Card surcharge ban: what Australian small businesses need to know before October 2026

On 31 March 2026, the Reserve Bank of Australia (RBA) handed down their long-awaited report into the costs businesses and consumers are paying to use debit and credit card services.

The conclusion was unequivocal: from October 1 2026, there would be no more card surcharges – whether the customer was using a debit or credit card – simplifying transactions for both merchants and their customers. The RBA estimates that these reforms could save consumers and businesses up to $1.8 billion a year.

While this sounds like a straightforward change, once you dig a little deeper, the picture isn’t quite as clear. So what exactly did the RBA say? And what does it mean for the small business owners of Australia?

Why card surcharges are being investigated

As the country’s use of cash has plummeted – from almost 70% of all transactions 2007 to 15% last year – an increasing spotlight has been shone on the fees charged by banks, payment providers and credit card companies for the use of their payment services.

For businesses, these take the shape of a Merchant Service Fee (MSF), a fee paid on every transaction to their bank or payment processor.

The MSF includes three separate fees:

• Interchange fee: a fee paid by your bank or payment processor to the customer’s bank or payment processor to cover the transfer of funds.
• Card scheme fee: a smaller fee paid to companies like Visa, Mastercard or eftpos for the use of their payment network.
• A fee paid to the bank or payment processor for facilitating the transactions.

Taken together, these fees tend to make up between 0.5-2% of the purchase price, depending on the type of card being used – an amount typically passed along to the customer as a card surcharge.

What the RBA said about credit and debit card surcharges

The initial purpose of card surcharges was to create a competitive marketplace for the users of these cards. If one card had a 5% surcharge and another only 1%, then consumers would be encouraged to use the cheaper card.

However, as card use has become increasingly universal, surcharges have flattened out, meaning that the distinction between providers has largely evaporated. At the same time, the rules and fees around surcharging have become overly complex, leaving businesses unsure how to cover them precisely and customers feeling as if they’re paying too much for a basic financial service.

Proposed changes to the ways card fees work

The headline of the RBA’s findings was that from October 1 2026, all surcharges being charged by businesses should stop. As it’s impossible to remove MSFs entirely, the RBA guidance is that all costs to process the transaction should be included in the sticker price of the product or service.

At the same time, the RBA announced new caps on the interchange rates that banks and payment providers could charge for facilitating transactions, from 0.8% to 0.3%. As a result, it’s expected that MSFs should become significantly cheaper, especially for smaller businesses, which tend to be charged more for access to payment services. Interchange caps will also be introduced on foreign card transaction fees, starting from April next year. At present, these fees are unregulated and can be as high as 2.4%; under the new rules they’ll be capped at 1% instead.

Finally, payment providers who process more than $10 billion a year – basically Visa, Mastercard and eftpos – will need to publish their fees every quarter so that businesses can make easier comparisons between them.

While not covered by this inquiry, the RBA has confirmed that it will investigate the 3-6% fees charged by buy now, pay later (BNPL) schemes such as Zip and Afterpay later this year.

What do these changes mean for business owners?

In short, from October 1 you shouldn’t be charging your customers a surcharge if they use a credit or debit card to pay.

As businesses will still be charged by a payment processor for each transaction made with a credit or debit card – albeit at a lower rate – it will be up to businesses themselves to decide how much of that cost to pass on to consumers, or whether they can absorb the fees into their current pricing structure.

This is why some small business groups have opposed the changes, as they feel this creates a new burden for businesses and will result in higher prices for consumers. Yet on the flipside, the rules should simplify the way businesses engage with their payment providers and remove friction with their customers.

Note that American Express will be exempt from the new rules, as they (along with a handful of smaller credit card operators) operate a “closed loop” system, where the payment provider is the only link between the customer and the merchant. This means businesses will need to decide whether they continue charging surcharges for customers using American Express, or whether they stop accepting it entirely.

From a practical standpoint, take some time to get familiar with how your payment terminal actually operates. Most systems won’t update the surcharges automatically, so you’ll need to go in and reset them before October 1. Also, as surcharges will no longer be considered as a separate line item on your invoice, it may be worth talking to your accountant about whether there are any changes you need to make to your bookkeeping.

Getting prepared for the end of surcharges

The most important thing small business owners can do right now is get across exactly what you're paying in merchant service fees, and what your payment provider intends to charge from October 1.

If you're currently relying on surcharges to cover those costs, you'll need to create a new pricing strategy, whether that means small increases to your prices, absorbing the cost of the fees or renegotiating your merchant agreement.

The changes may feel like extra work in the short term, but for most small businesses the combination of lower interchange fees and simpler customer transactions should entail a smoother payment experience on both sides of the counter.