.png)
The End of the Surcharge: What the RBA's 2026 Reforms Mean for Australian Merchants
Australia’s card payment landscape is about to change significantly.
In its Review of Merchant Card Payment Costs and Surcharging Conclusions Paper, published on 31 March 2026, the Reserve Bank of Australia (RBA) confirmed a package of reforms that will reshape how merchants price card payments and how payment providers charge for them.
From 1 October 2026, card surcharges on designated eftpos, Mastercard and Visa debit, prepaid and credit card transactions are expected to disappear. At the same time, new interchange fee caps will apply to domestic card transactions.
The reforms are designed to make pricing clearer for consumers, reduce merchant card payment costs and increase competition between payment providers. The RBA estimates the interchange changes could lower wholesale card costs for Australian businesses by approximately $910 million a year.
Key takeaway
The Australian card surcharge ban is not being introduced through a direct legislative prohibition at this stage. Instead, the RBA is lifting its prohibition on card network “no-surcharge” rules, allowing eftpos, Mastercard and Visa to prevent merchants from adding card surcharges.
The RBA expects the designated networks to impose those rules shortly afterwards. If surcharging continues, the RBA could recommend that the Australian Government legislate a formal ban.
For merchants, the practical outcome is clear: businesses should prepare to remove card surcharge line items from checkout, review their payment plans and ensure any reduction in interchange costs is passed through by their acquirer.
What happened to Australia’s surcharge rules?
Australia’s current surcharging framework was introduced in 2003. Its original purpose was to encourage consumers to use lower-cost payment methods by allowing merchants to recover the cost of card acceptance from the customer using the card.
However, the RBA considers the framework no longer fit for purpose.
During the 2024–25 financial year, approximately 16 per cent of Australian merchants applied surcharges to designated card payments. Those surcharges totalled around $1.8 billion, of which consumers paid approximately $1.6 billion.
The framework has become less effective for three main reasons:
Many merchants use blended or single-rate payment plans, then apply the same surcharge to different card types despite their different underlying costs.
It is difficult for consumers and regulators to determine whether a surcharge accurately reflects a merchant’s cost of acceptance.
Cash is no longer a practical surcharge-free alternative for many customers. Cash accounted for around 15 per cent of in-person transactions in 2025, down from 69 per cent in 2007.
The consumer case for change is also strong. Around 76 per cent of consumers surveyed by the RBA said surcharging should stop, while approximately 60 per cent preferred an all-inclusive price that does not change based on the payment method.
The RBA estimates that removing surcharging across all designated card networks will cost payment service providers about $25 million to implement. That is lower than the estimated $45 million cost of removing surcharging from debit cards only, partly because a complete removal is simpler to explain, implement and enforce.
What the surcharge reforms mean for merchants
From 1 October 2026, merchants accepting designated eftpos, Mastercard and Visa cards should expect the following changes:
Card surcharge options will be removed from terminals, payment links and online checkout flows.
Customers should see the price they pay without a separate card payment fee.
Merchants currently relying on surcharges will need to incorporate payment costs into their advertised prices or margins.
Businesses can still use discounts to encourage customers towards preferred payment methods, where their payment provider and applicable rules permit it.
Non-payment surcharges, such as weekend or public holiday fees, are outside the scope of this particular RBA review.
The RBA expects merchants that currently surcharge to increase their advertised prices by less than the surcharge amount in many cases, because lower interchange costs should reduce the underlying cost of card acceptance.
That does not mean every merchant will automatically receive the full benefit. The interchange fee is only one component of a merchant service fee. Acquirer margin, scheme fees, terminal costs, gateway charges and other service fees may remain unchanged.
This is why the effectiveness of the reform will depend on merchant vigilance and fee transparency.
What the RBA interchange reforms mean
Interchange is a wholesale fee paid by the acquirer to the card issuer. It forms part of the cost that eventually flows into the merchant service fee.
The RBA is lowering selected interchange caps to reduce excessive fee differences between large and small merchants. Large merchants often negotiate strategic rates, while smaller merchants are more likely to pay rates close to the regulatory caps.
New interchange fee caps from 1 October 2026
Card type | Current framework | New framework from 1 October 2026 |
Domestic debit and prepaid | 10 cents or 0.20% cap; 8-cent benchmark | 8 cents or 0.16% cap; 8-cent benchmark retained |
Domestic consumer credit | 0.80% cap; 0.50% weighted-average benchmark | 0.30% cap; benchmark abolished |
Domestic commercial credit | 0.80% cap | 0.80% cap; benchmark abolished |
Foreign-issued cards acquired in Australia | No equivalent RBA cap | 1.0% cap from 1 April 2027 |
The domestic changes are intended to take effect at the same time as the removal of surcharging.
The debit and prepaid cap will fall from 10 cents to 8 cents, or 0.16 per cent on an ad valorem basis. The RBA is retaining the 8-cent benchmark because debit interchange is already relatively competitive and the benchmark helps prevent rates drifting upwards as transaction values change.
The domestic consumer credit cap will fall substantially, from 0.8 per cent to 0.3 per cent. The benchmark will be removed, creating a simpler cap-only framework.
The commercial credit cap will remain at 0.8 per cent, but its benchmark will also be abolished. The RBA’s reasoning is that a significant reduction could strengthen the position of three-party networks such as American Express, which is particularly prominent in commercial cards and is not currently subject to the same interchange regulation.
Foreign-issued cards are a major part of the reform. They represent only around 3 per cent of card transactions in Australia, but approximately 20 per cent of interchange paid. A uniform 1.0 per cent cap will apply from 1 April 2027 to foreign-issued debit, prepaid and credit cards, for both in-person and online transactions.
Who benefits most?
Small merchants
Small businesses are expected to benefit most from the domestic interchange reductions because they tend to pay fees close to current caps.
The reduction should narrow the gap between small merchants and large merchants receiving strategic rates. It should also reduce the extent to which smaller businesses subsidise premium card rewards and lower-cost rates negotiated by larger businesses.
However, merchants should not assume that lower interchange automatically equals lower total payment costs. They will need to check whether their provider passes the savings through in full.
Large merchants
Large businesses are more likely to already receive negotiated rates below the old caps. Their biggest direct benefit may come from the new foreign-issued card cap, particularly where they process significant volumes from international customers.
Large merchants operating on unblended pricing plans should be better positioned to see foreign interchange reductions flow through automatically. Businesses with blended pricing will need to examine how their provider calculates and applies the savings.
Payment providers
Acquirers and payment service providers will face implementation and reporting obligations. Networks must publish aggregate interchange and scheme fee information, simplify scheme fee structures and provide greater justification for fee increases.
Large acquirers with direct merchant relationships will need to publish merchant service fee data. Providers will also be expected to publish measures of interchange pass-through during the first four quarters following the domestic reforms.
From 1 April 2027, merchant statements will contain more detailed information, including distinctions between domestic and foreign-issued cards and between card-present and card-not-present transactions.
What Australian businesses should do now
Merchants have a limited window to prepare for the 1 October deadline.
Review your payment plan. Identify whether you are on a blended, unblended, flat-rate or interchange-plus arrangement.
Benchmark your costs. Compare your effective rate by card type, channel, transaction value and card origin.
Ask your acquirer how savings will be passed through. Request a clear explanation of the new interchange rates and any changes to your merchant service fee.
Remove surcharge logic from checkout. Check terminals, payment links, APIs, invoices, subscriptions and ecommerce checkout rules.
Model pricing changes carefully. If you currently surcharge, assess whether to adjust headline prices, absorb part of the cost or use discounts for preferred payment methods.
Review card routing. Least-cost routing remains important for dual-network debit cards. Ensure your provider’s routing strategy is delivering value rather than simply increasing authorisation complexity.
Monitor Amex and BNPL. Commercial cards, American Express and buy-now, pay-later services may become more strategically important as the market adjusts.
A unified platform can make this review easier by connecting payment acceptance, transaction data, reconciliation and business intelligence. Quantum Payments helps businesses manage online and in-person payments through a modular platform designed for omnichannel operations, with payment orchestration and analytics capabilities that support faster decision-making.
The bigger payments trend
The RBA reforms point to a broader shift in payments regulation: payment costs are moving away from opaque checkout add-ons and towards transparent competition between providers.
Merchants will increasingly need to manage payments as a strategic operating cost, not simply a transaction-processing utility. The strongest businesses will use detailed data to understand their true cost by channel, card type, customer segment and geography.
The next RBA review, expected to consider the broader powers introduced under the amended Payment Systems (Regulation) Act, will examine mobile wallets, three-party networks such as American Express, BNPL services and ecommerce platforms.
That means the 2026 surcharge and interchange reforms are unlikely to be the final word on Australian merchant card payment costs. They are the beginning of a more detailed examination of the entire payments chain.
Frequently asked questions
When does the card surcharge ban start in Australia?
Card surcharging on designated eftpos, Mastercard and Visa debit, prepaid and credit cards is expected to end from 1 October 2026, when the RBA lifts its prohibition on network no-surcharge rules.
Is the surcharge ban a law?
Not directly at this stage. The RBA is enabling card networks to impose no-surcharge rules. If surcharging continues, the RBA could recommend that the Government legislate a formal ban.
What is the new interchange cap for consumer credit cards?
From 1 October 2026, the domestic consumer credit interchange cap will be 0.3 per cent of the transaction value, down from 0.8 per cent. The previous weighted-average benchmark will be abolished.
What is the new debit interchange cap?
The domestic debit and prepaid interchange cap will be 8 cents per transaction or 0.16 per cent, with the 8-cent benchmark retained.
Does the commercial credit interchange cap change?
The commercial credit interchange cap remains 0.8 per cent, but the benchmark will be abolished.
When does the foreign card interchange cap start?
A uniform 1.0 per cent cap on foreign-issued card transactions acquired in Australia begins on 1 April 2027.
Will merchants automatically receive the interchange savings?
Not necessarily. Interchange is one part of the total merchant service fee. Merchants should review statements, ask providers about pass-through and compare competing payment plans.
Authoritative sources
Ready for the next phase of Australian payments? Explore Quantum Payments’ platform, review point-of-sale options or speak with our team about your payment strategy.
SEO metadata
SEO title: Australian Card Surcharge Ban and Interchange Reforms 2026
Meta description: Discover what the RBA’s 2026 surcharge reforms and interchange fee caps mean for Australian merchants, including key dates, savings and practical preparation steps.
Suggested URL slug:australian-card-surcharge-ban-rba-interchange-reforms-2026
Primary keyword: card surcharge ban Australia
Secondary keywords: RBA interchange reforms, merchant card payment costs, surcharge rules 2026, interchange fee caps Australia