Key Highlights

  • The Governor said several large providers have cut card processing fees for small businesses and competition is showing signs of increasing.
  • The evidence so far is qualitative and early, and whether savings reach every merchant depends on pass-through.
  • Transparency rules would require eftpos, Mastercard, Visa and large acquirers to publish the fees they charge.

Governor Michele Bullock has told senators that several large payment providers have cut card processing fees for small businesses since surcharging ended, but whether the savings reach every merchant is still an open question.

For a small business owner, the end of card surcharging on 1 October 2026 raised an obvious concern. If a café, hairdresser or corner store can no longer add a surcharge to card payments, who covers the cost of accepting them?

The Reserve Bank of Australia's (RBA) answer has always been that the reform was designed to lower those costs at the same time. Now, nearly four weeks in, the Governor has offered the first evidence that this is beginning to happen. In her Opening Statement to the Senate Economics Legislation Committee on 28 October 2026, Governor Michele Bullock said several large providers have cut card processing fees for small businesses, and that competition is showing signs of increasing.

The Governor's update

The Governor's remarks came in the payments section of her statement to the Supplementary Budget Estimates hearing, delivered by videoconference. She reminded senators that the Payments System Board had concluded that removing card surcharging, reducing interchange fee caps and improving transparency was in the public interest, and confirmed: "Card surcharging was removed from 1 October".

Her two observations on the market response were brief:

  • several large providers have cut card processing fees for small businesses
  • competition is showing signs of increasing.

The statement, as verified today, did not name the providers or quantify the cuts. That means it is not yet possible to say how large the reductions are, how many businesses have benefited, or whether smaller providers have followed. The Governor's description is also measured: competition is showing signs of increasing, a description that points to an early trend rather than a settled outcome.

Why small businesses were the focus

Small businesses have been central to the debate over card costs, and they were the group the Governor singled out when describing fee cuts. The RBA's reform package addressed costs at the wholesale level, through lower caps on domestic interchange fees, which took effect on 1 October 2026 alongside the end of surcharging.

The RBA's March 2026 Conclusions Paper from its Review of Merchant Card Payment Costs and Surcharging estimated that the lower caps would cut merchants' wholesale card costs "by around $910 million per year". It also found that 16 per cent of merchants were surcharging, and that the prevalence of surcharging had doubled since 2022.

The broader business environment adds context. The RBA's October 2026 Financial Stability Review found that business insolvencies are around their longer-run average but elevated in hospitality, construction and transport.

The pass-through question

Interchange fees are only one part of what a business pays to accept a card. The rest is set by the provider that supplies the business with its payment services. A cut in wholesale caps does not automatically translate into lower prices for every merchant; it depends on providers passing on the saving.

The consumer side of the ledger shows why getting this balance right matters. The Conclusions Paper found: "Consumers are estimated to be paying $1.6 billion of a total $1.8 billion in card payment surcharges" each year. Ending surcharges removes that visible cost from shoppers. Lower wholesale fees are intended to ensure that removing it does not simply shift an equivalent burden onto merchants instead.

That is why the Governor's two observations go together. Price cuts by large providers are a direct sign of pass-through. Increasing competition is what would, over time, encourage the rest of the market to follow, as businesses compare offers and move to cheaper options.

Small businesses may wish to understand exactly what they are paying and how it has changed since 1 October. That task is due to become easier.

Transparency as the next lever

The reform package includes transparency changes, some of which take effect on 1 April 2027 along with the foreign card interchange cap. Under the Conclusions Paper:

  • eftpos, Mastercard, Visa and large acquirers must publish the fees they charge
  • businesses are to receive standardised fee information on their statements.

Standardised statements are designed to make it easier to see the true cost of accepting cards and to compare providers on a like-for-like basis. Until those rules apply, the main information available to most businesses remains the statements they already receive from their existing providers. If the Governor's early signs of increasing competition are to broaden, comparable information is likely to be an important part of that process.

The commercial credit card interchange cap was retained at its current level. This article does not state specific cap levels, as those figures are not part of the verified information available today.

Beyond transparency, the surcharging reform sits within a larger program of work. The Governor told senators that the Review of Payments System Regulation released an Issues Paper in June, with stakeholders raising mobile wallets, three-party card schemes, account-to-account payments and agentic commerce. "We intend to release regulatory priorities by the end of 2026," she said, with further consultation on prioritised issues by mid-2027.

The Payments System Board is next scheduled to meet on 19 November 2026, according to the RBA's calendar.

This payments work runs separately from monetary policy. The Monetary Policy Board meets on 2–3 November to set the cash rate target, currently 4.60 per cent, against a backdrop of headline CPI at 4.3% and trimmed mean inflation at 3.6% in the year to September, as reported by the Australian Bureau of Statistics. That decision has not been made.

The bottom line

Are card fees falling for small business? According to the Governor, the first signs are there: several large providers have cut card processing fees for small businesses, and competition is showing signs of increasing. But the evidence so far is qualitative and early. The RBA's estimate of around $910 million a year in lower wholesale costs describes the reform's expected effect, not a measured outcome. The transparency rules arriving in April 2027 should make it easier for businesses, and the RBA, to see how much of the saving is reaching merchants.