AUD 1.2 billion was paid in card surcharges in fiscal 2023-24, a bill that shows how much value leaks from households and small businesses. Stripe’s Australia guidance reports the AUD 1.2 billion total for 2023-24, and the Reserve Bank of Australia’s March 2026 Review of card payments recommended ending surcharging on debit and credit cards from 1 October 2026. The RBA also proposed lower interchange fee caps, caps on foreign-card fees and tighter transparency rules for payment service providers, and the federal government has given the ACCC AUD 2.1 million to tackle excessive surcharging. Small merchants can act now to cut fees while regulatory changes roll out.

Start with the read. The surcharge tab is no longer a minor annoyance. It's a visible transfer of money between customers and merchants, and the Reserve Bank of Australia has decided the practice must end by 1 October 2026. That decision is both a consumer protection move and a market signal that merchant costs have been opaque for too long.

Five ways you overpay, and the precise fixes

1) Taking flat-rate bundled quotes without fee detail. Many small businesses accept a single "flat" rate and assume they know the cost. In reality, flat-rate offers can hide the acquirer markup and add-on line items. The fix is simple and specific. Ask for an interchange-plus fee schedule and a full statement breakdown so you can separate interchange, scheme fees and the acquirer markup. Demand typical per-transaction examples for your card mix. Industry guides recommend interchange-plus as the transparency benchmark, and the RBA has spoken to the need for clearer fee reporting from providers.

2) Not optimising card mix. Some cards cost much more to accept than others. The Reserve Bank’s published data and industry summaries place the weighted average merchant service fee for credit card transactions at about 0.89% as at March 2023, while average debit (EFTPOS) fees were around 0.21%. Higher-cost credit and foreign-issued cards will inflate your average fee. Practical steps include steering customers to lower-cost methods where doable, checking which card types your pricing assumes when you set surcharges, and comparing how providers route foreign-card transactions. The RBA’s planned caps on interchange and foreign-card fees should reduce costs once implemented, but merchants should optimise their mix now.

3) Applying incorrect or excessive surcharges. Australian rules enforced by the ACCC and guided by RBA standards allow businesses to surcharge only to recover the actual cost of processing a card payment. The surcharge must be clearly disclosed before payment, must not exceed the business’s cost of acceptance, and must reflect differences between card types. Charging more than processing costs risks ACCC enforcement and customer complaints. Fix this by calculating your surcharge from your merchant statements, applying it only to genuine processing costs, and disclosing the amount at entry and at checkout.

Mastheads

Accounting software can automate calculations and keep you compliant.

4) Overlooking hidden contractual fees. Merchant service fees aren't just interchange and scheme fees. Acquirers often add terminal rental, monthly statement-keeping charges, batch settlement fees and chargeback fees. These can add materially to annual costs without a merchant noticing. The remedy is an audit: compile a checklist of common line items, ask your acquirer to explain every recurring fee, and negotiate to remove or reduce charges. When you compare providers, look at the total cost of acceptance, not headline rates alone.

5) Failing to shop around or compare offers. Small merchants frequently stay with incumbent banks or processors and miss cheaper alternatives. The RBA has signalled a move to require more complete fee information from payment service providers and said it will publish merchant fees to make comparisons easier. In the meantime, use published benchmarks, request full quotes from multiple acquirers, and insist on the precise information the RBA has proposed providers must supply. Competition will work for you only if you demand the data.

Background, politics and practical context

The shift away from cash has increased the stakes for merchants. Industry summaries note a large increase in EFTPOS terminals since the late 1990s, reflecting broad consumer adoption of card payments. As card use rose, regulators moved from permitting broad surcharging to tighter controls because surcharges were often poorly disclosed and sometimes exceeded actual costs. The RBA’s March 2026 Review concluded that surcharging had outlived its usefulness as a market signal. Consumer advocates and the RBA argued that complexity and poor disclosure harm consumers, while payments providers and some merchants still see value in surcharge flexibility to reflect particular card costs.

Policy is active. The federal government provided AUD 2.1 million to the Australian Competition and Consumer Commission to crack down on excessive surcharging, and it said it had considered a debit-surcharge ban in earlier policy work. The RBA paired a staged end to surcharging with lower interchange caps and greater market transparency to protect small businesses’ margins. That mix of enforcement, disclosure and fee caps is meant to reduce the overall cost of card acceptance, not simply shift costs around.

For small-business owners, that means two parallel tracks. One is immediate housekeeping: demand interchange-plus statements, audit contracts, and adjust pricing and payment options to favour lower-cost methods. The other is policy watching: the RBA will publish merchant fees and enforce new transparency rules ahead of the October 2026 cut-off, which should make price comparison and negotiation easier.

These steps are both defensive and opportunistic. If you can show a lower total cost of acceptance to customers, you protect margin and pricing power while regulators finish the job.

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The Reserve Bank has set 1 October 2026 as the target date to end card surcharging and signalled it will publish merchant-fee data and tighten disclosure rules ahead of that deadline. Merchants should audit their statements, demand interchange-plus pricing, and compare provider quotes now to protect margins before the changes take effect.

This article was created with AI assistance.