If you've ever winced at a "card surcharge" appearing at checkout — or felt caught off guard when your morning coffee suddenly costs a little more than the menu price — that frustration is about to become a thing of the past.
The Reserve Bank of Australia's Payments System Board has finalised a package of reforms that includes removing surcharging, reducing interchange fees and increasing transparency — with most changes taking effect from 1 October 2026.
Here's what it means for both consumers and businesses.
Why Is This Happening?
Surcharging was introduced in Australia more than two decades ago with a clear purpose: to nudge consumers towards using cheaper payment methods, particularly cash. In the early 2000s, that logic made sense.
But the payments landscape has shifted dramatically. Cash now accounts for less than 13% of in-person transactions in Australia and contactless card payments have become the default for most Australians. Consumers and businesses find the rules complex and confusing, surcharges are often not well disclosed, and most consumers want surcharging to stop.
Just 13% of consumers in a recent RBA survey said they are always told about surcharges when they shop, and 76% want surcharging to stop. The RBA's own conclusion is that the surcharging framework is no longer achieving its intended purpose.
What's Actually Changing?
The reform package has three key components:
1. Surcharges on card payments are banned from 1 October 2026
The ban covers card surcharges for payments using eftpos, Mastercard, and Visa debit, prepaid and credit cards. Businesses will no longer be permitted to pass these fees directly on to customers at the point of sale.
2. Interchange fees are being reduced
The RBA is reducing caps on the interchange fees that businesses pay on debit and consumer credit cards and is also introducing caps on fees for foreign cards. The RBA estimates that the reduction in interchange fees will reduce merchant payment costs by approximately $910 million annually. Small businesses are expected to benefit the most, as they currently tend to pay fees closer to the existing caps.
3. Greater fee transparency for merchants
Increasing transparency over the fees charged by card networks and payment service providers will enhance competition between players within the payments chain, put downward pressure on card payment costs and make it easier for businesses to shop around for a better deal.
What Doesn't Change on 1 October?
Not everything is covered by this round of reforms. American Express is not included, so surcharging can still apply. Buy Now Pay Later, mobile wallets, and some online payment models are still under review. The introduction of an interchange cap on foreign card transactions and certain transparency measures will follow on 1 April 2027, providing the payments industry with additional time to implement more complex changes.
The RBA has also signalled it will launch a further public consultation in mid-2026 to consider whether mobile wallets, three-party card networks, BNPL services and e-commerce platforms should be brought within the regulatory framework.
What Does This Mean for Consumers?
On the face of it, this is good news. The ban is expected to save consumers about $1.6 billion in surcharge fees each year. Prices at checkout will be simpler and more transparent.
That said, the picture is not entirely straightforward. Businesses that currently surcharge will need to recover those costs somehow — and some will do so by adjusting their advertised prices. The RBA's own modelling suggests that if surcharges are removed and merchants adjust base prices, the overall consumer price level might increase by approximately 0.1 percentage points— a modest figure in aggregate.
There is also the question of credit card rewards. Reduction in interchange fee caps directly compresses one of the more opaque revenue lines in retail banking. Commonwealth Bank CEO Matt Comyn has previously warned that lower interchange fees would "devalue popular frequent flyer and loyalty point schemes." It is worth reviewing the terms of any rewards credit cards you hold as the October deadline approaches.
What Does This Mean for Businesses?
If your business currently applies a surcharge, you will need to remove it before 1 October 2026. Businesses that currently pass on payment fees to customers will need to absorb these costs or adjust pricing strategies.
The practical steps to consider include:
- Review your current payment processing costs — with interchange fees being reduced, your underlying card acceptance costs should come down, which may offset much of the impact.
- Talk to your payment provider — now is a good time to review what you are paying and whether you can negotiate a better deal, particularly as greater fee transparency makes comparison easier.
- Revisit your pricing — if card payment costs have historically been passed through as a surcharge, consider how those costs will be reflected in your base pricing from October 2026 onward.
- Check your terminal and software settings — many terminals are configured to apply surcharges automatically. These will need to be updated before the deadline.
The Bottom Line
These are the most significant reforms to Australia's retail payments system in over two decades. For consumers, the change should make card payments simpler and more transparent. For businesses, the transition will require some planning — but the accompanying reduction in interchange fees means the impact should be manageable for most.
If you would like to discuss how these changes might affect your business's cashflow, pricing or payment processing arrangements, please contact our office to arrange an appointment.