The Card Surcharge Ban for Small Business: What Changed and What to Do (2026)

If your invoices, website or counter sign said "1.5% card surcharge", that line has to go. 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 businesses that live on regular customers. We do not process payments and have nothing to sell you in this post. It is the practical version: what changed, what you can still do, and what it costs.

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. The Reserve Bank's FAQs say all businesses are covered, including not-for-profits, unless a card network rule or law provides an exemption. The Reserve Bank does not regulate merchants directly. The card networks wrote the ban into their rules, which means surcharging now breaches your merchant agreement.

The wholesale cost of a card payment fell. Every card payment carries an interchange fee, 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. From 1 October 2026 the card networks and the largest payment providers (acquirers) have to publish quarterly fee data, with the first reports due by 30 October. Those first reports cover July to September, which is before the interchange cuts took effect, so they show where fees started rather than whether your provider has passed the cuts on. We could not find the first reports published when we looked on 31 October, so check your provider's site and the Reserve Bank's. The report that matters more is the first one on how much of the interchange cut has been passed through to merchants, due by 30 January 2027 and covering October to December. From April 2027, merchant statements also move to a standardised format.

Does the ban apply to my business?

Almost certainly. The Reserve Bank says all businesses are covered. The details that trip people up:

Invoices. If a customer pays by card on or after 1 October, you may not be able to surcharge, even if you issued the invoice in September. Xero, for one, removed surcharges from unpaid invoices automatically: customers who pay on or after 1 October pay the invoice amount without the fee.

Business-to-business payments. Not automatically exempt. The Reserve Bank says there is no general B2B exemption, and the card networks may restrict surcharging on business and government card payments too.

Online stores and booking systems. Covered. Check your checkout, your booking platform and any "pay now" links, since each one can have its own surcharge setting.

Regulated prices. Some businesses have prices set by a regulator and cannot simply adjust them. The Reserve Bank says governments and price regulators have been informed. If that is you, check with your regulator.

Other payment methods. The ban is about cards. The Reserve Bank does not currently regulate surcharges on non-card methods such as bank transfer or PayID, so check with your payment provider. We would still be cautious: the ACCC's rules on clear pricing apply, and a "transfer fee" that looks like a card surcharge under another name will not go down well.

What you can still charge

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

A discount for paying another way. You can offer a lower price for cash, PayID or direct debit. The ACCC says the discount must be clearly disclosed before the customer books, orders or pays, and the full price must be shown prominently. The discounted price cannot be displayed alone or made more prominent.

A genuine service, booking or delivery fee. The Reserve Bank says the ban does not cover booking fees and service fees. But if a fee only appears when someone pays by card, it is a card surcharge, whatever you call it. The ACCC warns that relabelling a card surcharge as another type of fee may be misleading. Xero makes the same point: a "cash discount" or "card handling fee" is not a workaround.

A fee on every sale, shown up front. If a fee applies to everyone and you can work it out in advance, such as a flat percentage, the ACCC says it generally has to be included in the single price you display, not added at the end.

Weekend and public holiday surcharges. Still allowed for businesses that charge them, as long as they apply to everyone and are clearly disclosed.

Raising your prices. Always allowed. The only rule is not to mislead people about why. The ACCC's example is a hair salon: if a $60 haircut goes to $65 because of general cost increases, the salon must not say the rise is because of the card changes.

The 1.3% sum

Here is a way to work out your number that does not depend on what you sell.

Say your business takes $30,000 a month, and 80% of it arrives by card. That is $24,000 on cards. At a flat rate of 1.6%, which is what Square's pricing page shows for in-person payments for sellers who joined after May 2024 (checked 31 October), your card fees are $384 a month.

Spread across everything you sell, that is 1.28% of your revenue ($384 divided by $30,000). A price rise of around 1.3% across the board brings in the same amount.

Online and invoice payments often cost more than a terminal tap. Xero's online payments, which run on Stripe, cost 1.75% plus 30c per card payment from 1 October (including GST). On a $450 invoice that is about $8.18. The fixed 30c is what makes small online payments expensive.

Run it with your own numbers. Your provider statement shows your monthly card fees. Divide them by your total monthly revenue, and you have the percentage you need to find. If you sell many items, that tells you whether to lift everything a little or just the few things that carry most of the card volume.

Will your merchant fees go down?

They should. Whether they do is up to your provider, and it depends on your plan.

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

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

Some already have. As of 31 October:

• CommBank cut its single-rate plan from 1.10% to 0.99% on 1 October, per its merchant guidance, applied automatically to existing customers.
• Westpac cut its flat transaction rate for EFTPOS terminals from 1.20% to 0.79%, and EFTPOS Air and OnlinePay from 1.40% to 1.25%, from 1 October, per its media release. Eligibility conditions apply.
• Xero cut its Stripe-powered card fee by 5 cents per $100. Stripe itself shows 1.65% plus 30c online and 1.65% plus 10c in person for domestic cards on its pricing page.
• Square's pricing page shows 1.6% in person for sellers who joined on or after 30 May 2024, 1.9% for earlier sellers using Square hardware, and 2.2% online and for invoices paid online. We found no change after 1 October, so check which rate you are on.
• NAB's page still says it is reviewing its pricing and will notify merchants before any change.

Many providers quote rates privately, so a cut may only show up on your statement.

This is the call worth making. 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 payment down the cheaper network, and for a business taking lots of small debit payments it can be one of the bigger savings available.
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 checkout, your booking system and your invoicing software. CommBank switched it off automatically on some online platforms, but says terminals and integrated systems need to be done by you.

Check your paperwork. Quotes, invoice templates, terms and conditions, and your website's payment page. Any line that mentions a card or merchant fee needs updating.

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

Tell your staff. Somebody will be asked "why has the surcharge gone?" and somebody else will be asked "why did your price go up?". A one-line answer to each saves an awkward moment.

Decide your prices with the sum, not a guess.

Ring your provider. The three questions above.

If you are putting prices up

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

Round once, not repeatedly. One clean change now beats three small ones over a year.

Be honest about why, or say nothing. The ACCC's warning is about misleading reasons. "Our costs have gone up" is true for most businesses. Blaming the card rules for a rise that is mostly something else is not.

Remember who notices. A first-time customer has no idea what you charged last month. Your regulars know. They are also the people you most want to keep, so a price change is a good month to make them feel looked after. There are plenty of ways to do that without a discount: a simple loyalty reward, a birthday email, a thank-you for coming back. It costs far less than finding a new customer to replace one who drifted off, which is why we wrote about lifting average spend without a price rise and getting repeat customers.

Look at cheaper ways to get paid. Xero says direct debit and PayTo typically cost less than cards. For regular clients on repeat invoices, that is worth raising.

Frequently asked questions

Can small businesses 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. The Reserve Bank says all businesses are covered, including not-for-profits.

When did the card surcharge ban start?

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

Does the surcharge ban apply to invoices?

Yes, if the customer pays by card on or after 1 October 2026. Surcharging may not be available even if you issued the invoice earlier. Some invoicing software, including Xero, removed surcharges from unpaid invoices automatically.

Does the card surcharge ban apply to online businesses?

Yes. It covers online payments as well as in-person ones. Check your checkout, booking platform and any payment links for surcharge settings.

Does the ban apply to business-to-business payments?

Not automatically exempt. The Reserve Bank says there is no general B2B exemption, though a card network rule or law could provide one. Ask your payment provider how it applies to your invoices.

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 books, orders or pays, and the full price is displayed prominently.

Can I add a service fee instead of a card surcharge?

Only a genuine one that applies however the customer pays. A fee that only appears for card payments is still a card surcharge, and the ACCC warns that relabelling it may be misleading. A fee you can calculate in advance generally has to be included in the displayed price.

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 total monthly revenue. If 80% of your sales are on cards at a 1.6% rate, the answer is about 1.3%.

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.

What happens if my business keeps surcharging?

It breaches your merchant agreement with your payment provider. The card networks and providers enforce the rule, and the ACCC can act separately if fees are described in a misleading way. Customers can raise concerns with the business first, then with the card network, their provider or the ACCC.

Where that leaves you

Take the surcharge off your terminal, invoices and website, then test it. Work out your real cost as a percentage of revenue, which for most card-heavy businesses is around 1.3%, and adjust 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 started with independent cafes, and the same tap-to-stamp card, win-back emails and birthday emails work for any business whose customers come back, such as bakeries, barbers and boutiques. It is free until your first 50 customers. See how it works, or read our cafe version of this guide.

Sources: the Reserve Bank's conclusions media release and surcharging FAQs, the ACCC's card surcharge guidance, Xero's explainer (last updated 19 September 2026), Sprintlaw's summary, all checked 18 October 2026, and merchant guidance from CommBank, NAB, Westpac, Stripe and Square, plus the Reserve Bank's implementation paper, checked 31 October 2026. This is a plain-English summary for small business owners, not legal or financial advice. Provider pricing changes often, so confirm your own rate with your provider.