Key Takeaways
- A merchant account holds card payments temporarily before settling to your business bank account, usually within 1-3 days
- You can apply online through major banks (ANZ, CBA, NAB) or payment facilitators like Square or Stripe
- Merchant account costs typically include 1.0%-2.0% per transaction, $0-$30/month, and $20-$45/month terminal rental
- Square charges a flat 1.6%-1.9% per transaction with no monthly fee - simple, but still a cost on every transaction
- QwikPay is a fee-free alternative that uses bank-to-bank transfers via Australia's NPP, not card networks
- Bank-to-bank payment platforms let businesses accept payments without a merchant account or card terminal
If you want to accept card payments as a business in Australia, you need a merchant account. But merchant accounts come with fees. Here's how they work, what they cost, and why more small businesses are looking for alternatives.
What is a merchant account?
A merchant account is a type of bank account that allows a business to accept card payments. When a customer pays by card, the funds are held temporarily in your merchant account before being settled to your regular business bank account, usually within 1-3 business days.
Merchant accounts are provided by acquiring banks (like ANZ, CBA, or NAB) or payment facilitators (like Square or Stripe). Every card payment you accept runs through this account.
How to apply for a merchant account in Australia
You can apply for a business merchant account online through most major Australian banks or through a payment provider. The process typically involves:
- 1Providing your ABN and business details
- 2Completing identity verification
- 3Agreeing to the provider's merchant terms
- 4Receiving your merchant ID and payment credentials
Approval times vary. Banks can take several business days. Payment facilitators like Square typically approve instantly.
What does a merchant account cost?
Merchant account fees in Australia typically include:
- Transaction fee: 1.0%-2.0% per card payment (varies by card type)
- Monthly fee: $0-$30/month depending on provider
- Terminal rental: $20-$45/month if you need EFTPOS hardware
- Chargeback fee: $15-$35 per disputed transaction
- Setup fee: $0-$300 depending on provider
For a small business processing $20,000/month in card payments, that's $240-$400/month in fees before terminal costs.
What is the best merchant account for small business in Australia?
The best merchant account depends on your volume and how you sell:
- Low volume, in-person: Square is simple, no monthly fee, 1.6%-1.9% per tap
- High volume, in-person: Bank merchant accounts can offer lower rates with a contract
- Online only: Stripe or PayPal are common choices
- Zero fees: QwikPay processes payments bank-to-bank with no merchant fee
For businesses whose margins are being eaten by card fees, the question is not which merchant account is cheapest. It's whether you need a card-based merchant account at all.
Looking for an alternative to Square?
Square is one of the most popular payment solutions for Australian small businesses. Easy setup, no monthly fee, and a flat rate per transaction. But that flat rate is still a fee: 1.6% for accounts opened after May 2024, or 1.9% for older accounts.
On $30,000/month in sales, that's $480-$570/month out of your pocket.
QwikPay vs Square
QwikPay charges $0 per transaction. Instead of routing payments through card networks, QwikPay uses bank-to-bank transfers via Australia's NPP. No card network, no interchange fee, and no merchant service fee. The tradeoff: customers pay via QR code from their bank account, not by tapping a card.
For businesses whose customers use their phones to pay, it works seamlessly. See the full comparison on our merchant fees page.
Do you actually need a merchant account?
Traditional merchant accounts were the only way to accept non-cash payments for decades. That's no longer true. Bank-to-bank payment platforms like QwikPay let businesses accept payments without a merchant account, a card terminal, or any transaction fees.
If the majority of your payments are in-person and your customers have Australian bank accounts, a QR-based bank transfer solution may cost you significantly less than any merchant account on the market.
The question is no longer which merchant account is cheapest. It's whether you need one at all.
Free for 12 months
Merchants who sign up before 30 August 2026 get QwikPay free for 12 months. No lock-in contracts. Setup takes under 5 minutes.