Australia Bans Card Surcharges From October 1: What Shoppers and Businesses Face

Australia’s Reserve Bank has banned card surcharges from October 1, 2026, ending a practice that has cost businesses billions since 2003. Retailers can no longer charge customers 0.43% to 1.36% per card transaction. The change forces businesses to absorb costs or raise prices for all shoppers, while banks are already hiking fees to recover lost revenue.

What the ban covers and what it does not

From October 1, businesses cannot add a surcharge when customers pay with debit, credit, EFTPOS, or prepaid cards. American Express is voluntarily joining the ban. The ban applies only to merchant surcharges, not ATM fees or bank card annual fees. The Reserve Bank made this decision after a lengthy review, removing surcharging from all designated card networks: EFTPOS, Mastercard, and Visa.

How payment costs shift to consumers

Card processing costs do not disappear. Currently, businesses pay 0.43% for EFTPOS debit, about 1% for Visa or Mastercard credit, and up to 1.36% for American Express. Without surcharges, retailers face two choices: absorb the cost or build it into higher prices for all customers, including cash payers. Banks are already raising card fees. BankSA, a Westpac subsidiary, has increased some credit card fees by AUD 75 per year on top of existing charges, pushing customers toward AUD 7 monthly cards or debit alternatives.

Who pays the biggest price

Cash users will likely see the largest impact. Cash made up 15% of consumer payments in 2025 but accounts for almost one in four purchases under AUD 10. These shoppers currently avoid surcharges but will now pay higher base prices if retailers pass costs on. Debit cards dominate Australian payments at 49% of all transactions in 2025, followed by credit cards at 23%. The Australian Restaurant and Cafe Association called this one of the largest changes in payments in Australia’s history, noting many small businesses are unprepared.

The shift to debit and payment strategy changes

Experts recommend using debit cards for everyday spending to avoid rising credit card fees. Debit cards spend your own money with no interest or debt risk. Credit cards remain useful for emergencies, hotel and rental-car guarantees, and travel insurance, but annual fees are climbing. For overseas travel, alternatives like Wise cards are worth investigating. The change reflects a payment landscape transformed since 2003, when cash accounted for 69% of transactions and cards were used for only one in four payments.

Final Thoughts

The October 1 surcharge ban forces Australian retailers to choose between absorbing costs or raising prices. Shoppers paying cash face the biggest hit, while banks are already hiking fees to recover revenue. Debit cards emerge as the smarter choice for everyday purchases.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.