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Come October, Aussies will officially say goodbye to debit and credit surcharges under a reform from the Reserve Bank of Australia (RBA). The new rules will force businesses to remove added fees on Mastercard, Visa and EFTPOS payments – a move expected to save consumers $1.6 billion in surcharging fees annually. But it’s not all good news. Rewards programs are likely to weaken, while small businesses will face a choice of either absorbing the merchant fees or passing them on to customers.
The change follows an 18-month consultation with major banks, businesses and industry groups, replacing the previous 2003 surcharge reform. Australian treasurer Jim Chalmers said the move is aimed at easing the pressure of the rising cost of living, with the new rules coming into play on October 1, 2026.
In addition to letting consumers use their debit and credit cards without extra fees, the reform will lower the caps on interchange fees that businesses pay to customers’ banks. For domestic-issued consumer credit cards, the cap will drop from 0.8 per cent to 0.3 per cent, saving businesses an estimated $910 million per year.
Debit card fee limits will be reduced from 0.2 per cent to 0.16 per cent, while the cap for commercial credit cards will remain at 0.8 per cent. Interchange fees for foreign cards will follow six months later, starting on April 1, 2027, with a one per cent cap.
What impact will it have?
The reality is that payment systems still come with costs, and businesses will still have to pay providers. With surcharges removed, they’ll have to absorb those fees themselves or pass them on to customers through higher menu or retail prices.
Banks are also likely to lose revenue from charging businesses, with some experts predicting they may respond by increasing credit card fees and interest rates while cutting back on rewards. Since interchange fees often fund points and perks on reward cards, consumers could see higher card costs, steeper interest rates and reduced frequent flyer benefits.
It's still unclear who the real winners and losers of the upcoming surcharge reform will be, but we expect other 'hidden costs' to emerge down the line.