Green’s Dictionary of Slang

(Aus.) a phr. written on the back of a pay cheque and handed to a publican when a man wanted to spend his entire season’s wages in a single binge.

1916

Bulletin (Sydney) 10 Feb. 22/2: When a drover, fencer or tank-sinker handed a cheque over the bar Pat would ask, ‘Is it “No mercy”?’ ‘Yes.’ Then ‘No mercy’ would be written across the back, and Pat would take down a bugle ... and blow ... and a general rush would be made for the pub. [Ibid.] 30 Mar. 24/3: He passes his cheque which is seized in a crack, And the landlord takes pen and writes ‘No Mercy’ on the back.