Updated: June 2026
The Reserve Bank of Australia (RBA) has confirmed one of the most significant reforms to Australia’s payments system – a ban on card surcharges for eftpos, Visa and Mastercard transactions, taking effect on 1 October 2026. With the deadline now less than four months away, this article explains the final regulatory position, enforcement framework, and what every business must do before October arrives.
If your business currently applies surcharges to recover payment processing costs, this change is not just operational — it has pricing, contractual and compliance implications that require attention now.
Key takeaways
- Card surcharges on eftpos, Visa and Mastercard are banned from 1 October 2026
- The RBA’s Payments System Board has already directed acquirers and card terminal providers to remove surcharging functionality from that date
- Enforcement is contractual: card networks — not the ACCC — will enforce the ban through merchant agreements
- The ACCC continues to enforce excessive surcharging rules in the interim period
- Businesses must absorb payment processing costs or build them into base pricing
- Lower interchange fee caps will reduce merchant costs — but whether savings flow through depends on your provider contract
- Credit card rewards programs are likely to be cut back in response to reduced interchange revenue
- American Express, BNPL services and Diners Club are not covered by the ban
- A second tranche of reforms — including caps on foreign card fees — commences 1 April 2027
What is the RBA card surcharge ban?
The RBA’s reform removes the right for businesses to add surcharges to most common card payments. On 31 March 2026, the RBA’s Payments System Board released its final Conclusions Paper following an 18-month consultation. The decision is unequivocal: from 1 October 2026, surcharges on the following payment types will be prohibited:
- eftpos (debit and prepaid)
- Visa (debit, prepaid and credit)
- Mastercard (debit, prepaid and credit)
Importantly, the ban does not extend to American Express, Diners Club, PayPal or Buy Now Pay Later (BNPL) services. Those payment methods remain subject to separate, existing rules.
How the ban will be enforced – a critical distinction
A key development since the RBA’s announcement is clarity on the enforcement mechanism — and it operates differently to what many businesses may assume.
Contractual enforcement by card networks, not the ACCC. The ban will be implemented through the rules of each card network (Visa, Mastercard, eftpos). From 1 October 2026, those networks can prohibit merchants from applying surcharges through their merchant agreements with banks and payment processors. This means the ACCC will not be the primary enforcement body for the surcharge ban itself.
Terminal functionality removed at the source. The Payments System Board has already directed acquirers — including card terminal providers — to remove surcharging functionality from 1 October 2026. This is not aspirational; the direction has been issued to the industry.
ACCC role in the interim. Until 1 October 2026, current surcharging rules — including the cost-matching framework — remain in full force. The ACCC continues to investigate and take enforcement action on excessive surcharges now. Consumers can still report non-compliant surcharges to the ACCC through the transition period.
Booking fees and similar charges. The ban captures surcharges by any name. A mandatory ‘booking fee’ that applies only to card payments is a card surcharge by another name and will be prohibited. A genuine booking fee that applies equally across all payment methods is permissible — but must be included in the upfront advertised price, not added at checkout.
Why the RBA is introducing this reform
The RBA has concluded that the current surcharging framework, introduced over two decades ago to incentivise more efficient payment choices, is no longer fit for purpose. Key concerns driving the reform include:
- Only 13% of consumers report always being told about surcharges at the point of purchase
- 76% of consumers surveyed by the RBA want surcharging to stop
- An estimated 16% of Australian merchants were surcharging in 2024/25, generating approximately $1.8 billion in annual surcharges
- Many businesses apply flat or excessive surcharges that do not reflect actual processing costs
- Cash usage has fallen from ~70% of transactions in 2007 to approximately 15% today, making the original policy rationale obsolete
The RBA estimates the reforms will eliminate approximately $1.6 billion in annual surcharges paid by consumers, while reducing total merchant payment costs by around $910 million per year through lower interchange fee caps.
The full reform package
The ban on surcharges is one part of a broader package of reforms. Understanding the complete picture is important for pricing and commercial planning.
1. Surcharge ban (1 October 2026)
No surcharges on eftpos, Visa and Mastercard debit, prepaid and credit cards. Applies to all in-store and online transactions.
2. Reduced interchange fee caps (1 October 2026)
Interchange fees — paid by merchants to card issuers — will be reduced under new caps:
- Consumer credit cards: cap reduced from 0.8% to 0.3%
- Debit cards: cap reduced from 0.2% to 0.16% (or from 10 cents to 8 cents when charged as a fixed amount)
- Business/commercial credit cards: cap unchanged at 0.8%
Whether these savings flow through to your business depends heavily on your payment provider contract — reviewing those contracts now is strongly recommended.
3. Increased transparency (1 October 2026)
Card networks and payment service providers will be required to publish clearer, standardised fee information making it easier for businesses to compare costs and hold providers accountable.. The RBA will require payment service providers to report wholesale fees separately from other fees in merchant statements.
4. Foreign card fee caps (1 April 2027)
A second tranche of reforms commences six months later, introducing a 1% cap on interchange fees for foreign-issued cards. This may benefit Australian businesses selling to overseas customers online or to inbound tourists making in-store purchases.
The downstream impact: credit card rewards programs
One significant and underappreciated consequence of the reform is its effect on credit card rewards programs – an issue directly relevant to businesses whose employees or clients use rewards or corporate cards.
Interchange fees are one of the primary revenue streams that banks use to fund rewards points, frequent flyer benefits, airport lounge access, travel insurance and sign-up bonuses. With the consumer credit card interchange cap dropping from 0.8% to 0.3%, the RBA acknowledges this will significantly reduce the revenue available to fund those programs.
Major banks have publicly indicated they will respond to lower interchange by reducing rewards, increasing card fees or interest rates, or both. The RBA is aware of this outcome and has accepted it as an acceptable trade-off.
Historical precedent bears this out: when interchange fee caps were last reduced on 1 July 2017, most Australian banks immediately cut points-earning rates on credit cards. Businesses and individuals who rely on rewards cards for corporate expenditure, travel or cash-back should review their current card arrangements ahead of October 2026.
What this means for your business
For businesses in retail, hospitality and services, this reform requires a fundamental shift in pricing strategy. The core options are:
Absorbing payment costs
Merchant service fees become a cost of doing business, like rent or utilities. For businesses with lower margins, this requires careful margin analysis — factoring in what lower interchange caps may save under a renegotiated or new provider agreement.
Repricing goods and services
Businesses may adjust pricing across their product or service range to reflect the absorbed cost. This requires consideration of margin impacts, customer pricing sensitivity and competitive dynamics. Any mandatory fee applicable to all payment types must be included in the upfront advertised price.
Reviewing POS and payment arrangements
Operational steps businesses should take before 1 October 2026:
- Review payment gateway and merchant service provider agreements, including whether interchange savings flow through
- Update point-of-sale (POS) systems to remove surcharge functionality (acquirers are already being directed to do this)
- Renegotiate payment provider contracts in light of lower interchange caps
- Review pricing displays, menus and e-commerce checkout flows for compliance with upfront pricing rules
Franchisees and Franchisors:
If you operate within a franchise network, the surcharge ban has additional compliance implications for your franchise agreements, disclosure documents and operations manuals. > Read our dedicated article: RBA surcharge ban: what franchise networks need to do now
When should you seek legal advice?
You should consider seeking advice promptly if:
- Your business currently applies card surcharges to customers
- You are reviewing pricing structures ahead of October 2026
- You are uncertain whether your payment provider will pass on interchange savings
- Your contracts or commercial arrangements reference surcharging or payment processing costs
How can MST Lawyers help?
MST Lawyers regularly advises businesses on regulatory changes affecting operations, pricing and compliance. We can assist with:
- Assessing payment provider agreements and renegotiation strategy
- Advising on pricing and commercial strategy changes from a legal perspective
- Reviewing contracts and commercial arrangements for surcharge-related references
- Ensuring your business is prepared for the 1 October 2026 deadline
Frequently asked questions
When does the card surcharge ban start?
1 October 2026. A second tranche of reforms, including foreign card fee caps, commences 1 April 2027.
Is this confirmed or still subject to legislation?
The RBA’s Payments System Board issued its final Conclusions Paper on 31 March 2026 and has already directed acquirers to remove surcharging functionality. The changes are proceeding. Legal advice should be sought on your specific circumstances.
Who enforces the ban?
Primarily the card networks (Visa, Mastercard, eftpos), contractually through merchant agreements. The ACCC continues to enforce excessive surcharging rules in the interim period.
Can businesses still recover card payment costs?
Yes — but not through surcharges. Businesses must incorporate payment processing costs into their base pricing.
Does this apply to American Express or BNPL?
No. The ban applies to eftpos, Visa and Mastercard. American Express, Diners Club, PayPal and BNPL services are not covered.
Can I offer a cash discount instead?
Yes. The ban applies to surcharges — it does not prohibit discounts for cash or bank transfer payments.
What happens to rewards credit cards?
Banks are expected to reduce rewards points earn rates and potentially increase card fees in response to lower interchange revenues. Historical precedent from the 2017 interchange reduction suggests this is likely to occur around or after October 2026.
Reviewed by Raynia Theodore, Principal, MST Lawyers.
If would like to understand how the RBA surcharge ban affects your business, our commercial lawyers can help you prepare with confidence.
Phone Raynia Theodore or Louise Wolf on +61 3 8540 0200 or contact us
This article is intended to provide general information only and does not constitute legal advice. The legal and regulatory position is subject to ongoing legislative and regulatory developments. You should obtain specific legal advice relevant to your circumstances before acting on any of the information contained in this article. MST Legal Pty Ltd trading as MST Lawyers ABN 49 417 397 084. Liability limited by a scheme approved under Professional Standards Legislation.
