Guide to credit card surcharges

Everything you need to know about credit card surcharges and how you can avoid them.

Last updated:

Credit cards are convenient, but using them can often cost you more money than other payment options. As well as regular charges from interest rates and annual fees, you may also have to pay a surcharge when you use your credit card.

These surcharges are usually transaction-based and can make a big difference to the total transaction cost. Here, we look at when these fees are charged, how much you can expect to pay and how to avoid credit card surcharges so that you have a payment option that works for you in every situation.

What is a credit card surcharge and when is it applied?

Surcharges are fees that merchants apply to your transactions to help them cover the cost of accepting a specific payment method.

For example, a business that accepts credit cards will be charged a fee for processing these payments. Depending on the card and type of transaction, this fee can range from 0.5% to 3% or more of the total transaction cost and is usually paid by the business to its bank. Businesses can choose to offset the cost of this fee through their pricing, or by applying a surcharge.

Payments that attract a surcharge

While credit cards often attract a surcharge, businesses can actually apply this fee to a range of different payment methods, including:

  • American Express (credit card, debit card and prepaid)
  • Mastercard (credit card, debit card and prepaid)
  • Visa (credit card, debit card and prepaid)
  • NETS (debit and prepaid)

Some businesses also apply a fee for other payment options, such as Alipay or PayPal. It is also uncommon for merchants to charge a fee for credit card payments below a certain amount, for example, a 3% fee may be imposed if you opt to make payment by credit card on transactions less than $20.

It’s important to note that any business that includes a surcharge must let customers know before they pay. They also have to provide a fee-free alternative, such as cash or direct deposit.

How much is a credit card surcharge?

The cost of a surcharge will vary depending on factors such as the business and the type of card. For credit card surcharges specifically, the cost is usually between 1% and 3%, but could be higher in some circumstances.

Credit card surcharges are strongly discouraged

According to Visa and Mastercard, the practice of imposing surcharges are in breach of the contract terms between merchants and acquiring banks. While it is not illegal, the practice is strongly discouraged. Merchants who impose such charges must also inform the customers before requesting for payment. Otherwise, customers have the right to report these merchants to the credit card providers.

Paying for a taxi

The surcharge, known as the administrative charge is applied when you use your credit or charge card to pay for a taxi is 10% of your fare price. The prevailing GST is also chargeable on top of the 10% administrative charge.

Credit card surcharges for in-store or online purchase

The surcharges you’ll pay for credit card purchases online will be imposed when you pay in foreign currency. This is known as a foreign currency transaction fee, which is generally between 1.5% and 3% of the total transaction cost.

Remember that any brick-and-mortar or online store that applies a credit card surcharge should clearly notify you before you make a payment. For example, if you’re shopping in-store, there should be signs at or near the checkout notifying you of any surcharges. Online, there is usually a similar notification of a surcharge for specific payment options. Remember, merchants also have to provide you with fee-free ways to pay, such as cash or direct deposit.

Back to top

How to avoid surcharges

While there are some instances where you have no option in paying a credit card surcharge, here are some ways you can avoid or reduce how much you pay in surcharges over time.

  • NETS. Network for Electronic Transfers (NETS) is a Singaporean electronic payment service provider which offers a full suite of payments processing services, such as direct debit and credit payments at point-of-sale. It is widely used nationwide and rarely incur any additional fees.
  • Use a debit card. Debit cards deduct payments directly from your bank account, so there’s generally no charges for using it.
  • Consider going to other businesses. In most cases, you may be able to shop around to find a merchant that charges reduced or no credit card fees. For example, some taxi companies charge as much as 10% for credit card payments, while Grab doesn’t apply any credit card surcharge and even allows you to link your card through the app for faster payment.
  • Link your card to PayPal. You can link your credit card account to PayPal and then use your PayPal account to make payments if the merchant provides this option as a fee-free alternative.
  • Booking flights with points. When booking flights with Jetstar and Scoot, you can avoid surcharge fees by booking your flight with Air Miles rather than cash.
  • Vouchers. Some airlines and institutions don’t charge payment fees when you use a voucher to make the purchase or booking.
Back to top

Frequently asked questions

The cost of a surcharge depends on a range of factors including the business, the cost of the transaction and the type of card you use. By taking note of when surcharges are applied, using alternative payment options or shopping around for a more affordable product or service, you can avoid paying, or at least reduce the cost of credit card surcharges, to make paying with plastic more affordable.

Picture: Shutterstock

Back to top

Ask Finder

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 provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy Policy and Terms.

Questions and responses on are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site