Australia's Surcharge Ban and Interchange Changes: What the October 2026 Card Reforms Mean for Merchants, Banks and Payment Providers
TL;DR
Australia’s card payment economics will change significantly from 1 October 2026.
The Reserve Bank of Australia (RBA) is removing card surcharging on the designated eftpos, Mastercard and Visa networks for debit, prepaid and credit card payments. At the same time, it is lowering the interchange cap on domestic consumer credit cards to 0.3% and introducing an 8-cent cap per transaction for domestic debit and prepaid cards.
From 1 April 2027, interchange on foreign-issued cards will be capped at 1.0%, alongside further payment cost transparency measures.
The reforms should save consumers around $1.6 billion a year in surcharge fees, businesses around $200 million a year in surcharges paid, and businesses a further $910 million a year through lower transaction fees. However, the benefits will depend on whether acquirers, payment service providers (PSPs) and other participants pass lower costs through.
The hidden effect is already emerging: banks are repricing credit cards through higher interest rates, annual fees and changes to rewards programmes. Australia is moving from paying at the point of payment to paying through the price.
Is the credit card surcharge ban happening in Australia?
Yes. Card payment surcharging on eftpos, Mastercard and Visa debit, prepaid and credit card transactions is expected to end from 1 October 2026.
The RBA published its Conclusions Paper on the Review of Merchant Card Payment Costs and Surcharging on 31 March 2026. To implement the reform, it is lifting its prohibition on card network “no-surcharge” rules.
The three designated networks are expected to introduce rules preventing merchants from adding a card payment surcharge from 1 October 2026.
This means merchants will need to remove separate card fees from relevant receipts, invoices, checkout flows, menus, websites and point-of-sale systems. The rule concerns fees added specifically because a customer pays by card. It does not automatically prohibit unrelated charges such as weekend surcharges, public holiday surcharges, booking fees or service fees.
Businesses should confirm the final implementation requirements with their acquirer or PSP because the RBA regulates the payments framework and networks, rather than directly managing every merchant’s checkout configuration.
When do the Australian surcharge and interchange changes take effect?
Most reforms take effect on 1 October 2026, with foreign-card interchange and some transparency changes beginning on 1 April 2027.
The key timetable is:
1 October 2026: No surcharging on debit, prepaid and credit cards on eftpos, Mastercard and Visa.
1 October 2026: Lower domestic consumer credit interchange cap.
1 October 2026: New domestic debit and prepaid interchange cap.
1 October 2026: Commercial credit card interchange cap remains unchanged.
1 April 2027: A 1.0% interchange cap applies to foreign-issued cards.
1 April 2027: Some additional payment cost transparency obligations begin.
The RBA has allowed time for more complex changes because the reform affects network rules, issuer economics, acquiring agreements, merchant statements, pricing models and technology platforms across the payments chain.
What are the new interchange caps?
The most important change is the reduction of domestic consumer credit interchange to 0.3%, while debit and prepaid interchange will be capped at 8 cents per transaction.
Card category | Position from 1 October 2026 |
Domestic consumer credit cards | 0.3% interchange cap |
Domestic debit and prepaid cards | 8 cents per transaction |
Domestic commercial credit cards | 0.8% cap remains |
Foreign-issued cards | 1.0% cap from 1 April 2027 |
The consumer credit change is particularly significant. The RBA is abolishing the existing benchmark framework and replacing it with a direct 0.3% cap.
The debit change requires more nuance. The cap is moving from the previous 6-cent benchmark to 8 cents per transaction. That is not a simple reduction. The Customer Owned Banking Association welcomed the decision as a way to moderate debit interchange while recognising the economics of smaller issuers.
This distinction matters because debit represents a large share of Australian card payments. The RBA is not applying one blunt approach across all products. It is trying to reduce excessive merchant costs while preserving enough issuer economics to support participation, innovation and system resilience.
The RBA’s interchange fee chapter explains the detail behind the new framework.
Why is the RBA removing card surcharges?
The RBA believes surcharging is no longer steering consumers towards cheaper payment methods and has become complex, confusing and difficult to enforce.
The surcharge framework was introduced more than two decades ago, when cash was a more practical alternative and merchants could use surcharges to encourage lower-cost payment choices.
The market has changed. Consumers use less cash, digital payments dominate everyday transactions and many businesses apply a similar surcharge across different card types. As a result, the surcharge often does not reflect the actual cost of acceptance.
The RBA says consumers and businesses find the rules difficult to understand, while surcharges are not always clearly disclosed. Governor Michele Bullock said the framework was no longer working as intended and that most consumers wanted surcharging to stop.
Treasurer Jim Chalmers put the political message more directly: Australians dislike paying these charges.
The reform therefore shifts the system from a visible fee at checkout to an all-in price. That may create a simpler customer experience, but it does not make card acceptance free.
Around 16% of businesses currently surcharge. Many of those businesses are likely to consider whether to absorb the cost, increase prices across all customers or use discounts to encourage lower-cost payment methods.
As University of Sydney academic Fei Gao noted in reporting by the ABC, payment costs are likely to be reflected in the price of goods and services. The charge may disappear from the terminal while remaining part of the business’s pricing model.
How are banks responding to the surcharge ban?
Banks are responding to lost interchange revenue by repricing credit cards, increasing fees and redesigning rewards programmes.
The surcharge ban and interchange reductions are expected to reduce bank interchange revenue by about $600 million a year, according to reporting by Nine News.
The response is already visible:
St George is increasing the Amplify Qantas Platinum card interest rate from 20.99% to 23.99%.
The card’s annual fee is rising from $75 to $125.
The interest-free period is being reduced by 10 days.
Westpac is increasing rates and annual fees on some cards.
NAB is increasing some credit card interest rates by 1.5 percentage points.
CBA is replacing its CommBank Awards structure with the revamped CommBank Yello programme.
This is the hidden story behind the surcharge reform. The cost of “free” rewards has always been funded through a combination of interchange, annual fees, interest income and customer behaviour. When interchange revenue is reduced, issuers have fewer options.
Consumers may no longer see a card surcharge at the terminal, but some will pay through higher annual fees, increased interest rates, tighter rewards eligibility or lower points value. Canstar’s Sally Tindall has warned consumers to compare the total cost of a card against the value of its rewards.
For issuers, repricing is likely to continue through 2026 and 2027, particularly in premium and rewards-led credit card portfolios.
What do the reforms mean for small businesses and merchants?
Small businesses may benefit from lower interchange, but the outcome will depend on whether those savings reach merchant service fees.
The RBA expects the reforms to reduce business transaction costs by approximately $910 million a year. Small businesses could benefit disproportionately because they generally pay fees closer to the existing interchange caps and have less negotiating power than large retailers.
That does not remove the pressure created by the surcharge ban.
A café operating on a margin of around 3% to 3.5% may view a merchant service fee of 1% to 1.2% as a material cost. As Independent Payments Forum co-founder Brad Kelly explained to the ABC, that fee can represent a significant share of the business’s margin.
ACCI and COSBOA have made a similar point: small businesses do not surcharge because they want to. For many, it has been one of the few ways to recover a cost they cannot control.
The RBA’s answer is lower interchange and greater transparency. But lower interchange will only improve the merchant’s position if acquirers and PSPs pass through the benefit rather than preserving it inside bundled pricing.
The RBA also recognises a structural imbalance in the market. Large supermarkets can negotiate aggressively because of their transaction volumes, while independent retailers often pay more. In effect, smaller merchants can subsidise larger merchants through the economics of acquiring.
The reform’s real test will therefore be the merchant statement, not the policy announcement.
What should merchants do before 1 October 2026?
Merchants should treat the reform as a pricing, technology and supplier review : not just a compliance task.
A practical checklist is:
Audit every surcharge. Identify where card fees appear across terminals, ecommerce checkouts, invoices, subscriptions, bookings and payment links.
Confirm network coverage. Check how your PSP will handle eftpos, Mastercard, Visa and any other payment methods.
Update customer-facing pricing. Review menus, signage, websites, terms and receipts so advertised prices reflect the new model.
Choose absorb, bake in or discount. Businesses can consider incorporating costs into standard pricing or offering discounts for selected payment methods where permitted.
Review acquiring statements. Separate interchange, scheme fees, processing fees, terminal rental, gateway charges and other PSP costs.
Request comparable quotes. Ask providers for standardised information and effective rates across your actual card mix.
Model rewards-card exposure. Track whether premium and rewards cards represent a disproportionate share of your transactions.
Renegotiate before the market resets. Do not assume lower interchange will automatically produce a lower merchant service fee.
What should payment providers, acquirers, ISOs and Payfacs do now?
Payment businesses need to move from surcharge-led pricing to transparent, value-based propositions.
Acquirers, ISOs, Payfacs and PSPs face margin pressure from lower interchange, greater merchant scrutiny and easier provider comparison. Bundled pricing may become harder to defend when networks and large providers publish more information about their fees.
This creates both risk and opportunity.
Providers that can clearly explain authorisation performance, settlement, fraud controls, reconciliation, uptime, omnichannel acceptance and support will be better placed to retain margin. Providers that rely mainly on opaque pricing or surcharge functionality may face switching pressure.
Tyro and Fat Zebra have welcomed the reforms because transparency creates an opportunity for merchants to reassess their providers. That is likely to be one of the most important competitive effects of the policy.
The RBA’s competition in card acquiring services chapter provides further detail on the transparency measures.
What is the strategic outlook for Australia’s payments industry?
Australia is entering the biggest reset of card economics in two decades, and the winners will be the participants that make cost and value easier to see.
For consumers, the checkout should become simpler. For merchants, lower interchange could improve economics, but only if savings are passed through. For issuers, rewards and premium card portfolios will need to be repriced. For payment providers, transparent value will become more important than surcharge capability.
The central shift is straightforward: Australia is moving from paying at the point of payment to paying in the price.
The next phase will determine whether that produces genuinely lower payment costs or simply redistributes them between merchants, customers, banks and technology companies.
For fintechs, payment providers and merchants preparing for the transition, RivaTech Consulting helps businesses assess payment strategy, provider economics and customer experience. Explore RivaTech’s payment solutions.
Frequently asked questions
When is the Australian card surcharge ban starting?
The surcharge ban for debit, prepaid and credit cards on the eftpos, Mastercard and Visa networks is expected to begin on 1 October 2026.
What is the new Australian credit card interchange cap?
From 1 October 2026, the domestic consumer credit card interchange cap will be 0.3%. The previous benchmark framework will be abolished.
Is debit card interchange being reduced?
Domestic debit and prepaid interchange will be capped at 8 cents per transaction from 1 October 2026. This is up from the previous 6-cent benchmark, reflecting the RBA’s effort to moderate debit interchange while recognising issuer economics.
When will foreign card interchange be capped?
Interchange on foreign-issued cards will be capped at 1.0% from 1 April 2027.
Can merchants recover card acceptance costs after surcharging ends?
Merchants will still incur card acceptance costs. They may reflect those costs in overall pricing, subject to applicable laws, regulations and network rules. Businesses should speak with their PSP and review the RBA’s guidance before changing their pricing model.