The Card Surcharge Ban: What It Means for Your Cafe, and What to Do Now

If you had a "1.5% surcharge on card payments" sticker on your counter, it has to come down. The Reserve Bank announced the change in March, and it took effect on 1 October.

We are the team behind Back Again, a loyalty and marketing platform for independent cafes. We do not process payments and have nothing to sell you here. This post is the practical version: what changed, what you can still do, and what it actually costs a cafe.

What changed on 1 October 2026

Three things, all from the Reserve Bank's review of merchant card payment costs, published 31 March 2026.

Card surcharges are gone. Businesses can no longer add a surcharge for payments on eftpos, Visa, Mastercard or American Express cards, per the ACCC's guidance. That includes debit, credit and prepaid cards, and applies whether the customer taps at the counter or pays online. Strictly, the Reserve Bank has let the card networks ban surcharging through their own rules, and they have. The practical effect is the same: surcharging puts you in breach of your merchant agreement.

The wholesale cost of a card payment fell. Every card payment carries an interchange fee, which is the part of your merchant fee that goes to the customer's bank. The Reserve Bank lowered the caps on it from 1 October:

Fees have to become more visible. Payment providers will have to publish their merchant fees, and the Reserve Bank has said it will monitor whether the interchange cuts are passed on and name providers that do not pass them on.

What you can still charge

The ban is specifically about charging more because the customer paid by card. Other things are still allowed.

Weekend and public holiday surcharges. Still fine, and not covered by the Reserve Bank's rules. They have to apply to everyone, however they pay, and they must not be a card surcharge under another name. Display them clearly before people order.

A discount for paying another way. You can offer a lower price for cash or PayID. The ACCC says the discount must be clearly disclosed before the customer orders, and the full price must be displayed prominently. You cannot quietly turn your old surcharge into a "cash discount" by inflating the menu price and only mentioning it at the till.

Raising your prices. Always allowed. This is where most cafes will land, and the sum below is why it is less painful than it sounds.

The ten-cent sum

Take a counter-service cafe doing 200 orders a day at an average of $6.50. That is $39,000 a month, nearly all of it on cards.

At a flat rate of 1.6%, which is what Square charges for in-person payments, card fees come to about $624 a month. If you were surcharging at 1.5%, your customers were covering roughly $585 of that. From 1 October, you cover it.

Now raise your average order by ten cents. Two hundred orders, thirty days, ten cents each: $600 a month.

That is the whole card fee bill, covered almost exactly by ten cents. On a $5.50 flat white, the 1.6% fee is about nine cents. Rounding the coffee up by ten cents covers it, which is about what a 1.5% surcharge was already adding to a card payment.

Run it with your own numbers before deciding anything. Your monthly card fees are on your provider statement. Divide that by your number of transactions and you have the exact amount per order you need to find.

Will your merchant fees go down?

They should. Whether they do is up to your provider, and it depends on which kind of plan you are on.

On an "interchange plus" or cost-plus plan, the interchange cut flows through to you automatically, because your bill is built from the underlying costs.

On a flat single rate, which is what most cafes have, you pay one percentage whatever the card. The interchange cut lowers your provider's cost. It only lowers yours if they cut the rate.

Some already have. CommBank cut its single-rate plan from 1.10% to 0.99% on 1 October, per its merchant guidance. As of 3 October, Square's pricing page still shows 1.6% for in-person payments. NAB says it is reviewing its pricing.

This is the call worth making this week. We said the same thing in our POS buyer's guide: the card rate costs a cafe far more than any software subscription, and cafes routinely sit on a rate they were given years ago because nobody asks. Ask three things:

1. "Is my rate going down now that interchange caps have dropped?"
2. "Do you offer least-cost routing, and is it switched on?" Most debit cards can be processed through either eftpos or Visa or Mastercard. Least-cost routing sends each one down the cheaper network. For a cafe, where most payments are small debit taps, it can be one of the bigger savings available, and it is worth confirming it is on.
3. "What would you charge me at my volume?" Then compare it with the fees providers now have to publish.

What to do this week

Turn surcharging off everywhere it lives. Your terminal, your POS, your online ordering, any booking or catering invoices. CommBank switched it off automatically on some of its online platforms, but says terminals and integrated systems need to be done by you. If you are not sure where the setting is, your provider is the place to ask.

Do a test payment. Tap a card and check the receipt. Assume nothing until you have seen it.

Take the signs down. The counter sticker, the line on the menu, the note on your website and on invoices.

Tell your staff. Somebody will be asked "why's there no surcharge any more?" and somebody else will be asked "why did my coffee go up ten cents?". A one-line answer for each saves an awkward moment at the till.

Decide your prices with the sum, not a guess. See above.

Ring your provider. The three questions above.

If you are putting prices up

A small, honest price change rarely costs a cafe its regulars. A badly handled one sometimes does.

Round once, not repeatedly. One ten-cent change now beats three five-cent changes over a year.

Do it where the cost is. Card fees scale with spend, so the item that needs the change is the one people buy most: the coffee. Leaving coffee alone and lifting the cake to compensate is a different decision that happens to look the same on a spreadsheet.

Remember who notices. A first-time customer has no idea what your flat white cost last week. Your regulars know to the cent. They are also the people you most want to keep, so if you have a way of rewarding them, this is a good month for it to be visible. We wrote about loyalty rewards that actually work and lifting average spend without a price rise, which is the other way to find ten cents.

Frequently asked questions

Can cafes still charge a card surcharge in Australia?

No. Since 1 October 2026, businesses cannot add a surcharge for payments on eftpos, Visa, Mastercard or American Express cards, including debit, credit and prepaid. If you use other card networks, check with your payment provider.

When did the card surcharge ban start?

1 October 2026. The Reserve Bank announced it on 31 March 2026.

Can I still charge a weekend or public holiday surcharge?

Yes. Weekend and public holiday surcharges are not covered by the ban, as long as they apply to every customer whatever they pay with and are clearly displayed.

Can I give customers a discount for paying cash?

Yes. You can offer a discount for cash, PayID or another payment method, as long as it is clearly disclosed before the customer orders and the full price is displayed prominently.

Does the surcharge ban apply to American Express?

Yes. The ACCC's guidance lists American Express alongside eftpos, Visa and Mastercard.

Will my merchant fees go down after 1 October 2026?

The wholesale part of the fee, called interchange, has fallen. On a cost-plus plan you should see that automatically. On a flat single rate, it depends on whether your provider cuts your rate, so ask them directly.

How much do I need to raise prices to cover card fees?

Divide your monthly card fees by your number of transactions. For a cafe doing 200 orders a day at an average of $6.50 and paying 1.6%, that is about ten cents an order.

What happens if a cafe keeps surcharging?

It breaches the merchant agreement with the payment provider. Customers can report a business that surcharges to the card network or their bank.

What is least-cost routing?

Most debit cards can be processed through more than one network. Least-cost routing sends each payment through the cheaper one. Ask your provider whether it is available and switched on. For cafes taking lots of small debit payments, it can make a real difference.

Where that leaves you

Take the surcharge off your terminal, test it, take the signs down. Work out your real cost per order, which for most cafes is around ten cents, and round your prices once. Then ring your provider, because the cost of taking a card just went down and your rate should follow it.

Loyalty is not what this post is about, so we will keep it to a line: Back Again is a tap-to-stamp loyalty card for cafes with win-back and birthday emails built in, and it is free until your first 50 customers. See how it works.

Sources: the Reserve Bank's conclusions media release and executive summary, the ACCC's card surcharge guidance, and merchant guidance from CommBank and NAB, all checked 3 October 2026. This is a plain-English summary for cafe owners, not legal or financial advice. Provider pricing changes often, so confirm your own rate with your provider.