The RBA has announced a major reform to Australia’s payments system, confirming that card payment surcharges on eftpos, Mastercard and Visa debit, prepaid and credit cards will be banned from 1 October 2026. The change forms part of the RBA’s Review of Merchant Card Payment Costs and Surcharging and represents the most significant overhaul of card payment rules in more than 20 years.
The reforms are designed to simplify payments, improve price transparency, and reduce overall payment costs across the economy. However, their impact will be felt differently by businesses and consumers.
What Has the RBA Announced?
Under the RBA’s final Conclusions Paper:
- Businesses will no longer be permitted to apply card surcharges on eftpos, Mastercard and Visa transactions from 1 October 2026;
- Interchange fee caps will be reduced, lowering the fees paid by merchants to card issuers, particularly benefiting small businesses;
- Caps will be introduced on foreign-issued card interchange fees from April 2027; and
- Greater transparency requirements will apply, requiring card schemes and large acquirers to publish clearer information about the fees they charge.
The RBA concluded that surcharging is ‘no longer achieving its intended purpose’ in a predominantly cashless economy, noting that consumers increasingly struggle to avoid surcharges and often encounter poor disclosure at the point of sale.
Please note, the reforms do not currently apply to American Express, buy-now-pay-later services, or mobile wallet arrangements. The RBA has indicated these payment methods will be considered in a separate public consultation commencing in mid-2026.
The Business Perspective
Loss of surcharging as a cost-recovery tool
For businesses that currently surcharge, the most immediate impact is the loss of a direct mechanism to pass card acceptance costs on to customers. From October 2026, these costs will need to be absorbed or incorporated into headline pricing.
Industry groups, particularly in hospitality and retail, have expressed concern that the change reduces pricing flexibility at a time when operating costs remain elevated, including wages, rent, energy and compliance costs.
Lower interchange fees
To address industry group concerns, the RBA has paired the surcharge ban with lower interchange fee caps, which are expected to reduce merchant payment costs by around $910 million per year, with proportionately larger benefits for small businesses that typically pay closer to the current caps.
The RBA has emphasised that removing surcharges without lowering fees would simply shift costs rather than reduce them, which is why fee regulation and transparency reforms are central to the package.
Increased transparency and bargaining power
From a practical standpoint, the new transparency requirements may prove significant for businesses over time. Card schemes and large acquirers will be required to publish clearer, comparable fee information, enabling businesses to benchmark providers and negotiate better payment arrangements.
The Consumer Perspective
No more ‘surprise’ surcharges at the checkout
For consumers, the headline change is simple – the advertised price should be the price paid, regardless of whether payment is made by debit or credit card. The RBA estimates Australians currently pay around $1.6 billion per year in card surcharges, and surveys indicate that three-quarters of consumers want surcharging to end.
The RBA and Treasury have both framed the reform as a cost-of-living measure, reducing frustration and uncertainty at the checkout and improving confidence in advertised prices.
Will consumers actually save money?
While surcharges will disappear, there is no guarantee that overall prices will fall. Some businesses may respond by embedding card costs into menu prices or shelf prices, particularly in sectors with tight margins.
The RBA has acknowledged this risk but maintains that lower interchange fees and increased competition among payment providers should still leave consumers better off overall, even if savings are not always visible on individual transactions.
Possible flow-on effects
There may also be indirect impacts for consumers, particularly through changes to credit card rewards programs. Commentators and the RBA have noted that reduced interchange revenue for banks could lead to adjustments in points programs, annual fees or interest-free periods as costs are rebalanced elsewhere in the system.
Looking Ahead
With the surcharge ban taking effect from 1 October 2026, businesses have a transition period to review pricing models, payment provider arrangements and customer communications. For consumers, the reforms signal a shift toward simpler, more transparent pricing in an increasingly cashless economy.
While debate continues about how costs will ultimately be shared, the RBA’s reforms mark a clear policy decision – payment costs should be embedded, visible and easier to compare – not added at the checkout.
For businesses, the lead‑up to October 2026 is an opportunity to get ahead of change. Our Moore Australia team can help you review pricing and payment arrangements and understand how the RBA reforms may affect your business. Contact us today.
