Australia Prepares for Total Ban on Card Surcharging Starting October 2026

The Reserve Bank of Australia is set to implement sweeping card surcharge reforms on 1 October 2026, fundamentally altering how merchants handle transaction costs. For the fintech sector, this mandate requires immediate technical and strategic alignment as businesses must disable surcharging for major card schemes while navigating significant reductions in domestic and foreign interchange fee caps.

What was announced

The reforms, led by the Reserve Bank of Australia (RBA) and supported by the Australian Banking Association (ABA), represent a major shift in the domestic payments ecosystem. From 1 October 2026, businesses will be prohibited from adding surcharges to transactions made via eftpos, Visa, or Mastercard. This change applies to both physical checkouts and online payments, ensuring the advertised price is the final price paid by the consumer. To balance the loss of surcharge revenue for merchants, the RBA is lowering domestic interchange fee caps. Specifically, the cap on the portion of card payment costs flowing to a customer’s bank will drop from 0.8% to 0.3% for personal credit cards. These lower domestic caps take effect alongside the surcharge ban in late 2026, while new interchange caps for foreign-issued cards will follow on 1 April 2027. The RBA estimates these lower processing costs will save businesses approximately $660 million annually. Furthermore, the reforms introduce increased transparency measures designed to help business owners better understand and compare payment costs across different providers. Banks are currently tasked with helping their business customers transition by disabling surcharging functions and implementing the new fee structures. The RBA estimates that currently, only one in every six businesses chooses to apply a card surcharge.

"While the RBA estimates that only 1 in every 6 businesses choose to apply a card surcharge, it's a practice that Australians will be happy to see the back of. From next month, the price consumers see in the aisle or on the menu will be the price they pay at the checkout. Similarly, when you shop or pay a bill online, you won't be hit with a card surcharge when you enter your payment details."

Simon Birmingham at the Australian Banking Association.

The companies involved

The Australian Banking Association (ABA) serves as the primary advocacy voice for the banking industry in Australia, representing a broad membership of retail and commercial banks. The association plays a critical role in mediating between regulatory bodies like the Reserve Bank of Australia and the private financial sector, particularly during large-scale policy shifts such as the upcoming surcharge reforms. Simon Birmingham, who serves as CEO of the ABA, also holds a prominent profile in Australian public life as a Senator for South Australia and has previously served as the Minister for Trade, Tourism and Investment for the Government of Australia. The ABA is frequently involved in industry-wide initiatives, ranging from security protocols to digital banking standards. Its member banks are currently responsible for the direct technical implementation of the RBA’s new fee caps and the decommissioning of merchant surcharging capabilities. As the 1 October 2026 deadline approaches, the ABA is acting as a central hub for business guidance to ensure the transition does not disrupt commercial operations or consumer confidence.

What FF News has reported before

FF News has followed the evolution of the Australian banking sector closely, recently reporting on how Australian Banks Welcome New Legislation to Regulate Cash-in-Transit Sector and Secure Distribution. The industry's focus on consumer protection was also evident when Australian Banks Issue Urgent Scam Warning Ahead of 2026 Census Week. Additionally, the shift toward digital-first commerce was highlighted in our report on how Mobile Wallet Payments Soar Amid Digital Banking Boom, while technical infrastructure improvements were noted when the New Confirmation of Payee Service Hits Important Milestone.

What this means

This announcement moves the needle by effectively ending the "user-pays" model for card processing in Australia, shifting the financial burden back toward the interchange system. While the $660 million in estimated savings is significant, the real pressure falls on smaller payment service providers whose business models rely on surcharge-heavy fee structures. The industry must now address whether the reduction in interchange fees from 0.8% to 0.3% is enough to prevent merchants from raising base prices to cover the remaining costs. It also raises questions about how credit card reward programs, often funded by these fees, will adapt to a lower-margin environment.