Australia bans card payment surcharges from October 1: Here's What the RBA changes mean

Australia is eliminating card payment surcharges on debit and credit cards, altering retail transactions nationwide as part of sweeping Reserve Bank of Australia reforms. Under the new rules, the price displayed on a shelf or menu will be the exact total paid by the shopper, removing unexpected checkout additions that typically ranged from one to two percent. Networks including eftpos, Mastercard, Visa, and American Express are included in the shift, alongside aligned networks such as JCB and UnionPay, according to reports from The News and CommBank.

The regulatory overhaul follows an extensive review by the central bank, which concluded that the existing surcharging framework was no longer working as intended. According to Abc reporting, RBA Governor Michele Bullock noted that surcharges had become harder for everyday shoppers to avoid. Public surveys indicated widespread frustration with checkout fees, leading the central bank to implement the changes to restore pricing transparency. Additional oversight requires networks such as eftpos, Mastercard, and Visa to publish their merchant fees so businesses can compare rates more easily.

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For merchants, the transition requires operational adjustments. CommBank notes that approximately sixteen per cent of businesses collected card surcharges prior to the federal announcement. To assist merchants managing payment acceptance costs, the bank announced it is reducing its Merchant Service Fee for in-store transactions on simple rate flat pricing to 0.99 per cent. For businesses on interchange-plus pricing models, merchant fees will automatically adjust to reflect the revised interchange caps.

The financial impact of the reforms extends across the banking and retail sectors. Finder research highlighted by Nine indicates that domestic credit and debit card purchases reached hundreds of billions of dollars prior to the reform. With banks facing millions in reduced annual revenue from lower interchange fees, major lenders have restructured consumer credit cards. Changes include higher annual fees, reduced reward earn rates, and shortened interest-free periods.

Industry bodies have expressed mixed reactions to the transition. Meanwhile, small business advocates cautioned that businesses operating on tight profit margins face difficult choices between absorbing the costs or adjusting baseline menu prices, as noted by The Conversation.

Consumers accustomed to chasing reward points must also navigate a shifting landscape. The Sydney Morning Herald outlines how major issuers have pared back sign-up bonus offers, raised minimum spend hurdles, and trimmed complimentary travel insurance protections. These adjustments reflect how financial institutions are recovering lost revenue streams previously funded by interchange fees.

The transition arrives alongside broader shifts in consumer habits. Experts suggest that removing card surcharges may accelerate the ongoing decline of physical currency, as shoppers who previously used cash specifically to avoid checkout fees find fewer financial incentives to do so. Further regulatory scrutiny is anticipated as consultations regarding buy-now-pay-later providers progress, with additional foreign-issued card interchange caps scheduled to take effect in April 2027.

Ahead of the October 1 deadline, the Reserve Bank of Australia conducted an eighteen-month review of the payment system involving numerous submissions and stakeholder meetings.