I’m sure you would have seen media coverage of the RBA’s recent comments regarding the application of credit card surcharges to consumer purchases. This is an issue I have written about previously and often discuss with TXA clients. And having recently travelled overseas where I couldn’t book and pay directly with my choice of accommodation and experienced the frustration and fear of manual bank transfers and cash payments, I thought it would be useful to cover this issue in this blog.

Despite the fees, the ability to securely process credit card payments delivers advantages to small tourism operators. They increase booking conversions by offering convenience and trust. This is especially true for international travellers who expect secure, seamless payment options.

Accepting cards also reduces reliance on cash, lowering the risk of theft and removing the burden of manually going back and forth with customers. Credit card payment systems typically integrate with distribution and booking platforms like TXA, enabling automated payment, confirmations, refunds, and accounting, which saves time and significantly improves customer experience. Additionally, card payments enhance cash flow and stability. With TXA direct payment bookings for example, funds are automatically settled direct to your bank account straightaway at time of booking. This means you are cash flow positive from the time the booking is received. Ultimately, offering card payments builds credibility and accessibility in a market where frictionless booking and trust are vital.

However, we all understand that small tourism businesses need to constantly balance manage costs and staying competitive and a common pain point is credit card transaction fees. With most customers now expecting the convenience of paying by card (or digital wallet), these fees are often unavoidable.

As identified by the RBA, the big question becomes, should you pass the cost on to the customer, or absorb it into your pricing?

Here’s how to consider your options to find the approach that works best for your business.

Option 1: Pass the cost to customers as a surcharge

Some businesses choose to add a small surcharge at the end of the payment/checkout process to cover credit card fees (typically 1.5% to 3.5% depending on the card provider). This is relatively transparent, easy to implement, and preserves your profit margin on every booking.

Pros:

  • You recover the payment transaction cost in full.
  • You do not need to raise base prices.

Cons:

  • If the fee isn’t disclosed early in the booking and payment process, customers are likely to feel penalised or surprised.

This can damage their perception of your business and set a negative ‘vibe’ from their very first experience, particularly for price-sensitive or international guests. This feeling can influence and cascade through to final reviews etc.

If you do decide to take this route, transparency is critical. Clearly disclose the surcharge early during the booking process not just at checkout and explain why it exists. Some customers may understand you’re a small business trying to remain sustainable.

Option 2: Build the cost into your pricing

The alternative is to recover the transaction cost by factoring it into your ‘inclusive’ sale price. This creates a much smoother experience and is fairer for the customer. This approach aligns with common practices in most industries, where all-inclusive pricing is the norm.

Pros:

  • Frictionless checkout with no surprises.
  • Enhances perception of value and professionalism.
  • Simpler accounting.

Cons:

  • Cash-paying customers may indirectly cross-subsidise card users.

To make this option work, you need to calculate your average card fee across all transactions (use an average over a six-month period) and adjust your pricing slightly across rates for all products. Even a small increase, say adding $2 on a $100 tour or $3 on a $200 room rate should be enough to cover the cost. I am certain that this approach doesn’t discourage bookings. In fact, irregular and unusual numbers will suggest to customers that your rates have been carefully ratcheted down as low as possible. So rather than having your rates in the traditional ‘even’ format $XX0, or $x50 don’t be afraid of using $XX3 or $X57.50. This implies you are taking the trouble to price everything at its minimum

 

In my view, for experience-driven tourism operators aiming to create seamless customer journeys, absorbing the fee as described above is the better long-term investment in trust and repeat business.

Ultimately, the goal is to protect your profit margin without eroding customer satisfaction.