Key facts
- A ban on credit and debit card surcharges in Australia takes effect October 1, 2026.
- The ban is expected to save Australian consumers A$1.6 billion annually.
- Businesses will no longer be able to pass on card processing fees to customers via surcharges.
- Merchant Service Fees (MSFs), which include interchange, card scheme, and bank fees, will still apply.
- The RBA has capped interchange rates for banks and payment providers.
Australia's small businesses are bracing for increased financial strain as a ban on credit and debit card surcharges takes effect on October 1, 2026. While the move is projected to save consumers A$1.6 billion annually, it leaves retailers with the challenge of absorbing merchant processing fees, which can range from 0.5% to 2% of a transaction.
Small business owners like Cascie Heart, who runs a breadboard company, have expressed concern about the impact on their already thin profit margins. Heart reported paying A$6,000 in transaction fees this year and faces additional costs from her e-commerce platform. She stated that without the ability to surcharge, businesses are left with few options to cover these expenses.
Similarly, Jo Yates, operating a multipurpose space in Noosa, is contemplating removing card payment options for certain services to avoid hundreds of dollars in monthly fees. This presents a dilemma, as customers may face friction from having to pay via bank transfer, and for consignment sales, the business cannot control prices to offset the costs.
Hospitality entrepreneur Steve Sidd, whose Catering HQ group employs about 500 people across 16 venues, is also preparing for the deadline. Sidd noted that simply increasing menu prices is not a viable solution due to existing cost-of-living pressures on diners. His team is reviewing operational margins to absorb the upcoming hit, which comes on top of rising costs for wages, utilities, insurance, and rent.
The Reserve Bank of Australia (RBA) mandated the ban following a report that highlighted the increasing use of cards over cash and the complexity of existing surcharge rules. The RBA estimates the reforms could save consumers and businesses up to A$1.8 billion a year. As part of the changes, the RBA has also introduced new caps on interchange rates, reducing them from 0.8% to 0.3%, which is expected to lower Merchant Service Fees (MSFs), particularly for smaller businesses.