Before card surcharges were switched off on 1 October, consumers were footing an estimated $1.6 billion of the $1.8 billion paid in surcharges each year — a figure that helps explain the Reserve Bank's case for change.

Tapping a card at the café counter and seeing an extra card surcharge added to the bill had become a familiar part of Australian life. As of 1 October 2026, surcharges on eftpos, Mastercard and Visa debit and credit cards are no longer allowed, and American Express credit card surcharging has ended on the same date, even though Amex is not formally regulated by the RBA.

Behind the change sits a striking estimate from the Reserve Bank's review of merchant card payment costs and surcharging. Of the $1.8 billion in card surcharges paid each year, consumers were paying an estimated $1.6 billion. On simple subtraction, that leaves around $200 million outside the consumer estimate. Put another way, close to nine dollars in every ten of surcharges came out of the pockets of consumers.

What the $1.6 billion represents

A card surcharge is a fee added at the checkout on top of the listed price when a customer pays by card. In principle, it lets merchants recover the cost of accepting card payments. The RBA concluded that the system had drifted from that purpose, saying "surcharging no longer works as intended".

The $1.6 billion figure helps explain why. It measures money paid by shoppers specifically in surcharges — an explicit, line-item charge on top of prices. Only a minority of businesses applied surcharges: the RBA found that 16 per cent of Australian businesses surcharged. Most did not — 85 per cent of small merchants and 89 per cent of large merchants did not surcharge.

So while surcharging was concentrated among a relatively small group of businesses, the total paid by consumers was substantial. That concentration also means the burden would not have been spread evenly. Shoppers who regularly paid by card at businesses that surcharged would have contributed more of that $1.6 billion, while those who mostly shopped where no surcharge applied would have paid little or none of it.

How the review reached its decision

The review was extensive. It began in October 2024 and drew more than 260 written submissions and around 150 meetings, according to the RBA's summary of the process.

Its conclusions went beyond ending surcharges. The RBA also changed the caps on interchange fees — the fees that flow between banks when a card is used — from 1 October 2026:

  • Consumer credit cards: capped at 0.3 per cent, with the weighted-average benchmark removed.
  • Commercial credit cards: unchanged at 0.8 per cent, with the benchmark removed.
  • Debit and prepaid cards: 8 cents plus 0.16 per cent per transaction, with the weighted-average benchmark staying at 8 cents.
  • Foreign-issued cards: a 1.0 per cent cap from 1 April 2027.

The RBA estimated that the changes would reduce card issuers' revenue by around $660 million a year, assuming no change in behaviour, and that payment service providers would face implementation costs of around $25 million across the industry. It expects small merchants — most of which do not have access to special strategic rates — to gain the most.

Will shoppers actually pay less overall?

This is where the $1.6 billion needs careful reading. Ending surcharges removes the separate line on the bill, but it does not necessarily mean consumers collectively save that full amount. The RBA's own assessment is that there will be no material change in the total price paid at merchants that previously surcharged. Businesses can still build payment costs into their sticker prices. The $1.6 billion is therefore better read as a measure of how much was being collected through a separate, visible charge than as a guaranteed saving for households.

On inflation, the RBA expects the impact from any rounding up of prices to be "negligible". That is relevant at a time when inflation remains above target. Headline inflation, measured by the monthly CPI indicator, was 4.0 per cent over the year to August, and 3.9 per cent over the year to the June quarter. Underlying inflation, measured by the trimmed mean, was 3.6 per cent in the June quarter, which Governor Michele Bullock has described as "about 3.5 per cent". The RBA's target is 2–3 per cent.

What changes for shoppers, then, is mainly transparency and predictability. For payments on the cards covered by the change, there should no longer be an extra card surcharge added at the till. Merchants can still offer discounts, including for cash, and charges such as weekend or public holiday surcharges, booking fees and service fees are not card surcharges.

Transparency is the next phase

The surcharge ban comes with new disclosure requirements designed to show where payment costs go. Card networks must publish aggregate interchange and scheme fee data, and acquirers must publish merchant service fee data, with the first release due by 30 October 2026 covering 1 July to 30 September 2026, and then 30 days after each quarter.

Further steps follow: an acquirer interchange pass-through measure by 30 January 2027, changes to merchant statements from 1 April 2027, and Scheme Fee Roadmaps expected by 1 April 2027.

The RBA's wider Review of Payments System Regulation is also continuing, following amendments in December 2025 to the Payment Systems (Regulation) Act 1998 that extended its coverage. Regulatory priorities are due by the end of 2026, consultation on those priorities by mid-2027, and conclusions in 2028. Ellis Connolly, the RBA's Head of Payments Policy, is scheduled to take part in a fireside chat at the AFIA conference on 20 October.

The bottom line

The headline statistic — $1.6 billion of $1.8 billion in annual card surcharges paid by consumers — helps illustrate the RBA's case for ending surcharging on 1 October. Yet the RBA does not expect total prices at surcharging merchants to change materially, and expects the inflation effect of rounding to be negligible.

For shoppers, the practical change is simpler: on the cards covered, the surcharge line is gone, while discounts (including for cash) and other charges such as booking or service fees can still apply.

The clearer gains are in transparency and lower interchange costs, with small merchants expected to benefit most. The first published fee data, due by 30 October, will offer an early look at how payment costs are flowing through the system.