For years, the price a small business paid to accept a card was something most owners barely looked at — a line on a statement, grumbled about and forgotten. That is about to change, because the single biggest shake-up in Australian card payments in two decades has turned merchant fees into a competitive weapon. And the banks have started swinging it.
Why the fee suddenly matters
The trigger is the 1 October 2026 surcharging ban. From that date, businesses can no longer add a surcharge on eftpos, Mastercard or Visa debit, prepaid and credit cards. The little “1.5% card fee applies” line on the receipt disappears — and with it, the ability to pass acceptance costs straight to the customer.
That single change transforms the economics of the merchant service fee. When you could surcharge, the fee your acquirer charged was largely the customer’s problem. Once you cannot, every basis point of that fee comes out of your margin. Suddenly the rate on your merchant agreement is not background noise; it is a direct hit to profit — and acquirers know it.
By the numbers
- CommBank is cutting its in-store Merchant Service Fee for simple flat-rate plans from 1.1% to 0.99% (including GST), effective 1 October 2026.
- Roughly 16% of Australian businesses were charging card surcharges at the time the ban was announced — all of whom must now rethink pricing.
- The RBA has estimated the reform ends around $1.6 billion a year in consumer surcharges, while lower interchange caps are projected to save merchants in the order of hundreds of millions annually.
- Card issuer interchange revenue is expected to fall by roughly $660 million as the new caps take effect — the mechanism designed to lower acceptance costs at the same moment surcharging ends.
The first shot: CommBank’s 0.99%
Australia’s largest bank has moved first and loudest. From 1 October, CommBank is dropping the headline in-store rate on its simple flat-pricing plans to 0.99% including GST, framing it explicitly as help for merchants “with some of the costs of accepting payments” now that they can no longer surcharge. The bank has said it will contact every merchant customer before 1 October about the compliance changes.
To make the number concrete, CommBank offered its own worked example: a local café turning over about $900,000 a year would save on the order of $1,000 annually from the cut. That is not life-changing for any single business, but across hundreds of thousands of merchants it is a meaningful transfer — and, just as importantly, a marketing line the other majors cannot ignore.
Why this becomes a price war
Here is the competitive dynamic. Acceptance costs are falling for every acquirer at once, because the RBA is cutting interchange — the wholesale fee baked into each transaction — on the same date. When a shared input cost drops for the whole industry, the pressure to pass some of it on and compete on the headline rate becomes intense. No acquirer wants to be the one still quoting 1.1% while a rival advertises 0.99%.
Expect the other majors and the specialist acquirers to respond, and expect the marketing to get loud. For merchants, this is the rare moment when switching or renegotiating carries real leverage — because the providers are motivated to keep and win business in a newly transparent market. Businesses on Interchange Plus or Interchange Plus Plus plans should see the interchange component fall automatically as the caps take effect, but the margin their acquirer charges on top is exactly where the competition will play out.
The trap hidden in the good news
There is a catch worth flagging, because it is where careless merchants will lose money. A lower advertised rate is not the same as a lower effective cost. Flat-rate plans bundle expensive and cheap transactions into one blended number; a business with a lot of debit volume might do better on an interchange-plus plan that lets the cheaper debit interchange flow through — especially with least-cost routing switched on to send contactless debit down the cheapest network. The 0.99% headline is a starting point for a conversation, not the end of one.
The single highest-value hour a merchant can spend this month is a call to their acquirer asking three things: what will my blended rate actually be after the October interchange cut; is least-cost routing enabled on every channel; and is there a plan that better suits my mix of debit and credit now that I can no longer surcharge? The businesses that ask those questions will capture the savings the reform intends. The ones that passively accept whatever lands will leave money on the table.
It is worth remembering who the reform is ultimately for. The RBA’s framing was that consumers stop paying visible surcharges while merchants get lower underlying costs — a rebalancing, not a giveaway to either side. In a genuinely competitive acquiring market, a share of the interchange savings should reach merchants as lower headline rates, and a share of the cost a merchant now absorbs should be offset rather than simply eaten. The winners are the businesses that make sure they are on the receiving end of both effects — the rate cut and the interchange reduction — instead of quietly absorbing a surcharge they can no longer pass on.
The bigger picture
Step back and the fee war is a sign the reform is working as designed. The RBA’s bet was never that banning surcharges alone would help merchants — it was that banning surcharges and cutting interchange and forcing more transparency would push acceptance costs down through competition. CommBank’s 0.99% is the first visible evidence of that theory playing out in the market. The interchange savings are real, the competitive pressure is real, and for once the merchant holds a little leverage.
The window to use that leverage is short. On 2 October, the surcharge is gone whether or not a business has renegotiated. The smart operators are treating the next few weeks as the cheapest renegotiation opportunity they will get in years.
Forward this to the business owner who hasn’t looked at their merchant statement in years. Right now, for a few short weeks, the banks are competing for their business — and a single phone call could lock in the savings. Share it before 1 October.