For years, card surcharges have been a common way for businesses to recover the cost of accepting electronic payments. However, a major shift is coming that will change how Australian businesses manage payment costs and pricing strategies.
The Reserve Bank of Australia (RBA) has announced significant reforms to merchant card payment regulations, including the removal of card surcharging from October 2026. These changes are designed to create a simpler, more transparent and more competitive payments system for both consumers and businesses.
Background: Why Is the RBA Making Changes?
When card surcharging was first introduced, it was intended to encourage consumers to choose lower-cost payment methods and help businesses recover their card acceptance costs. Over time, however, the payments landscape has evolved dramatically.
The RBA’s review found that surcharging isn’t really achieving its original goal anymore. Many shoppers are confused by surcharge fees, businesses don’t always disclose them consistently, and customers often have little opportunity to avoid them. The review also showed strong public support for scrapping surcharges altogether.
On the business side, the review found that many merchants, especially smaller businesses, are paying more for card processing than they should be. Often, they don’t have the information or transparency needed to compare providers and negotiate better pricing.
What’s Changing?
There are three changes that business owners need to be aware of ahead of October 1:
1. Card surcharging will end
From 1 October 2026, businesses will no longer be permitted to surcharge customers for debit or credit card payments. Although the changes are to simplify transactions for consumers, it’s likely that businesses will now be expected to wear these costs.
2. RBA to cap interchange fees charged to businesses
To help offset the cost to businesses, the RBA will reduce caps on interchange fees for domestic debit and consumer credit card transactions. A new cap will also be introduced for foreign card payments. Whilst this may bring some relief to businesses, it’s likely that for many businesses, these will only fractionally offset the surcharge cost.
3. Greater fee transparency
Payment schemes such as eftpos, Visa and Mastercard, along with large payment providers, will be required to improve fee transparency. Businesses will receive more standardised information about their payment costs, making it easier to compare providers and negotiate better arrangements.
Most changes commence on 1 October 2026, with some transparency measures and foreign card interchange caps taking effect from 1 April 2027.
What this means for your business
The impact will vary depending on how your business currently handles card payments.
If you currently apply a surcharge
You’ll need to review your pricing model before October 2026. Once surcharging is removed, any card acceptance costs will need to be absorbed by the business or incorporated into your overall pricing structure.
This may require:
- Reviewing product and service pricing.
- Understanding your current payment processing costs.
- Assessing profitability across different sales channels.
- Updating point-of-sale and invoicing systems.
If you don’t apply a surcharge
The news may be largely positive. The RBA expects lower interchange fees to reduce card acceptance costs, with smaller businesses likely to benefit the most.
However, this is still a good opportunity to review your merchant services arrangements and ensure you’re receiving competitive rates.
For all businesses
The increased transparency around merchant fees could create significant opportunities to reduce costs. Many businesses simply accept their current payment provider’s fees without regular review. The new reporting requirements should make comparison shopping much easier.
What you can do now
While the changes are still ahead, proactive planning can help avoid surprises.
Review your merchant fees
Understand exactly what you’re paying today, including:
- Merchant service fees
- Transaction fees
- Terminal rental fees
- Online payment gateway charges
Analyse your payment mix
Determine:
- What percentage of sales are paid by card
- Which card types are most commonly used
- The true cost of accepting those payments
Review any changes to pricing
If your business currently applies surcharges, you may need to consider how payment costs may be recovered in your pricing, whilst remaining competitive.
Compare providers
The transparency reforms are intended to support greater comparison between providers. Reviewing available options may help businesses understand the range of services and pricing structures available in the market.
Update budgets and forecasts
Including these potential changes in future budgeting and cash flow forecasts may help businesses assess any impact on profitability and financial performance.
Need help understanding what this means for your business?
The effect of these reforms will differ from one business to another. Businesses may wish to review their payment costs, pricing structures and merchant service arrangements ahead of the implementation dates.
Our team can assist in assessing the potential financial implications of the reforms and identifying options that align with your business objectives and operating model.
These two paragraphs might well be true, but it reads a bit like a press release from the RBA trying to justify what they’re doing. Maybe re-phrase this so that it sounds like we’re writing it, not the RBA.
