From 1 October 2026, the Reserve Bank of Australia (RBA) will ban surcharges on debit, prepaid, and credit cards on EFTPOS, Visa, and Mastercard networks (like Apple Pay). This is a major overhaul, as the ban could save consumers and businesses millions of dollars.
Surcharge Ban: What happened?
Surcharging has become the norm. Businesses add a fee to their advertised prices to cover the costs of accepting card payments. Surcharges currently look like something like this:
Example:
A customer purchases a sandwich from a deli for $15.
They pay by credit card.
A 1.5% surcharge fee is added to the purchase price, bringing the total to $15.23
From 1 October 2026, surcharging is no longer allowed on designated card networks (EFTPOS, Visa, and Mastercard).
In addition to the ban, the RBA is reducing the interchange fees and capping them to:
- Domestic Debit/prepaid cards: Capped at 8 cents, or 0.16% (whichever is lower)
- Domestic Credit cards: Capped at 0.3%
- Commercial cards: Cap stays at 0.8%
- Foreign-issued cards: Capped at 1.0% (from 1 April 2027)
Interchange fees are a wholesale cost that the merchant payment provider โ such as Mastercard โ pays to the customer’s bank each time the card is used.
Example:
A customer pays $100 using a credit card.
In the transaction, the payment provider pays an interchange fee of 0.3% (30 cents) to the card-issuing bank (the customer’s card).
The payment provider also collects its own scheme fees and a slight margin on the transaction.
The remaining amount is settled to the business.
The interchange fee is just one component of the merchant service fee in a card transaction.
The RBA is only capping the interchange fee, not merchant service fees as a whole.
For more information, check out the RBAโs decision here
Why are card surcharges getting banned?
The RBA came to a decision to ban card surcharges on the designated card networks for a number of reasons:
- In most cases, businesses simply charge a flat surcharge on all card payments regardless of the card used. Debit and credit cards have very different costs.
- Surcharge rules are hard to enforce, and pricing isnโt disclosed properly across the board.
- Surcharging has doubled since 2022, but competition among providers has remained the same, and wholesale costs have fallen but not been passed through to businesses and customers.
- Cash is less prevalent in the economy, accounting for approximately 10% of all transactions. This makes it hard for consumers to avoid surcharges.
The intention of surcharges when the rules were put in place over two decades ago was to push consumers to use cheaper payment options. In the current card-dominated landscape, these rules are no longer fit for purpose.
What does the surcharge ban mean for businesses?
On the surface, this looks like a big win for both consumers and businesses. Capping the interchange fee should provide businesses with relief, as the RBA modelling projects $910 million in savings per year when the caps are fully in place. However, it doesn’t eliminate merchant service fees entirely.
Businesses will still need to pay their providers per card transaction. With the ban, businesses canโt pass on the cost of merchant service fees to consumers through a surcharge. This could result in businesses simply โpricingโ MSFs into their current prices.
But the ban may give small businesses an opportunity to shop around for card payment systems with better prices. As it stands, the cap should reduce MSFs across the board, leading businesses to seek the lowest fees.
The surcharge ban and small businesses
Overall, the ban should be a positive for consumers and businesses. Customers will know exactly what they will pay at the till, with no surcharging to surprise them. For businesses, there should be a reduction in how much they pay in merchant service fees. Lower interchange fees should also give businesses the chance to find better deals when choosing payment providers.
