A cancellation fee is money a client pays, or forfeits, when they cancel too close to the appointment for the business to fill the time. It is usually a fixed amount or a share of the service price, and it applies only inside a stated notice window, such as 24 or 48 hours. It is different from a deposit, which is paid in advance, although many salons take the fee out of the deposit rather than chasing a card afterwards.
A fee can only fairly be charged if the client knew about it before booking. Australian consumer law can treat a charge as unfair if it was not made clear or is out of proportion to what the late cancellation costs you. If you are unsure about your wording, check with the ACCC or your state consumer affairs body.
In practice
A beauty salon sets its rule at half the service price for cancellations with under 24 hours' notice. A client cancels a $140 facial at 7 pm for 10 am the next day, so the fee is $70. The salon fills the slot from its waitlist at 8:30 am, and the owner waives the fee and tells the client why. That is a good habit: the fee exists to cover a loss, and when there is no loss, waiving it buys goodwill cheaply.
Write the rule as one sentence and use it everywhere: the booking page, the confirmation text and the desk. "Cancellations with less than 24 hours' notice are charged at half the service price" is clear. A paragraph of conditions and exceptions is not, and it will be explained differently by everyone who answers the phone.
In Glow Line
Write your cancellation rule in notes on the Receptionist page and the assistant states it when a caller asks. It never applies a fee or takes a payment; the money stays between you and the client. See change what the assistant knows.