Businesses incur costs for processing certain card payment types. Some businesses typically included these costs in the prices they charged for their products, whilst others passed on the costs for paying with a card as a “surcharge“. From 01 October 2026, this all changes and no surcharges are payable at all.
Many card payment facilitators (such as Stripe) charge businesses that use their service differently depending on the card used. For example, domestic cards within Australia such as Visa and Mastercard may be processed at 1.8% plus 30c per transaction whereas international cards like American Express may be processed at 3.5% plus 30c per transaction (excluding the cost of any currency conversion, if required).
Previously, the rules that applied when a business applies a surcharge to particular cards included:
- the surcharge can only include costs that are for accepting that payment type and the surcharge must not have been more than what it actually costs the business to process that payment type
- if there was no way for a consumer to pay without paying a surcharge (for example debit/credit card only transactions), the business must include the minimum surcharge payable in the displayed price for its products. (If customers paid by cash, direct transfer or cheque, then this isn’t required)
- if a business charged different surcharge amounts for different card types, they must have clearly displayed the higher surcharges for other card types.
- If a business could charge the same fee they are charged for each card type (for example the 1.8% for Visa and 3.5% for AMEX above), but rather imposed one standard level of surcharge for all card types, they could only charge the lowest possible surcharge (being 1.8%)
From 01 October 2026, businesses must not pass on any surcharge for accepting payment via EFPTOS, Visa or Mastercard and instead must absorb the cost. Payment via BPAY, PayPal or international cards like Diners Club, JCB or AMEX are excluded by these changes for now, with changes expected in April 2027.
Practically, this means that in the Reserve Bank of Australia’s push for transparency, consistency and simplicity, the costs for goods and services sold to consumers will simply be increased by most businesses as they adjust their pricing strategy to cover the shortfall caused by the inability to pass on the costs via a surcharge.
Businesses may also need to update their Terms of Trade accordingly.
FURTHER INFORMATION
Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to the leasing or licensing of business premises, commercial law or business related matters, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.
This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your legal concerns or objectives.
