Article Summary: 

The Reserve Bank of Australia (RBA) has confirmed that card surcharges will be banned from 1 October 2026, fundamentally changing how Australian businesses manage payment costs. While consumers benefit from simpler, more transparent pricing, business owners must now rethink how they recover merchant fees and protect margins. This article breaks down what’s changing, why it matters, and the practical steps you should take now to prepare — including reviewing payment providers, adjusting pricing strategies, and exploring alternative payment methods.

What Is the RBA Changing Around Card Surcharges?

Yes — from 1 October 2026, Australian businesses will no longer be allowed to apply surcharges on most card payments, including eftpos, Visa, and Mastercard.

The RBA’s Payments System Board confirmed this change as part of its Review of Merchant Card Payment Costs and Surcharging (March 2026). The decision aims to simplify the payment experience and reduce confusion for consumers.

According to the Reserve Bank of Australia, surcharging has become inconsistent, complex, and increasingly unclear for customers, which has reduced its effectiveness as a pricing signal.

Alongside the surcharge ban, several key reforms are being introduced:

  • Lower interchange fee caps (credit card cap reduced to 0.3%)
  • New caps on foreign-issued card fees (from April 2027)
  • Improved fee transparency from payment providers

The RBA estimates these combined changes will reduce merchant payment costs by approximately $910 million annually, particularly benefiting small businesses.

Why Does the Surcharge Ban Matter for Small Businesses?

It matters because many businesses currently rely on surcharges to recover payment processing costs — and that option is about to disappear.

For small to medium-sized businesses, especially in industries like hospitality, retail, and professional services, card fees can significantly impact margins. Removing surcharges means these costs must now be:

  • Absorbed into the business
  • Offset through pricing adjustments
  • Reduced through smarter payment strategies

As highlighted by the RBA, small businesses often pay higher average interchange fees than larger merchants, making this change particularly relevant.

The key takeaway: this isn’t just a compliance change — it’s a profitability and pricing strategy shift.

When Do Card Surcharges Become Illegal in Australia?

Card surcharges will become illegal from 1 October 2026 for eftpos, Visa, and Mastercard payments.

However, there are staged elements to the reform:

  • 1 October 2026 – Surcharge ban begins
  • 1 April 2027 – Foreign card interchange caps introduced

This timeline gives businesses a limited window to prepare — and those who act early will be in a stronger position.

How Will This Affect Your Business Costs and Margins?

In short — it depends on your current surcharge revenue and payment mix.

To understand the real impact, you need to calculate:

1. Current surcharge recovery

  • How much revenue are you generating from surcharges annually?

2. Merchant fee costs

  • What are you paying across debit, credit, and premium cards?

3. Expected savings

  • How much will lower interchange fees reduce your costs?

Your net impact = lost surcharge revenue – fee savings

Many businesses are surprised to find:

Others may be neutral or slightly better off due to fee reductions

Some will be worse off if they rely heavily on surcharges

What Should Business Owners Do Before October 2026?

You should start preparing now — not in September 2026.

Here are the key actions to take:

1. Understand Your Current Payment Costs

Yes — you need full visibility before making decisions.

Review:

  • Merchant service fees
  • Terminal and gateway costs
  • Debit vs credit transaction split
  • Surcharge revenue (if applicable)

Many businesses don’t realise how fragmented these costs are across providers.

2. Review Your Payment Provider

Yes — not all providers pass on savings equally.

Ask your provider:

  • Will interchange reductions be passed through?
  • What pricing model are you on (flat vs interchange-plus)?
  • Are there more cost-effective alternatives?

If your provider can’t clearly explain your fees, that’s a red flag.

3. Should You Adjust Your Pricing Strategy?

Yes — but it should be deliberate, not reactive.

Instead of blanket price increases, consider:

  • Adjusting pricing on high-margin services
  • Reviewing profitability by product category
  • Bundling services differently

According to industry trends, businesses that take a strategic pricing approach outperform reactive price increases (as seen in ACCC small business pricing guidance).

4. Can You Encourage Lower-Cost Payment Methods?

Yes — and this is becoming increasingly important.

Alternative payment methods include:

  • Direct debit (ideal for recurring revenue)
  • PayTo (real-time bank payments via NPP)
  • Bank transfer or invoice payments
  • BPAY for larger transactions

While not suitable for all businesses, these options can significantly reduce fees in the right context.

5. Do You Need to Update Systems and Processes?

Yes — and this is often overlooked.

You’ll need to update:

  • POS systems
  • E-commerce checkout settings
  • Accounting/invoicing software
  • In-store signage and pricing displays

Leaving this too late could create compliance risks or customer confusion.

What About Amex and International Card Payments?

Not all payment types are treated equally under the new rules.

The surcharge ban applies to:

  • eftpos
  • Visa
  • Mastercard

However:

  • Foreign-issued cards will not have capped interchange fees until April 2027
  • American Express (Amex) may still operate under different fee structures

If your business relies heavily on international customers (e.g. tourism or hospitality), you may experience a temporary cost gap.

This is where tailored advice becomes critical.

What Are Other Australian Businesses Doing to Prepare?

Many forward-thinking businesses are already:

  • Renegotiating merchant agreements
  • Moving to interchange-plus pricing models
  • Encouraging direct debit for recurring services
  • Embedding payment costs into pricing structures

A growing trend is “all-inclusive pricing”, where businesses simplify pricing and remove friction at checkout — aligning with consumer expectations.


How Does This Fit Into Broader Payment Trends in Australia?

The surcharge ban reflects a broader shift in the payments landscape:

1. Move towards pricing transparency
Consumers expect simple, upfront pricing with no surprises.

2. Growth in account-to-account payments
PayTo and NPP are becoming viable alternatives to card networks.

3. Increased regulatory oversight
The RBA and ACCC are placing greater focus on fairness and competition in payments.

These trends suggest businesses that modernise early will gain a competitive advantage.

FAQs

When do card surcharges become illegal in Australia?

From 1 October 2026, surcharges on eftpos, Visa, and Mastercard payments will be banned.

Will my merchant fees decrease?

Possibly. The RBA is lowering interchange fee caps, but whether savings flow through depends on your provider.

Can I still offer discounts for cash or bank transfer?

Yes. The ban applies to surcharges — not discounts for alternative payment methods.

How much will this impact my business financially?

It varies. The key is calculating your lost surcharge revenue versus fee savings.

Do I need to update my POS or invoicing systems?

Yes. Any system that currently applies surcharges must be updated before October 2026.

Can better financial reporting really improve business performance? 

Yes. Search trends consistently show business owners looking for ways to improve profitability and cash flow. Clear, regular reporting helps identify trends, manage expenses, optimise pricing, and plan for tax obligations before they become problems. The earlier issues are identified, the easier they are to address. 

Need Help Understanding How This Affects Your Business? 

Our Business Advisory and Strategic Accounting teams help Australian business owners cut through complexity and make confident financial decisions. If you’d like help reviewing your payment costs, modelling the impact of the surcharge ban, or building a plan for October — we’re here to help. 

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