Apply a manual surcharge
At this time, there is no in-built surcharge feature — when you connect the Square Point of Sale app to a connected device such as Square Terminal — meaning that any surcharges you wish to apply will need to be calculated and applied manually. We understand that businesses need to cover their costs, and with some payments, terminal providers’ fees are complex and hard to forecast. That’s why Square makes it easier to accept every way your customer wants to pay with one flat fee for all cards (including American Express).
This guide is only to be used when you connect the Square Point of Sale, Square Retail POS, or Square Restaurant POS apps with a connected device such as Square Terminal. If you are using the apps as a standalone point of sale, learn how to get started with automatic card surcharges.
If you do apply surcharges at your business, here’s what you need to know:
Important Notes About Surcharges
Merchants in Australia are responsible for adhering to all regulations regarding imposing a surcharge on consumers when a card is used for payment. New regulations set out by the ACCC have banned businesses from applying excessive surcharges for accepting different payment types.
Surcharging is allowed, but must not be excessive.
That means any surcharge you apply shouldn’t be higher than what it costs you to process the payment — please refer to the fees stated in your monthly statement, available through your Square Dashboard.
Service or handling fees are not a workaround.
A business is not able to bypass the new ban by instead charging a “service” or “handling” fee on some card payments. This is still effectively applying a surcharge.
The ban does not prevent you from changing your prices.
When deciding on the prices for your products and services, consider all of your operational costs and ensure you have a sustainable profit margin. Just like any business expense (including rent, storage, or staff costs), payment processing fees should be taken into account when determining the best pricing model for your business.
Create manual surcharge
To create a manual surcharge from your Square Dashboard:
Sign in your Square Dashboard and click Account & Settings > Business information > Sales taxes.
Click Create tax.
Enter the tax name, rate and select the location.
Choose All taxable items to apply the tax to all current and future taxable items in your library or choose Select items to pick specific items. You can also apply the tax to custom amounts and include a service charge.
Choose Add an exemption rule to specify when this tax shouldn't be applied.
Choose Include tax in item price to show one amount: the combined sales tax and item price. If toggled off, the tax will display as a separate line item.
Click Save.
To disable taxes for custom amounts visit your tax settings in the Square Point of Sale app or toggle off Custom Amounts when creating a new tax.
Keep in mind, Square’s fees are applied to the total payment amount – including any added tax.
Calculating Surcharge Fees
Square’s fee is taken out of the total amount of the transaction, including tax, tips, and any added surcharges.
The following is an example of a chip/contactless $100.00 payment processed with a Square Reader with an added surcharge.
Let’s say you added a surcharge of $1.90 to account for Square’s chip/contactless card fee: $100 + $1.90 = $101.90
If you charge your customer a total $101.90, Square’s fee will be applied to the total payment: $101.90 x 1.90% = $1.94
To determine the deposit you’ll receive for this payment, subtract the fee from the total payment amount: $101.90 – $1.94 = $99.96
Following this example, $99.96 will be deposited to your linked bank account.
Some merchants have found third-party fee calculators helpful in understanding the amount to add as a surcharge. You can find these online or within the Apple App Store or Google Play.
Disclaimer: Please note that this guidance is general in nature and does not constitute legal, tax or any other type of professional advice. If you are unsure about your tax obligations or where to find the relevant information, we suggest that you consult with a professional.