No More Card Surcharges from 1 October — So Where Does That 1-2% Actually Go?

From 1 October 2026, Australian retailers can no longer pass card surcharges on to customers.

Until now, banks and financial institutions have charged merchants a processing fee on card transactions — usually somewhere between 1% and 2% — and merchants have been able to pass that straight through on the terminal. From October, that's off the table.

Thinking about it, I've never seen a customer charged a card surcharge in Taiwan, Japan or Hong Kong. Australia is one of the few markets I've come across that does it at all. So in a sense, this change just brings us into line with what most of the world already does.

But turn the question around: that 1% to 2% the banks charge us doesn't disappear. So how do merchants absorb it?

Option one: switch to a cheaper terminal

Low-cost EFTPOS ads have been everywhere lately, all aimed at getting merchants to swap out a more expensive setup. That shift was already happening. The new rules will accelerate it.

For a lot of operators, a terminal is just a way to take money. As long as the money lands, it doesn't much matter whose logo is on the box. But I'd add one caution: alongside price, look at how stable the provider actually is.

Japan just delivered a case study. Payment processor Zentoshin was placed into bankruptcy proceedings by the Osaka District Court on 6 July. For the period of 1 to 5 July alone, more than 20,000 merchants hadn't received their takings — a total of around 5.3 billion yen. Anything processed before 5 July is now treated as a bankruptcy claim, with no clear timeline for when merchants will see it.

It gets worse. After proceedings began, some merchants' terminals were still running, processing tens of millions of yen between 6 and 15 July. Those operators were still taking card payments without knowing the money would never reach them.

My first thought reading that: the fraction of a percent you save is nothing next to a week of takings you never collect. Switching providers is fine — just ask about company size, settlement cycles and where your money actually sits before you hand it over.

This also means a lot of traditional banks and financial institutions are about to lose a large slice of their merchant business. This change reshapes the whole acquiring landscape, not just what happens at your counter.

Worth noting too: the RBA is cutting interchange caps from 0.8% to 0.3% at the same time, specifically to offset the surcharge revenue merchants lose. In theory your processing costs come down. How much, and when it shows up on your statement, depends entirely on your provider — and you'll need to ask. Nobody adjusts it for you automatically.

Option two: the quiet increases elsewhere

Here's something that happened to us.

After 1 July we started receiving notices from credit card companies raising annual fees. A card that cost $49 a year became $149 a year. That jump made me curious, so I went digging — and found that plenty of issuers running points programs have been quietly adjusting their terms too.

These look like small, incidental changes. Follow them downstream and they affect an enormous number of consumers. Money never disappears. It just reappears under a different name.

One more thing to flag: the ban only covers Visa, Mastercard and eftpos. Amex and PayPal sit outside it, and you can keep surcharging those as long as you don't exceed your actual cost. But don't get clever and rename a surcharge an "admin fee" or "service fee". The ACCC has been explicit — a new label doesn't change what it legally is, and it may be treated as misleading conduct.

So where does that 1% to 2% actually go?

If you can't pass it to the customer any more, what do you do?

Simple. It goes into the menu price.

This was meant to be good news for consumers. Go around the loop and their spend hasn't dropped — the same money has just been converted into a different kind of cost. Checkout looks cleaner, and that little surcharge line is gone. But the numbers on the price list may well have moved first.

For anyone running a store, the next three months come down to something practical: work out what card processing genuinely costs you as a percentage of revenue, ask your provider what your rate looks like after October, then decide whether you absorb it or reprice. Leave it until 1 October and all you can do is react.