The Reserve Bank of Australia’s card surcharge ban starts on 1 October 2026. This means businesses can no longer charge card transaction fees on EFTPOS, Visa, and Mastercard. While this simplifies the checkout process for customers, it will leave businesses with a choice: absorb the fees, or pass them on.
What the RBA surcharge ban means
The RBA surcharge ban means businesses must charge the price advertised for a good or service. Businesses can no longer add a card transaction fee at checkout. For instance, if you pay for a coffee advertised at $5.00, but the 1.2% transaction fee makes it $5.06 at checkout, that’s prohibited in Australia from 1 October 2026.
But this doesn’t mean businesses will no longer have to pay these transaction fees. It just means they are no longer visible in the transaction.
Important note: This bans card transaction surcharges, not holiday or weekend surcharges, booking fees, or service fees.
Why the RBA decided to ban card surcharges
The main reason the RBA banned surcharge fees on card transactions is that most transactions in Australia use a debit or credit card (73%). Because card transactions carry built-in fees charged by card providers and networks, customers and businesses are forced to absorb these costs unfairly.
This is why the RBA has stepped in. Without other viable payment options to counter the prevalence of card payments, consumers can’t avoid these card transaction fees.
What does this change mean for businesses?
Thanks to the RBA surcharge ban, businesses may enjoy lower interchange fees, but may also have to change how they charge card payments.
Interchange fees will drop from 0.8% to 0.3% for domestic consumer credit cards, while domestic prepaid and debit cards will be capped at 0.16% or 8 cents, whichever is lower.
However, interchange fees are only part of the merchant service fee (MSF) that businesses pay. MSFs include the interchange fee along with scheme fees and the provider’s margin.
While this should translate into lower MSFs, it isn’t guaranteed, though some providers, like CommBank, have lowered their fees. This leaves businesses to decide whether to absorb the cost and how much.
Why recovering the cost isn’t as simple as raising prices
Incorporating transaction fees into your sale price isn’t exactly straightforward. For instance, a broad price increase doesn’t account for:
- Changes to volumes of card payments
- Fees incurred by different card networks (e.g. Mastercard vs Visa)
- Additional costs for international credit cards
- Changes to merchant fees.
Let’s say a business pays $4,800 in merchant fees on $400,000 annual turnover, which is 1.2% of revenue. Simply increasing prices by 1.2% doesn’t cover the cost, as the merchant service fee is calculated on the final transaction value. As prices increase, so too do merchant service fees.
So, in practice, some cost absorption for businesses is inevitable — it’s just a matter of deciding how much. Businesses should also consider what a 1.2% price increase will look like on signage, i.e. $5.00 into $5.06 for a coffee.
What businesses should do before the surcharge ban starts
The surcharge ban requires businesses to adjust prices and processes, but it also presents an opportunity to compare card payment providers.
Compare card payment providers
Before deciding whether to absorb costs or adjust prices, compare your options. Part of the RBA’s reasoning for the ban is to give businesses a chance to shop around and find a better deal on card payment providers.
Update POS and payment systems
Most POS and payment providers will likely update themselves to accommodate the surcharge ban, but check and update manually if needed. Do this across payment terminals, and also check your integrated accounting software, since you’ll likely need to update costs and expenses there.
Communicate changes to customers
Remove all signage regarding surcharges for card transactions. For example, many cafes and restaurants will have this signage on menus or on the physical EFTPOS machine. If you’re passing costs on, update sale prices and include clear reasons why, if appropriate.
The RBA surcharge ban in a nutshell
While the surcharge ban offers simpler pricing for customers, it doesn’t remove fees entirely. Instead, it hides them and creates a challenge for small businesses that depend on card payment providers.
Ultimately, small businesses will have to decide how much to absorb and how to adjust pricing strategies. But there is an opportunity to reduce costs, too, since capped and lowered interchange fees may affect card payment system costs. Businesses should review provider offerings and switch to what best fits their operations so they’re ready when the ban takes effect on 1 October 2026.
