Surcharges Are Being Banned. Your Fees Aren't.

You have probably seen the news. From 1 October 2026, charging a surcharge on card payments in Australia becomes illegal. No more 1.5% tacked onto a café bill. No more "card payment fee" at the checkout. For most customers, that sounds like great news. For merchants, it raises an uncomfortable question.

If you cannot pass the cost of card payments onto your customers anymore, who pays for them? The honest answer: you do. This article covers what the RBA actually decided, what your fees look like after the ban, and what your options are before the deadline arrives.

Why Is the RBA Banning Card Surcharges?

Surcharging in Australia is not a modern invention. The Reserve Bank introduced the framework over twenty years ago to steer consumers toward cheaper payment methods. That logic made sense in 2003. It does not make sense in 2026.

The RBA ran an 18-month review. Phase 1 began in October 2024. Phase 2 followed with the Consultation Paper in July 2025. The final Conclusions Paper landed on 31 March 2026. The findings were unambiguous: consumers find surcharging rules complex, surcharges are often not well disclosed, and the framework is no longer achieving its intended purpose. The Payments System Board agreed. So it ends.

What Exactly Is Banned by the Surcharge Ban?

From 1 October 2026, businesses cannot impose surcharges on payments made using Visa (debit, prepaid, credit), Mastercard (debit, prepaid, credit), or EFTPOS. That covers the vast majority of card transactions in Australian businesses right now.

The ban also does not apply to cash discounts. If you want to offer a reduction to customers who pay by bank transfer or another fee-free method, you can still do that. The restriction is on surcharges specifically, not on merchant-controlled pricing incentives.

One practical note on enforcement: the ban operates through card network merchant agreements, not ACCC prosecution. The RBA is lifting its existing prohibition on "no surcharge" rules, which allows Visa, Mastercard, and EFTPOS to enforce those rules directly via your merchant contract. A merchant who applies a surcharge after 1 October 2026 risks having their card acceptance terminated.

Does the Surcharge Ban Eliminate Merchant Fees?

Here is the most important thing to understand, and the thing that most news coverage glosses over.

The surcharge ban does not eliminate merchant fees. It eliminates your ability to pass them on.

When a customer taps a Visa card at your terminal today, your payment provider charges you a merchant service fee. That fee is made up of an interchange fee paid to the card-issuing bank, scheme fees paid to Visa or Mastercard, and your provider's own margin on top. Surcharging let you recover those costs from the customer. From October 2026, you absorb them yourself.

The RBA is reducing interchange fee caps as part of the same package. Here is what changes:

• Domestic debit/prepaid: cap reduces from 10¢ or 0.20% → 8¢ or 0.16% (from Oct 2026)
• Consumer credit card: cap reduces from 0.80% → 0.30% (from Oct 2026)
• Commercial credit card: unchanged at 0.80%
• Foreign cards: new cap of 1.0% introduced from 1 April 2027

The RBA estimates these reductions will save Australian merchants around $910 million per year in aggregate. That is a real number. But it is a wholesale reduction in interchange. Whether your provider actually passes those savings through to you depends entirely on them. The RBA is requiring acquirers to publish quarterly pass-through data from January 2027 precisely because savings do not automatically flow to merchants.

What Does the Surcharge Ban Mean for Your Merchant Fees?

The impact depends on where you sit today. If you already absorb your card acceptance costs and do not currently surcharge, your operational requirements are minimal. Your costs may actually decrease as interchange reductions flow through.

If you currently surcharge, this reform requires a genuine rethink of pricing strategy. You have two choices once the ban takes effect: absorb those costs into your margins, or reprice your products and services to bake the acceptance cost into your advertised prices. The RBA estimates that around 16% of merchants currently surcharge.

Start by pulling your merchant statements for the last three to six months. Understand exactly what you are paying in card acceptance costs right now. You can also use our savings calculator to model your numbers in under a minute. Then compare that against what reduced interchange will actually return to you once your provider passes it on. Do this now, not in August.

What Should Merchants Do Before October 2026?

1. 1Know your number - pull three to six months of merchant statements and calculate your total card acceptance cost
2. 2Enable least-cost routing - ask your provider whether merchant choice routing is active on your terminal; if not, request it now
3. 3Check your POS configuration - if your system automatically applies a surcharge, that setting needs to be off before October
4. 4Model your two scenarios - absorb costs into margins, or reprice; talk to your accountant about the tax implications of each
5. 5Review your merchant services agreement - some contracts have surcharging provisions that will need updating
6. 6Explore alternatives - consider whether there is a payment method that carries no merchant fee at all, not just a lower one

Key Dates at a Glance

• 31 March 2026 - RBA releases Conclusions Paper; ban is confirmed
• Mid-2026 - RBA commences review of mobile wallets, Amex, and BNPL
• 1 October 2026 - Surcharges on Visa, Mastercard, and EFTPOS become illegal; new interchange caps take effect
• 30 January 2027 - Acquirers publish first quarterly pass-through data
• 1 April 2027 - Foreign card interchange caps and additional fee transparency requirements take effect

The Option Your Payment Provider Isn't Mentioning

Card network fees are being reduced. But they are not being eliminated. There is a category of payment that carries no merchant service fee at all: direct bank-to-bank transfers. Payments made over Australia's New Payments Platform (NPP) using PayID do not go through Visa, Mastercard, or the EFTPOS network. There is no interchange fee. There is no scheme fee.

This is how QwikPay works for merchants. A customer pays via QR code directly from their banking app. The payment settles through the NPP. The merchant receives the full amount. There is no surcharge to ban, because there is no fee to pass on in the first place. The surcharge ban addresses the symptom. QwikPay addresses the cause. We explain the mechanics in full in our guide: How to Accept Payments with Zero Merchant Fees in Australia.