Understanding EFTPOS Fee Components

When you accept card payments through an EFTPOS terminal, the total fee you pay isn’t just one simple charge. Instead, it’s made up of several different components that flow to various parties in the payment ecosystem. Understanding these components helps you make informed decisions about payment providers and pricing models.

Core Fee Components

Interchange Fees

Interchange fees are the largest component of most card transactions. These are fees paid by your bank (the acquiring bank) to the customer’s bank (the issuing bank) for each transaction. The card networks (Visa, Mastercard, etc.) set these rates, which vary based on:

• Card type – Premium cards typically have higher interchange rates
• Business category – Different merchant categories have different rates
• Transaction method – Card-present vs card-not-present transactions
• Card issuer location – Domestic vs international cards

In Australia, interchange fees typically range from 0.2% to 1.8% depending on these factors.

Scheme Fees

Also called network fees, these are charged by the card schemes (Visa, Mastercard, American Express, etc.) for using their payment networks. These are usually much smaller than interchange fees, typically around 0.01% to 0.05% per transaction.

Acquirer/Processor Fees

Your payment processor or acquiring bank charges fees for their services, including:

• Risk management and fraud prevention
• Settlement services
• Customer support
• Technology infrastructure

Gateway and Terminal Fees

• Payment gateway fees – For online transactions
• Terminal rental – Monthly fees for physical EFTPOS machines
• Setup and installation fees
• Paper roll costs

Pricing Models

Interchange-Plus Pricing

This transparent model shows you exactly what you’re paying:

• Interchange fee (varies by card type)
• Plus a fixed processor margin (e.g., 0.20% + 10 cents)

Example: 0.45% interchange + 0.20% processor fee + 10 cents = total fee

Advantages: Complete transparency, you see actual interchange costs Disadvantages: More complex statements, fees vary by transaction

Blended/Flat Rate Pricing

All transactions are charged the same rate regardless of card type.

Example: 1.2% flat rate for all Visa/Mastercard transactions

Advantages:

• Simple to understand and budget
• Predictable costs
• Easy statement reconciliation

Disadvantages:

• Less transparency about actual costs
• May pay more on low-interchange transactions
• Processor margin is hidden in the blended rate

Additional Fee Types

Monthly and Annual Fees

• Account maintenance fees
• Statement fees
• PCI compliance fees
• Annual service charges

Transaction-Based Fees

• Chargeback fees – When customers dispute transactions
• International card fees – Higher rates for overseas-issued cards
• American Express fees – Often higher than Visa/Mastercard

Penalty and Setup Fees

• Early termination fees
• Equipment replacement costs
• Minimum processing fees (if you don’t meet monthly quotas)

How Blended Rates Work

Blended pricing takes all the various interchange rates and averages them into one rate. The processor estimates your typical transaction mix and sets a rate that covers:

1. Average interchange costs across all your transactions
2. All scheme fees
3. Processor profit margin
4. Risk buffer for higher-cost transactions

For example, if your transactions typically include:

• 60% standard debit cards (0.2% interchange)
• 30% standard credit cards (0.8% interchange)
• 10% premium cards (1.5% interchange)

The processor might offer a 1.2% blended rate that covers this mix plus their costs and profit.

Which Model Is Better?

Choose Interchange-Plus if:

• You process high volumes
• You want maximum transparency
• Most transactions are low-interchange (debit cards)
• You’re comfortable with variable fees

Choose Blended if:

• You prefer simple, predictable pricing
• You process diverse card types
• You want easy budgeting and accounting
• You value simplicity over cost optimization

Key Takeaway

Understanding these components helps you evaluate different providers and pricing models. While blended rates offer simplicity, interchange-plus pricing often provides better value for businesses that primarily accept lower-cost payment methods. Always ask providers to break down their fees so you can make informed comparisons.