What are merchant fees?
- By Book Keeping Pros
- Sources checked 16 Oct 2026
Definition
Merchant fees are the charges a business pays its payment service provider to accept card payments from customers. They cover interchange fees that go to the card issuer, scheme fees set by the card networks and the provider's own margin, and may be taken out of each settlement or billed separately. In the books, they are a business expense.
Some providers take their fees out of each settlement and others bill them separately, but the bookkeeping follows the same pattern: card sales are recorded at their full amount and the fees as a business expense. Where the fees come out first, the deposit in the bank is smaller than the sales it covers, and the provider's statement is what explains that gap in the bank reconciliation.
Recording the fees as an expense, instead of netting them off sales, keeps the sales figure complete and shows what accepting cards costs the business from month to month, which is useful when setting prices. Checking each statement against the expense recorded also catches fees that were never entered and changes in what the provider charges. Beyond recording them as a business expense, how particular fees are treated in the accounts is a question for your accountant.
In Australia
In its conclusions paper on merchant card payment costs and surcharging, published in March 2026, the RBA uses the term cost of acceptance for the fees a merchant's payment service provider charges it to take card payments. Among its parts, it names interchange fees, which the merchant's acquirer pays to the customer's card issuer, scheme fees, which card networks such as eftpos, Mastercard and Visa charge for their services, and the provider's own margin.
The same paper describes pricing in the payments system as too complex and hard to see into. It sets out decisions by the RBA's Payments System Board to make card payment costs more transparent, including measures that will require acquirers to give merchants more information about their payment costs, so merchants can better understand the fees they are charged.
The ACCC points out that businesses still bear the cost of accepting card payments now that, from 1 October 2026, they can no longer add a surcharge to Visa, Mastercard, American Express or eftpos card payments. It says those costs should be reflected in a business's overall prices rather than charged as a separate surcharge.
Common mistakes
- Recording only the net settlement as sales, which understates both sales and merchant fees.
- Leaving a whole year of fees to be entered from the provider's statements at year end.
- Treating a fee debited from the bank account as an unknown item instead of matching it to the provider's statement.
- Assuming the fees are the same each month without checking the statement.
Related terms
Related service
Bank reconciliations
Each bank, card and loan account reconciled to its statement.
Sources
- Review of Merchant Card Payment Costs and Surcharging, Conclusions Paper: Glossary of Key Terms
Reserve Bank of Australia. Conclusions Paper, March 2026, released 31 March 2026. Checked 16 October 2026.
Source: Reserve Bank of Australia 2026 Licence: CC BY 4.0.
- Review of Merchant Card Payment Costs and Surcharging, Conclusions Paper: Executive Summary
Reserve Bank of Australia. Conclusions Paper, March 2026, released 31 March 2026. Checked 16 October 2026.
Source: Reserve Bank of Australia 2026 Licence: CC BY 4.0.
- Card surcharges
Australian Competition and Consumer Commission. Current at 2 October 2026, released 2 October 2026. Checked 16 October 2026.
Source: Based on ACCC data or other content Licence: CC BY 4.0.