card, what you pay is made of three separate things going to three different places. This matters because only one of them is capped, and the other two are where your money quietly goes.
Interchange
Goes to the customer’s bank. The biggest single component on most plans, and the one that is regulated. The caps come down on 1 October 2026.
Scheme fees
Go to Visa, Mastercard or eftpos. Not capped. There are a lot of them, they change, and they are almost never itemised on a small business statement.
The acquirer’s margin
Goes to your provider. Not capped, and the part most open to negotiation. How much room there is depends on your volumes and your plan.
Why the interchange cut may not reach you. On a single blended rate you are buying one number, and a reduction in one of its three ingredients does not have to be passed on. Plenty of businesses will expect a lower bill in October and find nothing has changed. If you have not caught up on what changes that day, start with what happens to surcharges on 1 October.
Work out your real rate
Not the rate on the contract. The rate you actually paid.
- Take one full month’s statement. A whole statement period, not a fortnight. Pick a normal month rather than December.
- Add up everything they charged you. Every transaction fee, plus terminal rental, plus any gateway or platform fee, plus monthly account fees, plus PCI compliance charges if you get them. All of it.
- Divide that by your card sales for the same month. Card sales only, not total turnover. If half your money comes in by bank transfer, including it will flatter the number and hide the problem.
- That percentage is your real cost. Write it down with the month beside it. This is the number to use in every conversation from now on.
A worked example. A business takes $50,000 a month on cards. The statement shows $525 in transaction fees, $39 terminal rental and a $25 monthly fee. That is $589, which is 1.18%, not the 1.05% on the contract. Over a year on $600,000 of card sales, the difference between 1.18% and 0.95% is $1,380.
Small tickets are where the fixed bits bite. A flat cents per transaction fee is nothing on a $900 invoice and brutal on a $12 coffee. If your average sale is small, the per transaction charge may be costing you more than the percentage is.
What to ask your provider
Ring them with your number in front of you. These are the questions that get useful answers, and asking in writing tends to get better ones.
- What is my effective rate across the last three months, on your figures?
- Am I on a blended rate or interchange plus? If blended, what would interchange plus look like on my volumes?
- How will the interchange reduction from 1 October be applied to my plan?
- Is least cost routing switched on for my in person transactions? If not, why not?
- What am I paying for terminal rental, and what is that on a month to month basis rather than a contract?
- What is my contract term and what does it cost me to leave?
Least cost routing is worth its own question. Many debit cards carry two networks, so an eligible tap can travel by either one, and least cost routing sends it whichever way costs you less. It only applies to those dual network transactions, the cheaper network is not always the same one, and on some plans the default was already the cheaper route. So it is not a guaranteed saving. It is still worth knowing whether yours is switched on, and asking why if it is not.
Getting a quote you can actually compare
Providers quote against different assumptions, which is how two quotes can both look cheaper than what you have. Give every one of them the same set of numbers.
- Monthly card turnover, and your average transaction size
- The split between in person, online and over the phone
- Your card mix, including how many are credit, debit and issued overseas
- Refunds and chargebacks in a normal month
- How many terminals you need and whether you want to rent or buy
- What you need it to talk to, if your terminal has to integrate with your point of sale or your accounting software
Then compare on the same basis you used for your own number: everything they will charge, divided by the same card sales. A headline rate with a terminal rental hidden underneath is not cheaper.
Public numbers are coming, and they are worth waiting for. The card networks have to publish quarterly fee data, with the first lot due by 30 October 2026 covering July to September. Large acquirers, meaning those handling more than $10 billion of Australian card transactions a year, have to publish their merchant service fee data on the same timetable, and a measure of how much of the interchange reduction they passed through by 30 January 2027. If your provider tells you everyone charges what they charge, that starts to be checkable.
Should you offer a discount for cash or PayID?
You can. Both the RBA and the ACCC are clear that offering a discount for paying a particular way is allowed, and the surcharging changes do not alter that. It is surcharging that stops on 1 October, not discounting.
The structure that works is one price on the ticket, which is the price a card customer pays, and the discount applied at the point of payment. The price you display has to be the full price somebody pays if they do not get the discount. Tell customers about it before they order or pay, not at the terminal.
The sum that decides it. Compare the discount against the card cost you actually avoid on that sale, which is the percentage and any cents per transaction. Not your all in rate. Terminal rental and monthly fees are payable either way, so they are not saved and they do not belong in the calculation.
If the card costs 1.2% on that transaction, a 1% discount leaves you slightly ahead. A 2% discount costs you 0.8% more than the card did, which plenty of owners would happily pay for money in the account today. A 5% discount is a much harder case. The rate is your call, but make it against a number you worked out.
Two things people forget. Cash is not free, because somebody counts it, banks it and carries the risk of it going missing. And PayID is often the better version of this idea for a trade business that invoices, because there is no terminal in the middle and nothing to count. Payments are usually quick, though they can be held for security checks, so do not promise a customer it is instant. The risk to watch when you are the one being paid is a screenshot or an email saying a payment has been sent. Do not release goods or sign off a job until you have seen the money in your own account.
Whatever you set, write down what the discount is, what it applies to, how it shows on the receipt and how it is recorded, because a discount reduces what you were actually paid and your books need to show that.
Where this normally lands
For most businesses we look at, the answer is not a dramatic saving. It is a quarter of a per cent, found by knowing the real number and asking one uncomfortable question, worth somewhere between a few hundred and a couple of thousand dollars a year depending on turnover.
That is not exciting. It is also money you are currently paying for no reason, it recurs every year, and it takes an afternoon to sort out once.
Bring us a merchant statement
We will work out your real rate, tell you whether it is reasonable for a business your size, and give you the questions to put to your provider. If it turns out you are on a fair deal, we will tell you that too.
General information only, current at 11 September 2026, and not advice about your business. Payment provider terms vary and change, so confirm your own arrangements with your provider. Business Edge Advisors, Level 1, 561 Olive Street, Albury NSW 2640. Registered tax agent 20651000.
