Australia stops letting shops charge customers extra for paying by card on Thursday 1 October 2026. The Reserve Bank of Australia has varied the standards that govern its designated card networks, and eftpos, Mastercard and Visa will impose no-surcharge rules on the merchants that accept them. The same day, the caps on domestic interchange fees fall, cutting the wholesale cost that sits underneath every card transaction in the country.
The reform is the third phase of the RBA’s Review of Retail Payments Regulation, concluded earlier in 2026 under the title Merchant Card Payment Costs and Surcharging. It pairs a consumer-facing ban with a wholesale price cut, on the theory that merchants who can no longer bill customers separately should at least face a lower bill themselves. Whether that trade lands evenly across a cafe in Adelaide and a supermarket chain in Sydney is the question the next quarter will answer.
In short
- Surcharging ends 1 October 2026 on eftpos, Mastercard and Visa credit, debit and prepaid cards, enforced through network rules rather than direct merchant regulation.
- Domestic interchange caps fall the same day: consumer credit drops from 0.80% to 0.30%, and debit and prepaid move from 0.20% or 10 cents to 0.16% or 8 cents.
- About A$1.8 billion of annual surcharges leaves the system (roughly USD 1.26 billion at 1 AUD = 0.7017 USD on 29 September), with consumers currently paying an estimated A$1.6 billion of that total.
- Card issuers are repricing rewards first: the RBA puts the interchange revenue hit at about A$660 million a year, and travel insurance and points perks are already being trimmed.
- Carve-outs survive: weekend and public holiday surcharges, booking fees, service fees, taxi fares and buy-now-pay-later all sit outside the ban.
What changes at the Australian checkout on October 1
The mechanical change is narrow. A merchant that today adds a line to the bill because the customer tapped a card must stop adding it. The price on the shelf, the menu or the checkout page becomes the price the customer pays, regardless of which card comes out of the wallet.
The RBA did not write a rule pointing at merchants. It varied its existing standards, including Standard No. 1 of 2016, Standard No. 2 of 2016 and Standard No. 3 of 2016, so that the designated networks must carry no-surcharge rules in their own scheme documentation. The RBA states plainly in its published guidance that it does not directly regulate merchants, and that whether any exemption exists is a decision for each card network rather than for the central bank.
That architecture matters for anyone modelling compliance risk. A merchant who keeps surcharging after 1 October is in breach of a contract with an acquirer and a scheme, not of a statute carrying a regulator’s penalty notice. Australia’s older regime, which barred surcharges above a merchant’s genuine cost of acceptance and is administered by the Australian Competition and Consumer Commission, sat on a different legal footing.
The change is channel-neutral. The RBA’s published guidance draws no distinction between a card presented in a store and a card entered on a checkout page, which means online sellers with a card fee toggle switched on in their payment gateway have the same two-day deadline as the cafe down the road.
Which payments are covered, and which escape the ban
The designated networks and the voluntary joiners
The binding scope is eftpos, Mastercard and Visa, across credit, debit and prepaid products. Those are the networks the RBA has designated under the Payment Systems (Regulation) Act, which is why the central bank can reach them at all.
Two large networks outside that perimeter have chosen to follow. American Express and UnionPay are removing surcharging voluntarily even though the RBA does not regulate them, and PayPal is doing the same from 5 October 2026, four days after the formal start date. The practical effect is that the overwhelming majority of Australian card and wallet volume becomes surcharge-free within the first week of October.
The commercial logic for a voluntary joiner is straightforward. A network that allowed merchants to keep surcharging its cards while rivals could not would hand consumers a reason to reach for a different card at the terminal, which is exactly the steering the surcharge was designed to create.
What stays legal after the ban
The ban is specific to fees imposed because a customer paid by card. The RBA’s guidance is explicit that it does not touch weekend surcharges, public holiday surcharges, booking fees or service fees, all of which remain available to a merchant that wants to price a cost separately.
Taxi surcharging stays with state and territory regulators, so the familiar 5% taxi payment fee is not affected by the RBA’s action. Buy-now-pay-later sits outside the designated perimeter entirely, which leaves an awkward gap: a merchant cannot pass on the cost of a Visa credit card at 0.30% interchange but can still negotiate and absorb a BNPL merchant fee that typically runs several times higher. The structural question of where BNPL sits inside the regulated payments stack is the same one driving the BNPL bank charter race between Sezzle, Affirm and Klarna in the United States.
Foreign-issued cards are covered by the surcharge ban but not yet by the interchange caps. That mismatch runs until 1 April 2027, when a 1.0% cap on foreign-issued card transactions acquired in Australia takes effect. Until then, a merchant in a tourist precinct absorbs an uncapped wholesale rate with no ability to charge for it, which is the sharpest single-sector squeeze in the whole package.
Why the RBA cut interchange at the same time
A surcharge ban on its own transfers cost from the customer to the merchant. The RBA paired it with a wholesale cut so that the transfer would be partly funded by card issuers rather than entirely by retailers, and the numbers show how the central bank sized that offset.
| Card type | Cap before 1 October 2026 | Cap from 1 October 2026 | Direction |
|---|---|---|---|
| Domestic consumer credit | 0.80% of transaction value | 0.30% of transaction value | Cut by 50 basis points |
| Domestic debit and prepaid | 0.20% or 10 cents | 0.16% or 8 cents | Cut by 20% |
| Domestic commercial credit | 0.80% of transaction value | 0.80% retained | Unchanged |
| Foreign-issued cards | Uncapped | 1.0% from 1 April 2027 | New cap, delayed start |
The retained 0.80% commercial credit cap is the most revealing line in the table. Business cards keep their wholesale economics intact, so a merchant taking a corporate Visa on a large order sees no relief at all while losing the right to charge for it. Retailers with a heavy B2B mix, trade counters and wholesalers among them, carry a worse version of the trade than a consumer-facing shop.
The interchange cut is also the reason this reform has a second constituency. Interchange is issuer revenue, and the RBA’s own estimate is that the domestic cuts reduce it by about A$660 million a year, near USD 463 million at current rates. Australian card issuers therefore have a quantified hole to fill, which is the subject of a later section.
The Australian approach contrasts with the United States, where merchants have spent two decades litigating and lobbying for the same outcome without a central bank able to set a cap by fiat. The path there runs through settlements and dockets instead, which is why US swipe fees are unlikely to fall for merchants in 2027 despite a long-running class settlement.
How much money the ban moves, and where it goes
The RBA’s published impact analysis puts total annual card surcharges at about A$1.8 billion, of which consumers pay an estimated A$1.6 billion. At the 29 September rate of 1 AUD = 0.7017 USD, that is roughly USD 1.26 billion in total and USD 1.12 billion borne by consumers.
Those figures need a second number beside them to make sense. The RBA reports that 85% of small merchants and 89% of large merchants do not surcharge at all, which means the A$1.8 billion is concentrated in a minority of businesses. The reform is a large redistribution inside a narrow slice of the merchant base rather than a uniform cost shock across the economy.
That concentration cuts both ways. A merchant that never surcharged gains the interchange cut with no offsetting revenue loss, which makes the package unambiguously positive for the large non-surcharging majority. A merchant that recovered 1.4% on every card sale loses that line and receives an interchange cut worth considerably less.
Implementation cost is small by comparison. The RBA estimates payment service providers will spend about A$25 million across the industry, near USD 17.5 million, to strip surcharging capability out of terminals, gateways and statements. An analysis published by The Conversation notes the Reserve Bank expects the change to add about 0.1% to measured inflation as a one-off, which is the statistical footprint of surcharges migrating into shelf prices.
What retailers are doing instead of surcharging
Absorb, reprice, or steer to cash
Australian reporting over the final week of September mapped three merchant responses, and most businesses appear to be choosing a blend. The first is absorption, which works where card costs are a small share of a healthy margin and where the interchange cut covers most of the gap.
The second is repricing. The RBA’s guidance explicitly permits it, stating that payment costs can be reflected in a business’s overall pricing rather than charged as a separate surcharge. The Conversation reported one concrete example: Flexischools announced a 6-cent increase per order plus a A$10 minimum order threshold (about USD 7) from 1 October.
The third is steering to cash. ABC News and The Australian both reported in late September that retailers are preparing cash discounts, and that some expect a genuine uptick in cash use as a result. A cash discount is the mirror image of a card surcharge and remains entirely legal, which is the most predictable arbitrage the ban creates.
The repricing response is the one with lasting consequence, because a price increase does not reverse when card costs fall again. Merchants across developed markets have been reworking checkout economics under regulatory pressure for two years, a shift examined in our analysis of structural repricing in US merchant checkout economics by early 2027.
The minimum-spend workaround
A minimum order value is not a surcharge, so it survives the ban. Expect it to spread in low-ticket categories where a fixed acquiring cost eats a large share of a A$4 coffee, and where the operator cannot recover it any other way.
The same reasoning applies to service fees and booking fees, both of which the RBA has left untouched. A merchant that rebadges a card fee as a generic service fee risks a misleading-conduct problem rather than a payments one, but a genuine, disclosed, payment-agnostic service fee is unaffected.
Why small merchants say the arithmetic does not work
The Council of Small Business Organisations Australia opposed the sequencing rather than the goal. COSBOA Chair Matthew Addison argued that removing surcharging before lower costs actually reach small businesses shifts pressure onto already thin margins.
The organisation’s published position is blunt: “If you ban surcharging without guaranteeing lower fees, small businesses have no choice but to absorb the cost and that will ultimately be reflected in prices.” COSBOA asked for an implementation timeline that gave small businesses time to see lower costs, obtain clear pricing information and make informed decisions before the ban landed.
The gap COSBOA identified is real and structural. Interchange is one input into a merchant service fee, and a small merchant on a bundled or blended plan does not automatically receive an interchange cut as a lower headline rate. That is precisely why the RBA layered transparency obligations on top of the price caps, with acquirers required to report pass-through from 30 January 2027.
Why a blended plan hides the interchange cut
The pass-through problem is a pricing-model problem. A merchant on an interchange-plus plan pays the wholesale rate plus a disclosed margin, so a 50 basis point cap reduction appears on the next statement almost mechanically.
A merchant on a blended or flat-rate plan pays a single headline percentage that the acquirer sets, and a lower interchange input simply widens the acquirer’s spread unless the acquirer chooses to reprice. Small Australian merchants sit disproportionately on blended and flat-rate plans, which is the mechanism behind COSBOA’s warning rather than a general suspicion of bad faith.
This is why the RBA’s transparency limb is not decoration. Requiring large acquirers to publish pass-through data from 30 January 2027, and to issue detailed merchant statements from 1 April 2027, is the only lever the central bank holds over a flat-rate plan it does not directly regulate.
The per-transaction spread explains the anger. The Conversation’s analysis put typical current surcharge levels at 0.43% for eftpos debit, around 1% for Visa and Mastercard credit and 1.36% for American Express, with small businesses commonly charged about 1.4%. A merchant paying 1.4% who can no longer recover it needs the interchange cut to deliver roughly that much relief, and a 50 basis point cut on the credit portion of a mixed card base does not get there on its own.
Sector exposure follows ticket size and card mix rather than business size. Hospitality, quick-service food, taxis outside the state-regulated carve-out, hairdressing and other low-ticket service categories carry the worst arithmetic, because a fixed per-transaction component is a large share of a small sale.
Categories with high average order values and a heavy debit mix fare best. A furniture retailer taking a A,000 debit sale was already paying close to the 8-cent cap in effective terms, so the loss of a surcharge line matters far less than it does on a A transaction.
Tourist-facing merchants sit in the worst position for the next six months, exposed to uncapped foreign-issued interchange with no recovery mechanism until the 1.0% cap arrives on 1 April 2027.
The Australian Restaurant and Cafe Association has said the change will be one of the largest in the history of Australian payments and that many small businesses are unprepared for it. Hospitality is the worst-exposed sector: low ticket sizes, thin margins, and a customer base that has grown used to seeing a payment line on the receipt.
How card issuers are repricing rewards and insurance
The A$660 million interchange hole is landing on cardholders first, and the repricing began before the ban did. Australian Community Media titles including the Illawarra Mercury and The Canberra Times reported in late September that major banks are cutting credit card insurance and travel perks, with rewards trackers documenting the same pattern across issuers.
The specific changes reported are dated and concrete. Commonwealth Bank’s credit card travel insurance conditions change from 29 September, requiring at least A$500 (about USD 351) of prepaid travel costs in a single transaction before departure plus an activation step. Westpac is significantly reducing its complimentary travel insurance offering from 1 October 2026.
ANZ is moving in two steps. ANZ Rewards Platinum loses complimentary international and domestic travel insurance and rental vehicle excess insurance from 9 December 2026, and ANZ Rewards Black loses those benefits from 24 March 2027. Reporting also points to higher annual fees and reduced points value across the market as issuers rebuild margin.
This is the part of the reform most likely to generate a consumer backlash after the fact. A shopper who saves a 1% surcharge at the checkout but loses complimentary travel insurance worth several hundred dollars a year has not obviously come out ahead, and the two effects arrive on different dates from different institutions.
There is also a competitive consequence for premium credit. A 0.30% interchange cap makes a high-earn rewards card structurally harder to fund in Australia, while the 0.80% commercial cap remains untouched. Issuer product strategy should be expected to tilt toward business and commercial cards, where the economics still support a rich feature set.
What the ban means for online checkouts and cross-border sellers
E-commerce operators have a configuration job, not a strategy debate. Any surcharge module, payment-method fee or card-fee line item in a Shopify, WooCommerce, Magento or custom checkout serving Australian customers has to be switched off for eftpos, Mastercard and Visa by 1 October, and for PayPal by 5 October.
The cross-border exposure is sharper than the domestic one. An Australian-acquired merchant selling to overseas customers absorbs foreign-issued card costs with no cap until 1 April 2027 and no ability to surcharge from 1 October 2026, which leaves a six-month window where inbound international card orders carry their worst economics of the decade.
Marketplace sellers face a platform dependency. Where the marketplace is the merchant of record, the platform controls whether a card fee appears, and sellers will need confirmation that the platform has removed it rather than assuming so. Where the seller is the merchant of record, the obligation is the seller’s own.
Dynamic currency conversion and cross-border assessment fees are not surcharges and are not banned, which preserves some recovery on international transactions. The distinction is that those are network and acquirer charges inside the transaction economics rather than a merchant-imposed fee at the point of sale.
Australia is not the only market putting a dated merchant-fee change on the calendar this quarter. India’s regulators held firm on a 0.4% merchant discount rate for high-value UPI payments, a decision covered in our report on India ruling out a UPI MDR delay ahead of the October 15 start, and the two reforms pull in opposite directions on who pays for a payment.
How Australia compares with the EU, UK, US, Canada and New Zealand
Australia is not the first market to ban consumer card surcharging, but it is the first to do it by central bank standard rather than by statute, and the first to pair the ban with a simultaneous interchange cut on the same date.
| Market | Consumer credit interchange cap | Consumer debit cap | Surcharging on domestic consumer cards | Legal mechanism |
|---|---|---|---|---|
| Australia (from 1 Oct 2026) | 0.30% | 0.16% or 8c | Banned | RBA standards, enforced via network rules |
| European Union | 0.30% | 0.20% | Banned on capped cards | Interchange Fee Regulation plus PSD2 |
| United Kingdom | 0.30% | 0.20% | Banned on consumer cards | Retained IFR caps plus Payment Services Regulations 2017 |
| United States | No federal cap | Capped for large issuers | Permitted, subject to state law and network rules | Durbin Amendment, state statutes, network rules |
| Canada | No regulated cap | No regulated cap | Permitted since October 2022, except Quebec | Class-action settlement plus network rules |
| New Zealand | 0.30% since 1 Dec 2025 | Capped | Still permitted | Commerce Commission caps; ban bill not passed |
The New Zealand comparison is the instructive one. Wellington chose legislation, introducing a Retail Payment System amendment bill to ban merchant surcharges with a target of May 2026, and the bill has not passed. New Zealand has the interchange caps, including a 0.30% in-person credit cap from 1 December 2025 and the first caps on foreign-issued cards from 1 May 2026, but surcharging there remains legal.
That divergence is a governance lesson more than a payments one. The RBA could deliver a surcharge ban because it already had designation powers over the networks and could vary its own standards, while a parliamentary route needed coalition votes that did not materialise. Two neighbouring markets with near-identical interchange settings therefore end 2026 with opposite consumer-facing rules.
The United States sits furthest from the Australian model, with surcharging permitted in most states and a patchwork of state statutes and network requirements governing how it is disclosed. Our analysis of why large US retailers are likely to skip card surcharges this holiday season found that the biggest chains decline to surcharge for competitive reasons rather than legal ones, which is the same conclusion the RBA drew from its own 89% figure for large Australian merchants.
What to watch after October 1
The compliance calendar does not stop on Thursday. Three dated obligations follow, and each one produces evidence that either supports or undermines the RBA’s central claim that lower wholesale costs will reach merchants.
| Date | Obligation or event |
|---|---|
| 29 September 2026 | Commonwealth Bank credit card travel insurance conditions change, per reporting |
| 1 October 2026 | Surcharging ends on eftpos, Mastercard and Visa; domestic interchange caps fall |
| 5 October 2026 | PayPal removes surcharging |
| 30 October 2026 | Designated networks and large acquirers publish the first quarterly fee disclosures |
| 9 December 2026 | ANZ Rewards Platinum loses complimentary travel and rental excess insurance |
| 30 January 2027 | Large acquirers report how interchange cuts flowed through to merchant service fees |
| 24 March 2027 | ANZ Rewards Black loses complimentary travel insurance |
| 1 April 2027 | Foreign-issued card interchange capped at 1.0%; all acquirers issue detailed merchant statements |
The 30 January 2027 pass-through report is the reform’s real test. If large acquirers show that a 50 basis point interchange cut reached merchant service fees, COSBOA’s objection is answered; if it shows the cut was retained in acquirer margin, the ban becomes a straight transfer from surcharging merchants to payment providers.
The second thing to watch is price behaviour through the holiday quarter. Australian retail moves into its heaviest trading period days after the ban, so any repricing decision taken now is embedded in Christmas trading, and the 0.1% one-off inflation effect the RBA anticipates will be hard to separate from ordinary seasonal movement.
Third is the cash question. If cash discounts spread through hospitality and low-ticket retail, the effective surcharge returns in inverted form, and the RBA achieves headline price transparency without changing the underlying cost allocation. Early reporting from ABC News and The Australian suggests at least some operators intend exactly that.
For retailers outside Australia, the file is worth tracking as a template. A central bank that can designate networks and vary standards can deliver a surcharge ban in months rather than the years a statute takes, and other jurisdictions with similar powers now have a working precedent plus a dated evidence base arriving in January. Readers can follow the underlying rule set on the RBA’s official guidance page for the removal of card payment surcharges.
Frequently asked questions
Can Australian businesses still charge a card fee after October 1, 2026?
No. From 1 October 2026 merchants cannot add a surcharge for payments made with eftpos, Mastercard or Visa credit, debit or prepaid cards. American Express and UnionPay are removing surcharging voluntarily, and PayPal follows on 5 October 2026.
Which fees are still allowed at an Australian checkout?
The RBA’s guidance confirms that weekend surcharges, public holiday surcharges, booking fees and service fees are unaffected, because they are not charged for using a card. Minimum order values also remain legal, and taxi payment surcharging stays with state and territory regulators.
What are the new Australian interchange fee caps?
From 1 October 2026 domestic consumer credit interchange is capped at 0.30% of transaction value, down from 0.80%, and domestic debit and prepaid at 0.16% or 8 cents, down from 0.20% or 10 cents. Commercial credit stays at 0.80%, and foreign-issued cards are capped at 1.0% from 1 April 2027.
Will prices rise because of the surcharge ban?
Some will. The RBA permits businesses to reflect payment costs in overall pricing rather than as a separate surcharge, and an analysis published by The Conversation notes the Reserve Bank expects a one-off addition of about 0.1% to measured inflation.
Does the ban apply to online purchases?
Yes. The RBA’s published guidance draws no distinction between card-present and online transactions, so e-commerce checkouts serving Australian customers must switch off card fee modules on the same timetable.
Is buy-now-pay-later covered by the surcharge ban?
No. BNPL providers are not designated card networks under the RBA’s framework, so BNPL merchant fees sit outside both the surcharge ban and the interchange caps.
How is the ban enforced if the RBA does not regulate merchants?
The RBA varied its standards so the designated networks must carry no-surcharge rules. Compliance therefore runs through scheme and acquirer contracts, and the RBA has confirmed that any exemption is a decision for each network rather than for the central bank.
How much are Australians currently paying in card surcharges?
The RBA’s impact analysis puts total annual card surcharges at about A$1.8 billion, with consumers paying an estimated A$1.6 billion of that. At 1 AUD = 0.7017 USD on 29 September 2026, that is roughly USD 1.26 billion and USD 1.12 billion respectively.
When will merchants know whether the interchange cut reached them?
Large acquirers must begin publishing information on how interchange reductions flowed through to merchant service fees from 30 January 2027. Networks and large acquirers start publishing quarterly card fee data earlier, from 30 October 2026.