Australia axes card surcharges in payments overhaul

Beginning Oct. 1, 2026, Australian businesses will no longer be able to surcharge consumers who pay using a credit, debit or prepaid debit card under a package of reforms just published by the Reserve Bank of Australia. Additional reforms include the lowering of interchange fees paid by Australian businesses to 30 basis points (0.30 percent) and increasing transparency in the fees charged by the card networks and payment services providers.

Surcharging was introduced in Australia in the early 2000s to encourage consumers to use lower-cost payment methods. But the RBA said they have outlived their usefulness, as card payments now dominate transactions and surcharges are applied at flat rates regardless of underlying costs. "Surcharging no longer works as intended," said RBA Governor Michele Bullock.

"Removing surcharging would make card payments simpler, more transparent and increase competition among payment service providers," RBA said in a press release. "Removing surcharging also aligns with the preference of most consumers for payment costs to be incorporated into advertised prices."

The changes are expected to lower what it costs businesses to accept domestic or overseas card payments, according to the RBA. "Small businesses should benefit the most because they tend to pay fees closer to the existing caps."

Estimates are that consumers will save $1.2 billion (Australian dollars) a year through the elimination of surcharges, and merchants will save an equal amount through the lowering of interchange caps. That works out to just over $1.6 billion in American dollars in combined savings under current exchange rates.

"Improving transparency will enhance competition between players within the payments chain, put downward pressure on card payment costs and make it easier for businesses to shop around for a better deal," RBA stated.

The RBA isn't done shaking things up in the payments space either. Plans are underway to assess public interest via "public consultation" in additional changes in retail payments in mid-2026. These include mobile wallets, three-party card networks (notably American Express), buy now pay later schemes, and ecommerce platforms.

While most of the changes just announced take effect on Oct. 1, some will come into effect in April 2027 "to ensure the payments industry has sufficient time to implement these more complex changes," the RBA explained.

#h2At least a year in the making and more to come The changes closely mirror policy changes laid out in a consultation paper published in 2025 by the Payments System Board, an entity within the RBA charged with regulating payment systems.

That paper concluded the surcharging framework was outdated. The framework required the card networks to eliminate no surcharge rules, with the intent of educating consumers on the cost of processing payments and encouraging them to choose lower-cost methods.

"However, the framework has become less effective due to a decline in consumers' cash use, the prevalence of single-rate payment plans among merchants and the difficulty of enforcing the surcharging rule," the PSB explained.

Australian bankers not happy

Simon Birmingham, CEO of the Australian Banking Association, in an interview with Sky News, said there are reforms the Australian banks would like to see particularly with regard to the way non-Australian players participating in the market get regulated, which the RBA has indicated it plans to do.

"Today's decision makes it more urgent for the Reserve Bank to do that review, capturing your Amex, and those foreign multinationals faster, sooner, comprehensively. So, we've got a fair system in the future, not one that is only regulating the Australian part and not dealing with the international part," Birmingham insisted.

"Australia's banks spent more than $2 billion building the infrastructure that is our payment system, and they fund that as well as more than $2 billion a year in investment in fighting financial crime and other things out of things like interchange," Birmingham told the Sky News interviewer. "And it's not being paid by your Apple's or your Amex's, and those who are taking and will now continue to take an even greater share of the payment system, because they're untouched by [the changes], whereas Australian banks find that they are taking a big cut out of it."

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