From 1 October 2026, the economics of accepting cards in Australia will change. Merchants will generally lose the ability to add a separate surcharge to eftpos, Mastercard and Visa card payments. At the same time, lower interchange caps will reduce an important wholesale component of the merchant service fee on Australian-issued cards.
The changes are intended to work as a package: consumers get clearer, all-inclusive prices, while merchants receive lower underlying card costs. But there is an important timing distinction. The domestic interchange changes begin on 1 October 2026; the new cap for foreign-issued cards does not begin until 1 April 2027.
What changes on 1 October 2026?
The Reserve Bank of Australia has removed the regulatory restriction that prevented designated card networks from imposing “no-surcharge” rules. The RBA says eftpos, Mastercard and Visa have each decided to introduce those rules from 1 October 2026. American Express has also announced that it will remove surcharging from that date, although it is not currently regulated by the RBA in the same way.
For affected payments, a merchant will no longer be able to add an extra charge simply because the customer pays using that card. Businesses will still pay to accept cards. Those costs may be reflected in the ordinary price of goods and services, but not presented as a separate card surcharge where the applicable network rules prohibit it.
The change concerns card-payment surcharges. A genuine weekend surcharge, public-holiday surcharge, booking fee or service fee is not automatically prohibited merely because card surcharging changes. However, relabelling a card surcharge does not necessarily alter its substance. Businesses should review any fee that applies only when a customer uses a particular payment method and obtain advice where the position is uncertain.
The interchange changes at a glance
| Transaction acquired in Australia | Before the reform | New position | Effective date |
|---|---|---|---|
| Australian-issued debit and prepaid | Cap of 10 cents, or 0.20% where percentage-based; weighted-average benchmark of 8 cents | Cap of 8 cents, or 0.16% where percentage-based; 8-cent benchmark retained | 1 October 2026 |
| Australian-issued consumer credit and charge cards | Cap of 0.80%; weighted-average benchmark of 0.50% | Cap of 0.30%; benchmark abolished | 1 October 2026 |
| Australian-issued commercial credit cards | Cap of 0.80%; included in credit benchmark | Cap remains 0.80%; benchmark abolished | 1 October 2026 |
| Foreign-issued debit, prepaid and credit cards accepted in Australia | No Australian interchange cap; RBA estimates weighted-average interchange of about 1.75% | Uniform cap of 1.00% across card-present and card-not-present transactions | 1 April 2027 |
Interchange is not the merchant service fee itself. It is a wholesale fee within the card-payment chain and is only one component of what the merchant ultimately pays. Scheme fees, acquiring margin, gateway charges, terminal rental, fixed transaction fees, fraud services and other charges may remain.
Domestic consumer credit cards: the largest immediate reduction
The most significant domestic change is the reduction of the consumer credit interchange cap from 0.80% to 0.30% of transaction value. The existing 0.50% weighted-average benchmark will be abolished.
The RBA found that the average consumer credit interchange rate was approximately 0.47%, but the distribution was uneven. Some large merchants obtained strategic rates as low as 0.18%, while small merchants could face rates up to the existing 0.80% cap. A uniform 0.30% cap therefore has the potential to benefit smaller merchants disproportionately.
On a $100 consumer credit transaction, the maximum regulated interchange amount falls from 80 cents to 30 cents. That does not mean every merchant service fee must fall by exactly 50 cents. A merchant may already have attracted a lower interchange category, and the acquiring price contains costs other than interchange. It does mean that the wholesale ceiling applying to the transaction has fallen materially.
Domestic debit and prepaid cards: a smaller but still relevant change
The debit and prepaid cap falls from 10 cents to 8 cents per transaction. Where an interchange fee is percentage-based, the cap falls from 0.20% to 0.16%. The weighted-average benchmark remains at 8 cents.
The RBA observed that weighted-average debit and prepaid interchange had already fallen to around 6 cents, below the benchmark. This means the average system-wide reduction may be less dramatic than the consumer-credit change. Nevertheless, lowering the cap limits higher debit categories and can help merchants—particularly smaller businesses—whose transactions were priced nearer the old ceiling.
Merchants should continue to ask whether least-cost routing is available and enabled. The interchange reforms do not remove the value of routing eligible debit transactions efficiently.
Commercial credit cards: the cap stays at 0.80%
Australian-issued commercial credit cards will be treated separately from consumer credit cards. Their interchange cap remains at 0.80%, while the credit benchmark is abolished.
This distinction matters for merchants with a high proportion of business, corporate, purchasing or virtual-card transactions. They should not assume that all Australian-issued credit cards will move to the new 0.30% cap. Providers should explain how they identify commercial cards and how those transactions affect blended pricing.
Foreign-issued cards: the reduction arrives six months later
From 1 April 2027, interchange on foreign-issued debit, prepaid and credit cards acquired in Australia will be capped at 1.00% of transaction value. The cap applies to both card-present and card-not-present payments.
This is significant for tourism, accommodation, travel, education, online retail and other merchants with substantial international-card volumes. The RBA estimates that foreign-issued cards represent only around 3% of Australian card transactions but about 20% of interchange paid by acquirers. It estimated the weighted-average interchange rate on those transactions at approximately 1.75% before the reform.
The foreign-card cap may also benefit merchants on blended or single-rate plans. The RBA found that high foreign-card interchange can inflate a single rate charged across domestic and international cards. Reducing that expensive tail should put downward pressure on the blended rate—but again, the outcome depends on provider pass-through.
What happens to credit-card rewards points?
The reform does not directly regulate how many points a bank may award. It changes a source of revenue historically used to fund some rewards programs.
The RBA found evidence that consumer credit interchange was being used by multiple issuers to fund frequent-flyer and other cardholder rewards. Its stated position is that, if issuers want to offer rewards, it is more efficient for issuers to bear that cost than for merchants to fund it through higher interchange fees.
Likely issuer responses are an inference, not a requirement of the new standards. Banks and card issuers could:
- reduce the number of points earned per dollar;
- introduce or tighten monthly points caps;
- exclude more transaction categories from earning;
- increase annual card fees or program fees;
- reduce sign-up bonuses, insurance or lounge benefits;
- increase the number of points required for a reward; or
- absorb more of the rewards cost from their own margin.
The effect will vary by issuer and product. Premium rewards cards that depend heavily on interchange revenue are more exposed than basic cards with few benefits. Commercial-card rewards may be affected differently because the 0.80% commercial interchange cap remains.
Why merchant service fees should fall
The RBA estimates that the domestic and foreign interchange reforms together will lower wholesale card-payment costs by around $910 million per year. It expects small merchants to benefit most because they have tended to pay interchange nearer the existing caps.
However, the RBA does not set each merchant’s retail acquiring price. Payment service providers remain responsible for their own merchant pricing. A provider could pass through the full wholesale reduction, pass through only part of it, alter other fees, or leave a flat rate unchanged until commercial pressure forces a review.
To make pass-through visible, large acquirers will have to publish quarterly measures comparing changes in average merchant service fees with changes in average interchange. The first pass-through publication is due by 30 January 2027 for the quarter from 1 October to 31 December 2026. Additional merchant-statement information and the foreign-card cap begin on 1 April 2027.
How much should an individual merchant expect to save?
There is no single correct percentage. The saving depends on card mix and contract structure.
- Cost-plus or interchange-plus pricing: the interchange reduction should be more directly visible, assuming the provider does not increase its margin or other charges.
- Blended pricing: the provider should recalculate the blended rate, but the timing and amount may not be automatic.
- Flat-rate pricing: the public rate may not change immediately. Merchants may need to negotiate or compare providers.
- High consumer-credit mix: likely to see more benefit from October 2026.
- High commercial-card mix: likely to see less benefit because the commercial cap remains at 0.80%.
- High foreign-card mix: may see a further reduction from April 2027.
A simple illustration: suppose a merchant processes $100,000 per month in Australian-issued consumer credit cards and the affected interchange component averages 0.47%. If it falls to 0.30%, the wholesale reduction is approximately $170 per month, before considering other card types and fees. A merchant paying interchange nearer the old 0.80% cap could have a larger theoretical reduction. Actual provider pricing may differ.
A merchant action plan
Before 1 October 2026
- Identify every card surcharge across terminals, invoices, payment links, booking systems and ecommerce checkouts.
- Confirm implementation requirements and any exemptions directly with each payment provider.
- Decide how card costs will be incorporated into ordinary pricing.
- Download several months of merchant statements and calculate the current effective merchant service fee.
- Request written pricing effective from 1 October, separated by domestic debit, consumer credit, commercial credit and foreign-issued cards where possible.
From October 2026
- Confirm card surcharges have been removed from every channel.
- Compare the new merchant service fee against the July–September 2026 baseline.
- Check that consumer credit reductions have not been offset by new gateway, terminal or account fees.
- Ask flat-rate providers when their public or negotiated pricing will reflect lower wholesale costs.
- Review the acquirer pass-through publications due from January 2027.
From April 2027
- Review foreign-issued card pricing after the 1.00% cap begins.
- Check the additional fee information on merchant statements.
- Reprice or retender the facility if the provider has not passed through a reasonable reduction.
The bottom line
From 1 October 2026, Australian merchants will generally need to treat card acceptance as an ordinary business cost rather than recover it through a separate customer surcharge. In exchange, the wholesale cost of domestic consumer credit—and, to a lesser extent, debit and prepaid acceptance—should fall.
The largest potential winners are smaller merchants paying rates near existing interchange caps. Merchants with foreign-card exposure should expect a second stage of savings from 1 April 2027. But lower regulated interchange does not guarantee an identical reduction in the retail merchant fee. Merchants should measure, question and compare.
Primary sources
- RBA: Interchange Fees — Conclusions Paper
- RBA: Removal of payment surcharges FAQ
- RBA: Impact and implementation
- RBA: Varied standards and implementation table
- ACCC: Card surcharges for businesses
Information current as at 20 August 2026. This article provides general information only and is not legal, financial or professional advice. Businesses should confirm their obligations and commercial pricing with their payment provider and advisers.