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Australia

Card surcharge ban takes effect amid warnings small businesses unprepared

RBA's ban on credit and debit card surcharges begins Thursday, with migrant-run shops among those still confused

By LineZotpaper
Published
Read Time2 min
Sources2 outlets
Australia's ban on credit and debit card surcharges takes effect on Thursday, but some consumers will still encounter surcharges at the checkout, with business groups warning many smaller shops, especially those run by migrants, remain unclear on how the new payment rules work.

The Reserve Bank confirmed the ban in March, giving businesses a six-month window to prepare. The reforms are estimated to save consumers $1.6 billion annually.

Small business owners have expressed concern that the sweeping changes will leave them financially worse off and force them to increase product and menu prices. Business lobby groups say many smaller shops are still in the dark about how the rules work, describing some as "quite ill-prepared".

The changes have already rippled through the payments ecosystem. Major banks have wound back the generosity of credit card sign-on bonuses and rewards points earning rates following a lower cap on interchange fees, the merchant fees that traditionally funded rewards perks.

The Australian Taxation Office has also removed credit cards as a payment method, saying the move would not affect most taxpayers. Only 2.3 per cent of tax payments in the 2024 financial year were made by credit card, with the majority from high net worth individuals or major organisations.

"As a government agency, the ATO has decided it would not be appropriate for the cost of credit card merchant fees to be transferred to the community," it said in a statement.

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Analysis

Why This Matters

  • The ban affects every Australian who pays by card, removing a fee that added to the cost of everyday purchases.
  • Small businesses, particularly migrant-run shops, face absorbing merchant fees or raising prices, which could offset the savings meant for consumers.
  • The reform is reshaping the payments industry, from bank rewards programs to how government agencies accept payments.

Background

The Reserve Bank confirmed the ban in March 2026, giving the economy a six-month transition period. Interchange fees, which merchants pay to a customer's bank for each card transaction, have traditionally funded rewards programs. By capping these fees, the RBA removed the main source of funding for card perks, prompting banks to scale back rewards and the ATO to stop accepting credit cards entirely.

Key Perspectives

Small business owners: Concerned the ban will leave them financially worse off, with some warning they will need to raise product and menu prices to cover the cost of accepting cards.

Business lobby groups: Say many smaller shops, especially migrant-run businesses, are "quite ill-prepared" and still in the dark about how the new rules work.

The Australian Taxation Office: Removed credit cards as a payment method, arguing it would not be appropriate for merchant fees to be transferred to the community. It noted only 2.3 per cent of tax payments in the 2024 financial year used credit cards, mostly from high net worth individuals or major organisations.

Major banks: Have already wound back the generosity of sign-on bonuses and rewards points in response to lower interchange fee caps.

What to Watch

  • Whether businesses quietly raise menu prices to absorb the cost of accepting cards, and whether consumer savings materialise.
  • How quickly enforcement begins for merchants that continue charging surcharges despite the ban.
  • Further changes to credit card rewards programs and government payment options as the industry adjusts to the new fee structure.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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