Merchants in Australia can no longer add a surcharge when a customer pays with an eftpos, Mastercard or Visa debit, prepaid or credit card. The change took effect on October 1, 2026, along with lower caps set by the Reserve Bank of Australia (RBA) on interchange for domestic-issued cards: 0.3% of the transaction value for consumer credit cards, and 8 cents or 0.16% for debit and prepaid cards. The RBA estimates that issuers will lose about A$660 million a year in interchange revenue, assuming no other changes in behavior.
The RBA’s Payments System Board announced the package on March 31. The central bank did not ban surcharges itself: it lifted its prohibition on “no-surcharge” rules, and eftpos, Mastercard and Visa each introduced such rules from October 1. The networks, not the RBA, enforce them. American Express AMEX and UnionPay, which the RBA does not formally regulate, have also decided to remove surcharging, the RBA says. PayPal’s rule is due to take effect on October 5.
Consumer credit interchange falls to 0.3%
Interchange is the fee the merchant’s bank pays the cardholder’s bank on each card payment, and it makes up part of the merchant service fee. The RBA set the new caps using issuers’ eligible costs as a reference point, which it puts at about 0.20% of the transaction value for consumer credit cards, and removed the weighted-average benchmark for credit cards, which are now subject to caps alone.
| Card | Before | After |
|---|---|---|
| Consumer credit, issued in Australia | 0.8%; 0.5% weighted-average benchmark | 0.3%; benchmark removed |
| Commercial credit, issued in Australia | 0.8%; 0.5% weighted-average benchmark | 0.8%; benchmark removed |
| Debit and prepaid, issued in Australia | 10 cents or 0.2%; 8-cent benchmark | 8 cents or 0.16%; 8-cent benchmark |
| Issued abroad, used in Australia | No cap | 1.0% from April 1, 2027 |
For debit and prepaid cards, the cap is 8 cents per transaction, or 0.16% where interchange is set as a percentage, and the weighted-average benchmark stays at 8 cents. Small merchants stand to gain the most, the RBA says, because they tend to pay interchange close to the caps. Its estimate of A$910 million a year in lower costs for merchants includes the cap on foreign-issued cards, which does not apply until April 2027. Bloomberg notes that the reform brings Australia closer to the UK and the European Economic Area, where surcharges on most consumer cards are banned.
Banks pare back credit card rewards
The bulk of the revenue loss falls on consumer credit card issuers, which have told the RBA they could respond by cutting rewards points, shortening interest-free periods or raising interest rates. Major Australian banks are raising credit card fees, reducing rewards and trimming travel insurance, ABC News reported on September 28. Commonwealth Bank closed its CommBank Awards program and moves the points into its Yello scheme from October 1. “That was one of the things that the Reserve Bank called out as not only expecting to see, but basically wanting to see,” Australian Banking Association chief executive Simon Birmingham told the ABC.
Merchants weigh price rises, discounts and minimums
Merchants that surcharged must now absorb the cost or build it into their prices. Ross Surace, co-owner of the Lennox Street Deli in Melbourne, planned to add 50 cents to a coffee and A$1 to a panini to replace his 1.9% surcharge, Bloomberg reported. On the acquiring side, Commonwealth Bank cut its flat-rate merchant service fee for in-store payments from 1.1% to 0.99% per transaction from October 1. “The price that the consumer sees when they’re shopping for the good ends up being the price they pay when they tap their card,” Ellis Connolly, the RBA’s head of payments policy, told Bloomberg.
Fee data due October 30, foreign-card cap in April
Card networks must publish quarterly data on interchange, scheme fees and rebates. Acquirers that process more than A$10 billion a year in card transactions must do the same for their merchant service fees. The first releases are due by October 30 and cover July through September. From April 1, 2027, interchange on foreign-issued cards will be capped at 1.0%, and merchant statements must detail card costs.