Startups and sole traders often operate on limited budgets, and every expense can impact your bottom line. Recouping payment processing fees could help you manage your cashflow more effectively, allowing more resources to be allocated to your business growth and development.

Your basic website overheads should only include your domain and hosting fees. But if you’re accepting payments through your website using software like Square, PayPal or Stripe, you’ll also be incurring transaction fees.

I generally recommend Square for payment processing because it has some extra features that can be very useful for startups and sole traders, whether you can use them now or to set you up for future business expansion.

If you’re using Square to:

  • Process payments through your website
  • Send invoices
  • Take payments via payment links
  • Process payments using the Square Reader at markets

… you’re already aware that you’re being charged about 2.2% per transaction.

While the transaction fee is very competitive, obviously the more you charge for your product or service, the more Square (or Paypal, Stripe, etc) charge you for the transaction.

Is it possible to recoup payment processing fees by passing it on to the customer at the checkout?

The simple answer is yes.

the legalities

While businesses are generally permitted to pass on the costs of card payments, regulations don’t allow you to pass on a surcharge that exceed your actual processing costs. 

Credit card surcharging in Australia is regulated by the Reserve Bank of Australia (RBA) and the Competition and Consumer Act 2010. 

To be legally compliant, you need to be fully transparent with your customers. This means letting your customer know in some way that they’re being charged for the payment process fee. We’ll discuss this a bit later on how you could do this. 

Non-compliance can lead to legal consequences, with the Australian Competition and Consumer Commission (ACCC) authorised to investigate and take enforcement actions. 

But first let’s look at some pros and cons of passing on the transaction fee to your customer.

advantages and disadvantages

The decision to pass on a surcharge depends on the specific circumstances of your business. Here are a few things to consider:

Transaction Costs

For businesses with tight profit margins, especially sole traders and startups, credit card processing fees can be a significant expense. Surcharging can help offset these costs and contribute to maintaining profitability.

Customer Perception

Customer perception is important, especially for startups trying to build a customer base and reputation. Surcharging might be viewed negatively, making customers unhappy and could affect how loyal they are to your business.

This could be mitigated by a gentle sentence like “As a small and growing business, we appreciate your support immensely. To ensure we can continue providing quality products/services, we’ve transparently included a small fee in our prices to cover necessary expenses. Thank you for supporting local businesses like ours!”

Competitive Landscape

If you’ve already figured out the best price for your product or service by comparing costs in your market, adding an extra fee at the checkout might make your offer less appealing to customers.


If you decide to implement surcharging, obviously transparency is critical in regards to the law. But you also want to clearly communicate the surcharge to customers upfront during the purchasing process. This will help build trust and mitigate negative reactions.

how to pass on a surcharge to your customer

If you’ve decided that adding a surcharge would be beneficial for your business, there are two ways you could do this.

Increase the price of your product or service

This way will be a bit more labour intensive because you would need to edit every single product price on your website.

If you’ve synced your website shop to Square to automatically manage your inventory, you would also have to edit the pricing on every product in your Item List.

Adding the surcharge using a global app on your website

Another way is to pass on the credit card surcharge fee is by adding a plugin (app) to your website that automatically calculates the surcharge on the total in your customers cart. 

This is a super simple solution and doesn’t create any extra work for you. It’s also cheap to install.

how to let your customers know

To be legally compliant, you would need to clearly display the itemised price to your customers. Here are a few ways you could do this:

  • On your product pages, use clear and descriptive language to advise that the listed price is inclusive of all applicable fees, including credit card surcharges.
  • During the checkout process, provide a brief explanation or disclaimer indicating that the listed prices include credit card processing fees. 
  • Consider updating your website’s terms and conditions, shipping or refund policy, as well as frequently asked questions (FAQs) section, to address the pricing structure. 

By being upfront about the pricing structure, you can minimise confusion and potential dissatisfaction.

If after reading this you feel that passing on transaction fees to your customers will be beneficial to your business while it’s still growing, feel free to contact me here.