Key Highlights

  • Around one in six merchants (16 per cent) was applying a surcharge, and the share had doubled since 2022.
  • Surcharging was estimated to cost consumers $1.6 billion a year before it ended on 1 October 2026.
  • A second stage on 1 April 2027 brings a foreign card interchange cap and transparency changes.

A sharp rise in the number of businesses adding card fees at the checkout helped convince the Reserve Bank that surcharging on debit and credit cards had to end.

Few line items on a receipt generated as much irritation as the card surcharge. A coffee, a taxi fare or a restaurant bill could carry a small extra charge simply because the customer tapped a card rather than handing over cash. For years that practice sat in the background of Australian commerce. Then it spread.

According to the Reserve Bank of Australia's Review of Merchant Card Payment Costs and Surcharging, published as a Conclusions Paper in March 2026, 16 per cent of merchants were surcharging, and the prevalence of surcharging had doubled since 2022. That growth, combined with the sheer amount of money involved, sits at the heart of the RBA's decision to remove surcharging on debit and credit cards from 1 October 2026.

This explainer looks at what the numbers showed, why the spread mattered, and what the regulator changed as a result.

What the review found

The headline numbers in the Conclusions Paper are blunt. The RBA estimated that "Consumers are estimated to be paying $1.6 billion of a total $1.8 billion in card payment surcharges" each year. In other words, the great bulk of surcharge revenue was coming out of the pockets of ordinary shoppers rather than business customers.

Two features of the data stand out:

  • Breadth. Around one in six merchants (16 per cent) was applying a surcharge, so the practice was no longer confined to a handful of industries.
  • Speed. The share of merchants surcharging had doubled since 2022, which pointed to a trend that was accelerating rather than settling.

When a practice is rare, consumers can avoid it by shopping elsewhere. When it becomes widespread, that choice narrows, and the surcharge starts to look like a standard extra fee built into everyday spending.

Why a spreading surcharge became a policy problem

Surcharging was originally permitted on the logic that merchants should be able to pass on the cost of accepting cards, so that customers using more expensive payment methods would bear those costs. In principle, that can encourage people to use cheaper ways to pay.

The difficulty is that the picture in practice can look different from the theory. When a growing number of merchants surcharge, consumers face extra charges across many purchases, and they may have little ability to compare or avoid them. The underlying cost of accepting cards, meanwhile, is largely shaped by wholesale fees such as interchange that are set further up the payments chain, out of sight of shoppers.

The Payments System Board concluded that removing card surcharging, reducing interchange fee caps and improving transparency was in the public interest, as Governor Michele Bullock told the Senate Economics Legislation Committee in her opening statement on 28 October 2026. Rather than simply banning the surcharge and leaving merchants to absorb their costs, the package tackled both ends of the problem: the fee consumers saw and the wholesale costs merchants paid.

The package that followed

The reforms announced in the Conclusions Paper were designed to work together. The key elements were:

  • Surcharge removal. Surcharging on debit and credit cards ended from 1 October 2026.
  • Lower domestic interchange caps. Reductions to domestic interchange caps also took effect on 1 October 2026. The RBA expected the lower caps to cut merchants' wholesale card costs "by around $910 million per year".
  • Commercial credit cards. The cap for commercial credit cards was retained at its current level.
  • Foreign cards and transparency. A foreign card interchange cap and some transparency changes take effect from 1 April 2027.
  • Published fees. eftpos, Mastercard, Visa and large acquirers must publish the fees they charge, and businesses are to receive standardised fee information on their statements.

The logic is straightforward. If merchants can no longer add a surcharge, it matters more that the costs they face for accepting cards are lower and easier to compare. The interchange reductions and transparency measures are intended to address that side of the ledger.

Early signs and what they mean

The surcharge removal has now been in place for a few weeks. In her Senate opening statement, Governor Bullock said plainly: "Card surcharging was removed from 1 October". She also noted that several large providers have cut card processing fees for small businesses, and that competition is showing signs of increasing.

For small businesses, reductions in what providers charge matter for how the reform lands. The RBA has framed the early response as a sign that competitive pressure is building, though it is still early days and further changes are scheduled.

The Payments System Board's calendar remains busy. According to the RBA calendar, it is due to meet on 19 November 2026 and again on 24 February 2027, ahead of the April 2027 changes to foreign card interchange and transparency.

For consumers, the most visible effect is that a debit or credit card purchase should no longer attract a surcharge. Given the RBA's estimate that consumers were paying $1.6 billion of the $1.8 billion in surcharges each year, that is a change many households may notice across their regular spending.

For merchants, the picture is more nuanced. Losing the ability to surcharge removes one way of recovering costs, but the reductions in domestic interchange caps are expected to lower wholesale card costs, and the coming transparency rules should make it easier to understand what they are paying and to compare providers. Businesses that want to understand their own position may wish to look closely at the fee information on their statements as the standardised format is rolled out.

It is also worth knowing what has not changed. The commercial credit cap was kept at its current level, and the foreign card measures do not start until April 2027. Readers looking for the detail of the new caps can find it in the Conclusions Paper.

The bottom line

The surcharging increase was not a story about one fee on one receipt. It was a story about a practice that had doubled in prevalence since 2022, reached 16 per cent of merchants and was costing consumers an estimated $1.6 billion a year. That scale is what turned an everyday annoyance into a regulatory priority.

The RBA's response combined a ban on debit and credit card surcharges with lower interchange caps and more transparency, on the view that the combination was in the public interest. With surcharging removed from 1 October, some providers already cutting fees for small businesses, and further changes due in April 2027, the next phase will show how far competition can carry the reform from here.