No More Card Surcharges from October 1st: What Australian Business Owners Need to Know

If your social feeds or news alerts have been exploding with talk about card processing fees lately, you aren’t imagining it.

The Reserve Bank of Australia (RBA) has dropped a massive announcement: starting 1 October 2026, merchants will no longer be allowed to pass credit or debit card surcharges on to customers at the checkout.

For the 16% of Australian small businesses that rely on a quick 1.5% or 2% tap-and-go surcharge to cover their merchant fees, this feels like an unexpected hit to the bottom line. But before you stress out, let’s break down exactly what is changing, why it’s happening, and the silver lining that will help your cash flow.

What Does the Ban Actually Mean?

Right now, if a customer pays with a card, you can add a small fee to match your cost of accepting that card. From October 1st, that stops for the vast majority of transactions.

• The Ban Covers: All debit, credit, and prepaid cards on the EFTPOS, Visa, and Mastercard networks (whether transactions happen in-person or online).
• The Penalty for Renaming: You cannot bypass the ban by simply renaming the charge to a “booking fee”, “admin fee”, or “service fee”. The ACCC treats disguised card surcharges as misleading conduct, which carries heavy fines.
• The Exception: The ban currently does not apply to American Express (Amex), PayPal, or Buy Now Pay Later (BNPL) services like Afterpay, provided your surcharge doesn’t exceed your true cost of acceptance.

The Silver Lining: Merchant Fees Are Dropping Too

The RBA isn’t just taking away your right to surcharge; they are also slashing the hidden wholesale fees that banks and card issuers charge you.

To help businesses absorb the change, the RBA is capping interchange fees, the largest component of your merchant processing costs.

For consumer credit cards, maximum interchange fees will plummet from 0.8% down to 0.3%. International card caps will follow a few months later, in April 2027.

Because of these caps, the actual cost of accepting Visa and Mastercard is about to become significantly cheaper, especially for small businesses. The government estimates this package will save Australian small businesses roughly $910 million per year in running costs.

3 Steps to Prepare Your Business Before October 1st

The fees aren’t completely disappearing; they are shifting from an external customer charge to a standard, internal expense (like rent or software). Here is how to protect your profit margins before the deadline:

1. Audit Your True Merchant Costs

Dig out your latest merchant statements from Square, Tyro, Westpac, or whichever payment provider you use. Look at your Merchant Service Fee (MSF) to see exactly what percentage you are being charged per transaction.

2. Enable Least-Cost Routing (LCR)

Ask your payment provider if they have enabled “least-cost routing” (also called merchant choice routing) on your terminal. This automatically routes debit card taps through the cheapest available network (often EFTPOS rather than Visa/Mastercard), reducing your transaction costs even further.

3. Review and Re-Bake Your Pricing

Since you can no longer add the fee at checkout, you need to decide whether to absorb the smaller fee as a cost of doing business or marginally adjust your base sticker prices to account for it.

How We “Free Your Mind” Through This Shift

You don’t have to guess how this will affect your margins. At Alexilum, we help you navigate these regulatory hurdles without the headache:

• Data Analysis: We can look into your Xero or MYOB file, run a report on your historical transaction volumes, and calculate exactly what your new monthly merchant expenses will look like.
• Pricing Strategy: We help you understand your clean data so you can make informed decisions about updating your baseline pricing model before October.
• Software Updates: We’ll ensure your point-of-sale (POS) integrations and invoicing workflows are up to date and compliant well before the October 1st deadline.

Want to figure out exactly how the upcoming surcharge ban impacts your business? Reach out to the team at Alexilum today, and let’s get your accounts prepped, compliant, and stress-free.

Ready to audit your merchant fees before October 1st? Request a Call Back Now