What is a merchant service fee?

The fee you actually pay

The merchant service fee is the headline price of accepting a card. Whatever pricing model you’re on, the MSF is what your business hands over for the privilege of taking that payment — most commonly expressed as a percentage of each sale, sometimes with a fixed cents component. It’s easy to think of the MSF as a single charge from your provider, but it’s really a bundle of separate costs collected together and presented as one number.

What’s inside the MSF

Three layers make up the MSF. Interchange goes to the card issuer (your customer’s bank). Scheme fees go to the card network — Visa, Mastercard or eftpos. The remaining margin goes to your acquirer or payment provider for handling the transaction and providing the service. The headline rate you see is the sum of all three. Different providers bundle and present these in different ways, which is why two “similar” rates can behave quite differently.

What the RBA does — and doesn’t — cap

The 2026 RBA changes cap interchange, not the whole MSF. Lower interchange caps from 1 October 2026 reduce one input, but your total MSF can only fall if your provider passes that reduction through. To understand your true position, it helps to calculate your cost of acceptance — total card fees divided by total card turnover for a period — rather than relying on a single advertised rate. Figures here are indicative and this is general information, not advice.

Source: RBA Review of Merchant Card Payment Costs and Surcharging — Conclusions Paper (March 2026).