The number of merchants charging fees for credit card transactions has risen steeply over the past few years, according to a report commissioned by the NSW government.

The Choice report, shows 20 per cent of smaller merchants and 40 per cent of larger businesses now surcharge their customers.

The survey of 1435 consumers and 140 members, also found 68 per cent of respondents did not believe retailers and other businesses should be allowed to surcharge credit card transactions.

Choice spokesman Christopher Zinn said "The Reserve Bank permits (surcharging) under law and actually we think for quite good reasons, but the issue is that some of the surcharges are patently excessive."

According to him, the taxi industry had been "coining tens of millions of dollars" out of surcharges for over a decade.

"There are many more merchants who are going to be surcharging, perhaps at levels which aren't fair, which are excessive."

NSW Fair Trading Minister Virginia Judge said retailers should disclose how they determine their charges.

"An idea I'd like to explore is actually asking merchants to have visual displays that they are charging surcharges and what that amount would entail."

She said she will be writing to federal parliamentary treasury secretary David Bradbury outlining the report.

Visa calls for action to protect consumers from unfair credit card surcharges

Visa's General Manager for Australia and New Zealand, Chris Clark said "The evidence suggests that some retailers have implemented surcharging to bolster their own profits and this is hurting consumers at a time when they are already facing increased cost of living pressures."

"We believe action needs to be taken to protect consumers from excessive surcharges."

The report, undertaken by Choice on behalf of the NSW Government, found there is "widespread consumer opposition to and disapproval of surcharges" with 68 percent of survey respondents saying businesses should not charge extra for the use of credit cards.

Mr Clark said the stated price of an item - as advertised or affixed to the price tag - should be the actual price the consumer paid at the check out.

"The cost of accepting a payment card is no different from other costs such as electricity or the cost of handling cash and in many cases has already been absorbed into the overall costs of the business.

"Where surcharging is allowed, we consider it an imperative that the surcharge reflects no more than the merchant's reasonable cost of acceptance for the card used. No consumer should ever be penalised with a higher price based on an excessive surcharge. Importantly, 'blended' surcharging should be banned. It sends the wrong price signals to consumers and disadvantages the lower cost payment cards."

The Minister said blended surcharging, whereby merchants applied the same average surcharge to both higher and lower cost cards, was "driving up the cost for everyone".

Mr Clark said recent research commissioned by Visa showed that one out of every two small and medium sized merchants who surcharged was imposing a blended surcharge2. Many hotels, taxis and utilities were also applying blended surcharges.

"While imposing a blended surcharge may seem a simple option for merchants, it potentially overcharges the 90 percent of consumers who use lower priced payment cards such as Visa," Mr Clark said.