The Card Surcharge Ban Is Here. What Does It Mean for Your Business?

By John Pierre Saliba · Last updated 21 October 2026 · OverdraftMe · ACL 511092

• Surcharges banned from 1 October 2026 on eftpos, Visa, Mastercard and American Express, including business-to-business card payments.
• Still allowed: weekend and public holiday surcharges, and discounts for cash, bank transfer or PayID.
• A $5.00 coffee at a 1.6% merchant fee: 8 cents a cup now comes out of margin, about $7,300 a year on a $45,000 a month till.
• RBA: $1.8 billion a year in surcharges, 16% of merchants surcharged, interchange cuts worth about $910 million a year to merchants.

How does the surcharge ban impact me?

It depends on how much of your money arrives by card and whether you were surcharging. Find your row.

If you take almost no card payments, the ban barely touches you directly. The indirect effect is that the ATO is ending credit card payments after 30 June 2027 (delayed from 30 November 2026) for the same reason, which matters if you were putting tax bills on a card.

What does the surcharge ban cover?

The Reserve Bank's standard removed surcharging on the designated card networks from 1 October 2026. It is broader than most owners expected.

The ACCC enforces it. Expect customers who know the rules before you do.

What does it actually cost you? The $5.00 coffee

Take a takeaway coffee at $5.00. These numbers are illustrative, but they are close to what a suburban cafe runs on.

Eight cents does not sound like much until you count the cups. At 300 coffees a day, six days a week, 50 weeks a year, with 85% of customers paying by card, the fee you now absorb on coffee alone is about $6,100 a year. Spread it across the whole till and a cafe turning over $45,000 a month with 85% on card hands over about $612 a month, or roughly $7,300 a year, that it used to recover at the counter.

The 1.6% is Square's published in-person rate as at October 2026. A bank merchant facility with least-cost routing on debit taps can be lower. Online and invoice payments usually cost more, often 2% or above. If you run a cafe, our cash flow guide for cafes and restaurants covers the rest of the cost stack.

Why did the RBA do it?

The RBA's conclusions paper put total card surcharges at about $1.8 billion a year, with consumers paying $1.6 billion of it, and found only about 16% of merchants surcharge at all. Its answer was to ban the surcharge and cut the wholesale cost underneath it. The interchange caps on domestic cards dropped on the same day, which the RBA expects to lower merchants' wholesale card costs by around $910 million a year, with small businesses benefiting most because they were paying closest to the old caps. A cap on foreign-issued cards and new fee transparency rules follow on 1 April 2027.

The RBA's own expectation is that the 16% of merchants who surcharged will lift advertised prices to cover the cost. That is not a loophole. That is the design. The same ban is why the ATO is ending credit card payments after 30 June 2027 (delayed from 30 November 2026).

What can I do about it? Four options

1. Reprice. A 1.5% to 2% move across the menu or price list covers a 1.6% blended fee. The $5.00 coffee becomes $5.10. The RBA expects this and customers have been primed for it by six months of news coverage. Round prices make it easier, not harder.
2. Renegotiate. The interchange cuts took effect on 1 October. Pull your September and October merchant statements and compare the effective rate. If your provider's rate has not moved, ask why, and get a quote from a flat-rate provider and from your bank. On $38,250 a month in card sales, every 0.1% is about $460 a year.
3. Re-route. Turn on least-cost routing so debit taps go through eftpos rather than the Visa or Mastercard debit network. For invoices, offer PayID or bank transfer, and you may offer a discount for it, which the ban allows.
4. Absorb it and fund the timing, not the cost. If your prices are contracted, tendered or set by a franchisor, the fee is a permanent cost until the contract rolls. A business overdraft is the wrong tool for a permanent cost. It is the right tool for the timing gap the ban sharpens: paying suppliers, wages and super weeks before card settlements and slow payers catch up. Draw an unsecured business overdraft or a business line of credit for the gap, repay when you are paid, and fix the pricing at the next review.

Who gets hit hardest?

• Cafes, restaurants, bars and takeaway, where card share is above 80% and margins are thin.
• Retail on tight margins, especially where the surcharge was a flat 1.5% on everything.
• Trades and suppliers who added 1.5% to 2% on large card payments for materials and progress claims. Business-to-business payments are covered too. See our cash flow tips for tradies.
• Anyone on contracted or regulated prices who cannot reprice until the next review.

If you were on the other side of that trade, paying suppliers by card and wearing their surcharge, the ban works in your favour. Our comparison of a business overdraft and a business credit card has been updated for the new rules.

What we have seen

In the weeks either side of 1 October the question we heard most from hospitality clients, many of them Sydney cafes across the inner west and CBD fringe, with the same story from Melbourne and Brisbane, was not about the fee. It was about the quarter. Coffee margins absorb 8 cents a cup, but the same cafe has been paying super within 7 business days of each pay run since July, and will not be able to put the February BAS on a card. Each change is small. Together they take $10,000 to $20,000 of working capital out of a business that never had much to spare. The owners who handled it best repriced in the first week, checked the merchant statement in the second, and set up a facility of around one month's turnover before they needed it, so the fee came out of margin and not out of the wages account.

The ones who struggled tried to absorb everything and discovered in late October that the cash they used to have in the bank on the 15th of the month was no longer there. The three changes together, with a worked example, are in the 2026 small business cash flow squeeze. The overdraft calculator shows what a 30 or 55 day draw costs on any amount.

Running a cafe, shop or trade business and want a second opinion on the numbers? Talk to JP, OverdraftMe's Sydney-based broker working with businesses Australia-wide, or check how much you could borrow first.