Credit Card Surcharges Are Ending: What the Changes Mean for Consumers and Small Businesses

For years, Australians have become accustomed to seeing an extra charge appear at the checkout when paying by card. Whether grabbing a coffee, dining out, paying a tradesperson or settling a large bill, card surcharges have become a common part of everyday spending.

However, that has now changed.

From 1 October 2026, businesses can no longer apply surcharges to payments made using Visa, Mastercard, American Express and eftpos cards. The change follows reforms introduced through the Reserve Bank of Australia's review of merchant card payment costs and surcharging.

While many consumers will welcome the removal of surcharges, the changes may have broader implications for both households and businesses.

Why Were the Rules Changed?

Historically, card surcharges were intended to encourage consumers to choose lower-cost payment methods and provide businesses with a way to recover the cost of accepting card payments.

However, the Reserve Bank concluded that surcharging had become increasingly confusing, difficult for consumers to avoid and often poorly disclosed. As a result, card surcharges on major payment networks were removed from 1 October 2026.

Importantly, the changes only apply to card payment surcharges.

Businesses may still charge other fees that are unrelated to payment method, such as booking fees, service fees, weekend surcharges and public holiday surcharges where permitted.

What Does It Mean for Consumers?

The most obvious benefit is simplicity.

Consumers will no longer face unexpected card surcharges at the point of payment when using major card networks. This makes it easier to compare prices and understand the true cost of goods and services upfront.

For many households, the savings on individual purchases may be relatively small. However, when accumulated across hundreds of transactions each year, they could add up to a noticeable reduction in everyday costs.

There is a potential catch, however.

Businesses still incur costs when accepting electronic payments. While they can no longer pass those costs on as a separate surcharge, some may choose to build these expenses into the overall price of their goods and services.

As a result, Australians may see fewer visible surcharges, but some costs could simply become embedded within pricing structures.

What Does It Mean for Small Businesses?

The impact on businesses is likely to vary.

Many small businesses welcomed recent efforts to reduce merchant payment costs. The reforms include measures aimed at lowering some of the fees businesses pay to accept card payments and improving transparency around payment costs.  

However, some business owners remain concerned about losing the ability to recover payment processing costs directly from customers.

Businesses that previously relied heavily on card surcharges may need to review their pricing models, profit margins and payment systems to ensure they remain sustainable.

For some, this may result in:

• Reviewing suppliers and payment providers.

• Negotiating lower merchant service fees.

• Adjusting prices to reflect operating costs.

• Encouraging alternative payment methods where appropriate.

• Reassessing cash flow management strategies.

The challenge will be balancing profitability while remaining competitive in an environment where consumers have become increasingly price sensitive.

The ATO Is Also Removing Credit Card Payments

A related development that has attracted significant attention from the business community is the Australian Taxation Office's decision to stop accepting credit card payments after 30 November 2026.

According to the ATO, the decision was made because it would not be appropriate for the broader community to absorb the merchant fees associated with credit card payments.  

While only around 2.3% of tax payments were made by credit card in 2024-25, many businesses have historically used credit cards to help manage cash flow, smooth the timing of tax obligations or earn reward points on large ATO payments.

From December, taxpayers will need to use alternative payment methods such as BPAY, direct debit, electronic funds transfer or Australia Post payment services.

Why This Matters for Business Owners

The ATO changes may have a greater impact than the removal of everyday retail surcharges.

Businesses that have relied on credit cards as a short-term funding or cash flow management tool may need to reconsider their processes and funding arrangements before their next tax payment falls due.

Now may be an appropriate time to review:

• Upcoming BAS and tax liabilities.

• Existing ATO payment plans.

• Working capital requirements.

• Cash flow forecasting.

• Business banking and lending facilities.

Forward planning may help avoid unnecessary cash flow pressure when the new arrangements take effect.

Key Takaways

The removal of card surcharges represents one of the most significant changes to Australia's payments system in recent years. For consumers, the changes promise greater transparency and fewer surprises at the checkout. For businesses, they create both challenges and opportunities as pricing and payment practices evolve.

The ATO's decision to stop accepting credit card payments adds another layer to these reforms, particularly for business owners who have traditionally used credit cards as part of their cash flow strategy.

Like many regulatory changes, the impact will vary from person to person and business to business. However, understanding the changes now may provide valuable time to adapt before they begin affecting your day-to-day financial activities.

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