Card Surcharge Ban Australia October 2026

From 1 October 2026, Australian businesses will be banned from adding surcharges to EFTPOS, Mastercard, and Visa card payments. The ban is estimated to save consumers $1.6 billion annually. In parallel, interchange fee caps are being reduced from 0.8% to 0.3%, delivering an estimated $910 million in annual savings for businesses. Together, these reforms represent the most significant overhaul of Australia's payment system since the introduction of the GST.

Data in this article is sourced from the RBA, Treasury, and the Finance Directory as at 5 July 2026.

What is being banned

From 1 October 2026, merchants are prohibited from adding surcharges to payments made using:

EFTPOS (domestic debit network)
Mastercard (credit and debit)
Visa (credit and debit)

The ban extends to in-store, online, and phone payments. It applies to all businesses regardless of size — from the local cafe to large retailers and government agencies.

What is not banned

American Express and Diners Club surcharges: These card schemes are not included in the ban, though the government has signalled it will monitor merchant behaviour
BNPL surcharges: Afterpay, Zip, and other BNPL providers are not covered
Payment processing fees: Merchants still pay fees to their bank or payment processor — the ban prevents them from passing those costs directly to consumers as a surcharge

Why the ban was introduced

The RBA's Payments System Board has been reviewing surcharging practices for several years. The key drivers of the ban were:

Excessive surcharging: Many merchants were charging more than their actual cost of acceptance, effectively profiting from card payments
Consumer harm: Consumers were being charged fees that were not transparent and could not be avoided without using cash — which is increasingly unavailable
Declining cash usage: As Australia moves towards a cashless society, card surcharges function as a hidden tax on everyday transactions
International alignment: The European Union banned card surcharges in 2018, and the UK followed shortly after. Australia was increasingly an outlier among advanced economies.

Interchange fee reductions

In parallel with the surcharge ban, the RBA is reducing interchange fee caps:

Before: Interchange fees capped at 0.8% of transaction value
After: Interchange fees capped at 0.3% of transaction value
Estimated business savings: $910 million annually

Interchange fees are paid by the merchant's bank (the acquirer) to the cardholder's bank (the issuer) on every card transaction. They are a component of the merchant service fee — the total cost a business pays to accept card payments.

By reducing interchange fee caps, the RBA is lowering the underlying cost of card acceptance. This means the surcharge ban is not simply shifting costs from consumers to businesses — it is reducing the total cost in the system, with the savings shared between businesses (lower acceptance costs) and consumers (no surcharges).

Impact on consumers

The estimated $1.6 billion in annual consumer savings breaks down across everyday spending:

Cafe and restaurant purchases: A $4.50 coffee with a 1.5% surcharge costs an extra $0.07. Over a year of daily coffee purchases, that is $25.55 in surcharges eliminated.
Supermarket shopping: A $200 weekly grocery shop with a 0.5% surcharge costs an extra $1.00. Over a year, that is $52.00 saved.
Online purchases: Many online retailers charge 1-3% for card payments. A $500 purchase with a 2% surcharge saves $10.00 from October 2026.
Utilities and bills: Council rates, electricity bills, and insurance premiums frequently attract card surcharges of 0.5-1.5%. On a $2,000 annual rates bill, a 1% surcharge saving is $20.00.

For an average household spending $50,000 per year on goods and services, eliminating card surcharges of 0.5-1.5% saves $250-$750 annually.

Impact on businesses

Small businesses

Small businesses have been the most vocal opponents of the surcharge ban, arguing that they cannot absorb the cost of card acceptance without passing it on. However, the concurrent interchange fee reduction from 0.8% to 0.3% is designed to address this concern.

For a small business processing $500,000 in card transactions annually:

Current interchange cost at 0.8%: $4,000
New interchange cost at 0.3%: $1,500
Annual saving: $2,500

Most businesses will find that the interchange fee reduction offsets or exceeds the revenue they were generating from surcharging. Businesses charging surcharges above their actual cost of acceptance — which, according to the RBA, was widespread — will face a revenue reduction.

Large businesses

Large businesses already negotiate merchant service fees well below the interchange cap and, in many cases, do not surcharge. The interchange fee reduction should flow through to lower acceptance costs, and the surcharge ban removes a competitive distortion that favoured businesses that surcharge over those that absorb the cost.

Payment processors

Payment processors and merchant acquirers will need to update their systems to comply with the ban and pass through the interchange fee reduction. The RBA expects full compliance from 1 October 2026, and has indicated it will monitor and enforce the ban through the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC).

Cards not covered

The ban applies specifically to EFTPOS, Mastercard, and Visa. American Express, Diners Club, and BNPL services are not covered, though the government has indicated it will monitor whether surcharging migrates to these payment methods and may extend the ban if necessary.

What this means

If a merchant currently surcharges Amex but not Visa/Mastercard, they can continue to do so after 1 October 2026
If a merchant starts surcharging Amex after the ban to compensate for lost Visa/Mastercard surcharge revenue, the government may respond with further regulation
BNPL remains outside the surcharge framework entirely, as it is a credit product rather than a payment method

FAQ

When exactly does the card surcharge ban take effect?

1 October 2026. From this date, businesses cannot add surcharges to EFTPOS, Mastercard, or Visa payments.

Does the ban apply to all businesses?

Yes. All businesses, regardless of size or industry, are covered. From the local corner shop to major retailers and government agencies, adding a surcharge to EFTPOS, Mastercard, or Visa transactions is prohibited.

Can I still use cash to avoid card fees?

Yes, cash remains legal tender. However, the surcharge ban means you will not pay extra for using a card at most merchants from October 2026, reducing the incentive to use cash.

What if a business ignores the ban?

The ACCC and ASIC will enforce the ban. Businesses that continue to surcharge after 1 October 2026 face penalties under the Competition and Consumer Act and the ASIC Act. Consumers can report non-compliant businesses to the ACCC.

Will businesses just increase their prices to compensate?

Businesses can set their prices at whatever level they choose. However, the concurrent interchange fee reduction from 0.8% to 0.3% means the cost of accepting card payments is being reduced at the same time surcharges are banned. For most businesses, the two changes should broadly offset each other.