Full Breakdown
Card Surcharge Ban Takes Effect in Australia: Businesses Scramble to Adjust Prices and Payment Options
By Drooid · · How we work
Core Event – Nationwide Ban on Card Surcharges
From a Thursday in early October 2026, the Reserve Bank of Australia (RBA) prohibited merchants from adding surcharges to credit- and debit-card purchases. The rule covers Visa, Mastercard, eftpos and American Express. The RBA estimates the ban will eliminate roughly $1.6 billion in annual consumer surcharge costs and cut merchants’ processing expenses by about $910 million a year.
Background & Context
Before the ban, Australian merchants could pass interchange fees on to customers as a separate line-item. The RBA and the Australian Competition and Consumer Commission (ACCC) have advised that businesses may instead offer discounts for cash or PayID payments. In March 2026 the RBA announced a further cap on interchange fees to offset the loss of surcharge revenue.
Data & Statistics
- 2025: ? 15 % of all payments were made in cash; about half of Australians used cash at least once a week.
- Cash-carrying rose from 47 % in 2022 to 50 % in 2025, the first increase since the RBA began tracking in 2007.
- Approximately 16 % of merchants previously applied surcharges.
- The RBA projects $910 million in annual merchant cost reductions once the new fee regime is in place.
- Flexischools introduced a $10 minimum checkout and a 6-cent per-transaction fee on 22 September 2026 to cover processing costs.
- Shopify announced lower domestic-card rates effective 1 October 2026.
Official Statements & Responses
The RBA reiterated that businesses may provide cash or PayID discounts but cannot impose card surcharges.
The Australian Taxation Office (ATO) will stop accepting credit-card tax payments from 30 November 2026, citing the surcharge ban as the reason for the change.
Shopify said it would lower card rates for Australian merchants from 1 October 2026, positioning the move as a response to the new regulatory environment.
Criticism & Opposition
Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry (ACCI), said the reforms are unlikely to deliver financial relief for small businesses and called the outcome “no real winners.”
Rob Strahan, owner of The Oarhouse café in Perth, warned that absorbing card fees would threaten his business, leading him to raise coffee prices from $6 to $6.50.
On-the-Ground Reports
- Cubby OOSH, an after-school care provider, notified families that it will no longer accept card payments, citing the new surcharge laws.
- Hair-dressing sector chief Fiona Beamish (Australian Hairdressing Council) described “fear” among members over having to raise prices while customers expect no surcharge.
Conflicting Reports & Gaps
The RBA forecasts lower consumer costs, yet the ACCI and several small-business owners report imminent price hikes. The RBA expects 16 % of merchants to benefit automatically from terminal updates, but many older point-of-sale systems require manual reconfiguration, leaving a risk of inadvertent surcharge continuation. Enforcement responsibility has shifted from the Reserve Bank and ACCC to card networks and payment providers, creating uncertainty about compliance monitoring.
What’s Next
Card networks and payment service providers must disable surcharge functions on their terminals by the ban’s start date. The ATO’s credit-card payment prohibition will take effect on 30 November 2026, prompting further adjustments for businesses that rely on card-based tax payments. Stakeholders continue to call for clearer guidance and support for small merchants adapting to the new payment landscape.