Australia Bans Card Surcharges to Lower Cost of Living

The Reserve Bank of Australia implemented a ban on credit and debit card surcharges effective October 1, 2026. The reform prohibits retailers from charging direct fees for transactions using Visa, Mastercard, and eftpos networks across in-store, online, and mobile wallet payments. American Express also prohibited surcharging on the same date, while PayPal followed on October 5. The government estimates the move will save consumers $1.6 billion annually.

To mitigate the impact on merchants, the central bank reduced the maximum domestic interchange fee from 0.80% to 0.30%, a move expected to save businesses between $660 million and $910 million per year. While legitimate booking, delivery, and public holiday surcharges remain permitted, the Australian Competition and Consumer Commission warned businesses against mislabeling card fees as other charges to bypass the rules.

Small business owners, particularly in Melbourne, argue the ban erodes profit margins and forces them to raise menu and shelf prices. Some merchants are shifting toward lower-cost digital alternatives like PayID to avoid card-related expenses. In a contrasting move, the Australian Taxation Office announced it will stop accepting credit card payments after November 30, stating it is inappropriate for a government agency to transfer merchant fees to the community.

Industry groups, including the Australian Chamber of Commerce and Industry and the Australian Travel Industry Association, have criticized the policy. They argue the ban creates a financial burden for small businesses while the tax office simply removes the payment facility, which some leaders described as a staggering act of hypocrisy.