Australians will stop paying separate surcharges on most credit and debit card purchases from October 1, 2026, but the change may not make every coffee, meal or shopping bill cheaper. Hospitality businesses warn some card-processing costs could instead be built into menu prices, while major banks are also changing credit card rewards, rates and benefits.
The Reserve Bank of Australia estimates consumers currently pay about $1.6 billion a year in card surcharges. The overhaul covers eftpos, Mastercard and Visa debit, prepaid and credit cards, while American Express has also decided to remove surcharging from October 1.
Card surcharge ban takes effect October 1
The RBA concluded that Australia’s surcharge system was no longer working as intended as card payments became increasingly difficult for consumers to avoid.
From October 1, participating networks will impose no-surcharge rules, meaning businesses will no longer be able to add a separate card fee to covered transactions.
The change does not remove legitimate weekend, public holiday, booking or service surcharges. Those are separate from payment-method fees.
The Reserve Bank’s official card surcharge guidance confirms businesses will still face costs when accepting cards and may incorporate those expenses into their overall prices.
$5 coffee highlights menu price concern
Those remaining processing costs are at the centre of the hospitality industry’s concerns.
Australian Restaurant & Cafe Association chief Wes Lambert has estimated that around 80 per cent of hospitality businesses use card surcharging, compared with the RBA’s estimate that roughly 16 per cent of Australian merchants overall surcharge customers.
A cafe currently adding eight or nine cents to a $5 coffee may not simply change its menu to $5.08 or $5.09. Hospitality representatives argue some operators could instead round the price to $5.10 or $5.20.
That is an industry warning rather than a forecast that every cafe will raise prices. Businesses could absorb some costs, secure cheaper merchant rates or restructure their pricing differently.
Cash customers could face higher base prices
If card costs are incorporated into the advertised price, customers paying cash could lose one of their current advantages.
A cash customer can sometimes avoid a card surcharge today. After October 1, a higher menu price would generally apply regardless of how the customer pays. Businesses may still choose to offer cash discounts.
The RBA argues the new model should improve price transparency because consumers will see more of the final cost before reaching the payment terminal.
Interchange fees fall alongside surcharge ban
The reform is not simply transferring today’s payment costs to businesses.
From October 1, the interchange cap on domestic consumer credit cards falls to 0.30 per cent. Debit and prepaid card interchange fees will be capped at 0.16 per cent or eight cents per transaction, depending on the applicable structure.
Lower interchange fees are designed to reduce merchants’ card-acceptance costs, particularly for smaller businesses. The eventual effect on cafe and retail prices will therefore depend partly on how much individual businesses save.
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CommBank, NAB and ANZ reshape card benefits
The payment overhaul arrives as banks reshape rewards and card benefits.
Commonwealth Bank is transitioning its rewards offering toward CommBank Yello, including changes involving travel and dining benefits and its frequent-flyer partnerships.
NAB is reducing some Qantas Points earn rates. On affected NAB Qantas Rewards Premium spending, the reported rate for the first $3,000 a month falls from one point per $1.50 to one point per $2.
ANZ is also making changes to some credit card rates and benefits. On affected cards, cash advance and standard balance transfer rates are set to rise to 23.49 per cent per annum, alongside changes affecting rewards and some card benefits.
$1.6 billion saving may not tell the whole story
The RBA’s $1.6 billion estimate represents card surcharges consumers currently pay. It does not guarantee Australian households will collectively have another $1.6 billion available to spend.
If businesses absorb their remaining payment costs, consumers retain more of the benefit. If cafes and retailers lift their base prices, some of the saving could effectively return through higher everyday costs.
The issue comes as households continue watching broader cost pressures, including movements in oil prices and major energy stocks that can flow through to transport and business expenses.
Credit card holders urged to review rewards and fees
Consumers do not need to replace their existing cards because of the reform. Rewards-card holders should instead review points earn rates, annual fees, interest charges, travel insurance and other benefits to see whether their card still provides the same value.
Households reviewing their budgets may also be dealing with other changes to disposable income, including the latest Centrelink JobSeeker payment rates.
For everyday shoppers, October 1 will remove the visible card surcharge from millions of transactions. The bigger test will come at cafes, restaurants and shops: whether the price printed on the menu or shelf changes after the separate card fee disappears.
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