From 1 October 2026, businesses across Australia will no longer be permitted to apply surcharges on debit and credit card payments. This significant reform, introduced by the Reserve Bank of Australia (RBA), is aimed at simplifying payments for consumers and improving transparency in pricing.
For business owners, however, the changes raise important operational and legal considerations.
What is changing?
Currently, many businesses apply a surcharge to recover the cost of accepting card payments, such as for Visa, Mastercard, and eftpos transactions. From October 2026, this practice will be prohibited.
At the same time, the RBA will:
• Reduce the cap on interchange fees (paid by merchants to card-issuing banks) from 0.8% to 0.3% for consumer credit cards
• Introduce caps on foreign-issued cards for the first time
• Require payment providers to pass cost savings on to businesses
These reforms are expected to reduce overall payment costs for merchants, while removing the need for surcharges.
Why is the ban being introduced?
The RBA has taken the position that surcharging is no longer functioning as intended.
While originally designed to encourage consumers to choose lower-cost payment methods, surcharges have become:
• Inconsistent across businesses
• Difficult for consumers to predict
• A source of frustration at the point of sale
Instead, the RBA expects businesses to incorporate payment costs into their overall pricing, resulting in clearer, “all-inclusive” pricing for consumers.
What does this mean for businesses?
Although the removal of surcharges may appear straightforward, it is not simply an automatic process. Businesses will likely need to take active steps to ensure compliance.
Key considerations include:
1. Updating pricing structures
Businesses that currently rely on surcharges will need to review their pricing models. Payment processing costs may need to be absorbed or built into the advertised price of goods and services.
2. Reviewing payment provider agreements
The RBA has indicated that payment service providers must pass on wholesale cost savings. However, the extent of these savings and how they are applied, may vary.
It is prudent for businesses to:
• Review merchant service agreements
• Compare providers if necessary
• Ensure fees reflect the new regulatory caps
3. Adjusting point-of-sale systems
Surcharge settings in EFTPOS terminals and online checkout systems will need to be disabled or removed before the October deadline.
This may require coordination with:
• Banks
• Payment processors
• POS software providers
4. Ensuring compliance with consumer law
Even prior to this reform, excessive surcharging could breach the Australian Consumer Law. From October 2026, any surcharge on standard card payments is likely to expose businesses to regulatory risk.
Clear, upfront pricing will be critical.
Will all surcharges disappear?
Based on current announcements, the ban will apply to common consumer card payments (including debit and credit cards on major networks). However, further detail may still be released, particularly regarding:
• Commercial or corporate card transactions
• Alternative payment methods (e.g. digital wallets or international cards)
Businesses should monitor updates as the implementation date approaches.
Practical next steps
With several months before the changes take effect, businesses should begin preparing now:
• Conduct a cost analysis of current payment fees
• Speak with your payment provider about upcoming changes
• Review your pricing strategy and margins
• Plan system updates well ahead of October
• Seek legal or commercial advice if your business model relies heavily on surcharging
Final thoughts
While the removal of card surcharges is intended to benefit consumers, it represents a structural shift for many businesses, particularly those operating on tight margins.
Early preparation will be key to ensuring a smooth transition and avoiding compliance risks.
If you would like advice on how these changes may affect your business operations, contracts, or pricing structures, our team at Joseph Grassi + Associates is here to assist.
