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# RBA bans card surcharges from October 2026
- URL: https://www.bushletter.com/rba-bans-card-surcharges-from-october-2026/
- Published: 2026-08-19T05:00:00.000Z
- Updated: 2026-08-19T04:59:59.000Z
- Description: Every payment terminal in Australia must stop adding a surcharge to eftpos, Mastercard and Visa transactions from 1 October 2026, and the Reserve Bank expects most small merchants to be better off.
- Author: Editor
- Tags: Finance, Australia, Reserve Bank of Australia

![Jonas Valenti](https://res.cloudinary.com/dz77sb7j1/image/upload/v1774262594/bushletter/authors/jonas-valenti.png)

By **Jonas Valenti** · 2026-08-04

TLDR

Card surcharges are being abolished on every eftpos, Mastercard and Visa transaction in Australia, and the Reserve Bank expects most small merchants to come out ahead. Interchange caps fall at the same time, cutting the wholesale cost of accepting cards. Businesses that surcharge today must fold the fee back into their prices before the 1 October 2026 deadline.

KEY TAKEAWAYS

01Every Australian merchant must stop surcharging eftpos, Mastercard and Visa payments, said the Payments System Board.

02Around $1.6 billion in annual surcharge costs currently paid by consumers will shift into merchant list prices.

03Debit interchange drops to 8 cents or 0.16 per cent; consumer credit falls to 0.3 per cent under new caps.

04Eighty-five per cent of small merchants never surcharged and stand to benefit directly from lower interchange caps.

05Acquirer cost-transparency duties take effect from 1 April 2027, giving merchants clearer data to audit statements.

## The surcharge line disappears

From 1 October 2026, every payment terminal in Australia must stop adding a surcharge on eftpos, Mastercard and Visa card transactions. The Payments System Board concluded that card surcharging on both debit and credit cards should end on 1 October 2026, applying to eftpos, Mastercard and Visa cards.[\[1\]](https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/non-tech-summary.html?ref=bushletter.com) No replacement line appears on the receipt.

That cost has to go somewhere, and the Payments System Board was direct about where. The Board said that of the 16 per cent of Australian businesses that surcharge, "it will be up to them to choose whether to include payment costs in their sticker prices when surcharging ends, just as they do with all their other costs."[\[1\]](https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/non-tech-summary.html?ref=bushletter.com) Menu prices, service fees and quoted rates will need to absorb what the terminal surcharge used to collect.

For customers, the change removes a fee that became increasingly opaque over time. Many merchants applied a blanket surcharge across all card types regardless of actual cost, making it near impossible for a consumer at the counter to know whether the fee was legitimate or excessive.

## Where the money actually goes

The mechanics that make the ban work run through interchange fees, the payments most consumers never see. When a customer taps a card, the merchant's bank pays a fee to the card issuer; the merchant ultimately bears that cost through its monthly merchant service fee. Those fees have long been capped by the Reserve Bank, but the caps were high enough that small merchants often paid close to the ceiling while large retailers negotiated far lower rates.

The new caps tighten that ceiling significantly. The Payments System Board decided to reduce the interchange cap on domestic debit card transactions to 8 cents or 0.16 per cent ad valorem, and to reduce the cap on domestic consumer credit card interchange to 0.3 per cent.[\[2\]](https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/conclusions-paper/pdf/conclusions-paper.pdf?ref=bushletter.com) The cap on commercial credit cards stays at 0.8 per cent. A new 1.0 per cent cap on foreign-issued cards comes into effect from 1 April 2027.[\[3\]](https://www.rba.gov.au/media-releases/2026/mr-26-10.html?ref=bushletter.com)

Lower interchange caps reduce what acquirers pay card issuers, and acquirers are expected to pass those savings through to merchant service fees. That pass-through is not automatic or guaranteed in every contract, which is precisely why the transparency rules arriving in April 2027 matter.

## Who gains and who absorbs the loss

The 85 per cent of small merchants who never surcharged were already bearing payment costs silently inside their prices.[\[2\]](https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/conclusions-paper/pdf/conclusions-paper.pdf?ref=bushletter.com) For them, lower interchange caps translate directly into a lower merchant service fee line on their statement, with no behavioural change required.

The 16 per cent who did surcharge face a genuine adjustment. The Reserve Bank estimates that those merchants collectively charged around $1.8 billion in surcharges in the 2024-25 financial year, of which $1.6 billion was paid by consumers.[\[2\]](https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/conclusions-paper/pdf/conclusions-paper.pdf?ref=bushletter.com) That $1.6 billion does not vanish. It migrates into list prices, or it gets absorbed as a narrower margin, and neither outcome is painless for a business running on thin returns.

Payment service providers face their own compliance cost. The industry is expected to spend around $25 million across all providers to update terminals and back-end systems before the October deadline.[\[2\]](https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/conclusions-paper/pdf/conclusions-paper.pdf?ref=bushletter.com) The Board judged that consumer savings would outweigh that figure.

## Three things to check on your merchant statement before October

The gap between a lower interchange cap and a lower merchant service fee is where margin can quietly disappear. Acquirers set their own fees on top of interchange, and a falling cap does not automatically mean a falling total rate. The three areas worth examining now are the blended versus unbundled rate structure, any fixed monthly fees that sit outside the per-transaction rate, and the contract renewal date relative to the October start.

Merchants on blended pricing, where all card types attract the same flat rate, may see the least visible benefit from debit interchange cuts because the acquirer can absorb savings at that blend point. Unbundled or interchange-plus pricing makes the pass-through transparent. If your current agreement locks in a blended rate through to mid-2027, the October interchange changes may not move your bill at all until the contract term ends.

Fixed monthly account fees, terminal rental and payment gateway charges are untouched by interchange reform. A merchant whose card volumes are low enough that fixed costs dominate the statement will see a smaller proportional benefit than one processing high volumes of small debit transactions, where the new 8-cent cap bites most sharply against the old rate.

## What comes next from April 2027

The October changes are stage one. From 1 April 2027, a 1.0 per cent cap on interchange for foreign-issued cards takes effect alongside new cost-transparency requirements aimed at acquirers.[\[3\]](https://www.rba.gov.au/media-releases/2026/mr-26-10.html?ref=bushletter.com) Foreign card interchange has historically been the highest-cost category for merchants in tourism and hospitality, where overseas visitors pay by Amex, UnionPay or internationally issued Visa and Mastercard products carrying rates well above the domestic caps.

The transparency duties require acquirers to give merchants clearer data on what they are actually paying and why. Merchants who understand exactly what each card type costs them will be better placed to assess whether their service fee is competitive and whether switching acquirers makes financial sense.

The Payments System Board's conclusions paper makes clear the April 2027 tranche is designed to work in sequence with the October changes: surcharging ends first, removing the existing outlet for cost pass-through at the consumer level, and then the transparency framework arrives to make the merchant-side costs legible.[\[2\]](https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/conclusions-paper/pdf/conclusions-paper.pdf?ref=bushletter.com) The Board said merchants cannot negotiate what they cannot see, and after April 2027 the data to do so will be available.

This article contains analysis and commentary on market conditions. It does not constitute financial, investment, or professional advice. Past performance is not indicative of future results. Always consult a qualified adviser before making financial decisions.

SOURCES & CITATIONS

1. [Payments System Board Review of Retail Payments Regulation: Non-Technical Summary](https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/non-tech-summary.html?ref=bushletter.com)
2. [Payments System Board Review of Retail Payments Regulation: Conclusions Paper](https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/conclusions-paper/pdf/conclusions-paper.pdf?ref=bushletter.com)
3. [RBA Media Release: Payments System Board Conclusions on Retail Payments Regulation](https://www.rba.gov.au/media-releases/2026/mr-26-10.html?ref=bushletter.com)
4. [ACCC: Card surcharges](https://www.accc.gov.au/consumers/pricing/card-surcharges?ref=bushletter.com)
5. [Australian Banking Association: Card surcharges explained](https://www.ausbanking.org.au/surcharging/?ref=bushletter.com)

FREQUENTLY ASKED QUESTIONS

Which cards does the surcharge ban cover?

The ban covers eftpos, Mastercard and Visa cards, both debit and credit. It takes effect on 1 October 2026.

Can merchants raise their prices to cover the lost surcharge revenue?

Yes. The Payments System Board said businesses that currently surcharge can choose to include payment costs in their sticker prices, the same way they treat any other operating cost.

Will my merchant service fee automatically fall after October?

Not necessarily. Interchange caps fall, which reduces the cost acquirers pay, but pass-through to your service fee depends on your contract structure. Merchants on blended pricing may see little change until their contract is renegotiated.

What changes in April 2027?

A new 1.0 per cent cap on interchange for foreign-issued cards takes effect, along with acquirer transparency rules requiring clearer cost reporting to merchants.

How much did Australian consumers pay in surcharges?

The Reserve Bank estimates consumers paid around $1.6 billion in card surcharges in the 2024-25 financial year, out of a total $1.8 billion charged by the 16 per cent of merchants that surcharged.

![Jonas Valenti](https://res.cloudinary.com/dz77sb7j1/image/upload/v1774262594/bushletter/authors/jonas-valenti.png)

[Jonas Valenti](https://bushletter.com/author/jonas-valenti/?ref=bushletter.com)

Jonas Valenti writes about search and how businesses get discovered. He has spent years watching what makes a company visible online, and is unsentimental about tactics that no longer work.