Hidden Merchant Fees: What Small Businesses Need to Watch Out For

For small businesses in Australia, merchant fees are an unavoidable cost of accepting card payments. However, what many business owners don’t realise is that some payment providers include hidden fees that can add up over time. These unexpected charges can significantly impact profitability if left unchecked. This article will help you identify and avoid hidden merchant fees, ensuring that you only pay for what’s necessary.

Common Hidden Merchant Fees to Watch For

1. Monthly and Annual Service Fees

Some payment providers charge monthly or annual service fees on top of transaction costs. These fees may cover:

• Account maintenance

• Reporting tools

• Access to customer support

💡 Tip: Check if your provider charges these fees and whether the services included justify the cost.

2. PCI Compliance Fees

PCI DSS (Payment Card Industry Data Security Standard) compliance is essential for securely handling cardholder data. Some providers charge a PCI compliance fee, while others may penalise businesses that fail to meet security requirements.

💡 Tip: Ensure your provider includes PCI compliance without excessive fees or penalties.

3. Non-Compliance or Minimum Transaction Fees

Some providers impose penalties if:

• You don’t process enough transactions per month (minimum transaction volume fee).

• You fail to meet contractual obligations, like using their service for a set period.

💡 Tip: Read the terms carefully to ensure your business won’t be penalised for low transaction volumes.

4. Chargeback Fees

Chargebacks occur when a customer disputes a transaction and requests a refund through their bank. Some providers charge a fixed fee per chargeback, which can be costly for businesses that frequently experience disputes.

💡 Tip: Reduce chargebacks by providing clear return policies and fraud prevention measures.

5. Early Termination Fees

If you decide to switch providers before your contract ends, you might be charged an early termination fee. These fees can be substantial, making it difficult for businesses to change providers.

💡 Tip: Choose a provider with flexible contract terms or a month-to-month agreement to avoid hefty penalties.

6. Statement Fees and Reporting Fees

Some providers charge businesses for access to detailed transaction reports or for receiving paper statements. These fees may seem small but can accumulate over time.

💡 Tip: Opt for digital statements and ensure transaction reports are included in your plan.

7. International Transaction Fees

If you accept payments from overseas customers, your provider may apply a foreign transaction fee or currency conversion fee.

💡 Tip: Compare providers that offer competitive international transaction rates if your business deals with overseas customers.

How to Avoid Hidden Merchant Fees

✅ Compare providers – Use a payment comparison platform to assess different fee structures.
✅ Negotiate your rates – Many providers are open to adjusting fees, especially if you process a high volume of transactions.
✅ Read the fine print – Understand the full breakdown of fees before signing a contract.
✅ Opt for transparent pricing models – Choose providers that offer clear, upfront pricing with minimal additional charges.

Conclusion

Hidden merchant fees can eat into your profits if you’re not careful. By understanding and identifying these extra charges, you can take proactive steps to reduce unnecessary costs and keep your business running efficiently. Always compare payment providers, negotiate fees where possible, and ensure you fully understand the terms before committing to a payment processing solution.