> ## Content Index > Fetch the complete content index at: https://www.benchmarkanalytics.com.au/llms.txt > Use this file to discover other available public pages before exploring further. # Explainer: Why Australia's 23-year card surcharge experiment is ending - URL: https://www.benchmarkanalytics.com.au/why-australias-card-surcharge-experiment-is-ending/ - Published: 2026-09-29T21:00:47.000Z - Updated: 2026-09-29T21:00:47.000Z - Description: Australia deliberately enabled card surcharging in 2003 to improve payment price signals and merchant bargaining power. Twenty-three years later, the RBA has concluded that the system no longer works as intended. - Author: Nick Hossack - Tags: Card Surcharges, Interchange Regulation, RBA, Visa, Mastercard, eftpos, Payments System Regulation, Retail Payments, No Surcharge Rule, #payments From **1 October 2026**, card surcharges will largely disappear from Australian shops. But describing this as an RBA “ban on surcharging” misses the most interesting part of the story. Australia is actually unwinding a regulatory intervention that began in **2003**. Before 2003, Visa and Mastercard generally prohibited merchants from adding a surcharge when customers paid by credit card. The Reserve Bank regarded those “no-surcharge” rules as inefficient. A customer using an expensive credit card could pay exactly the same shop price as somebody using a cheaper payment method, with the merchant recovering payment costs through prices charged to everybody. The RBA therefore required the schemes to allow merchants to surcharge from **1 January 2003**. American Express and Diners Club made similar undertakings. The reform had two economic objectives: give consumers a price signal encouraging cheaper payment methods, and give merchants leverage to negotiate lower card-acceptance fees. Initially, that logic was powerful. The person choosing the more costly payment method could be asked to pay its additional cost. But the system evolved. As surcharging spread, some charges bore little relationship to actual payment costs. In **2013**, the RBA allowed card schemes to limit surcharges to the “reasonable cost of acceptance”. In **2016**, Parliament prohibited excessive payment surcharges and gave the ACCC enforcement powers. The bigger change, however, was technological and behavioural. Cash fell from **69% of in-person transactions in 2007 to around 15% in 2025**. Many small businesses adopted payment plans charging one blended percentage for all cards, and only about **5% of merchants now apply different surcharge rates to debit and credit cards**. A surcharge therefore often no longer tells a customer which payment instrument actually costs less. The RBA estimates **16% of Australian merchants** surcharged designated cards in 2024–25, generating around **$1.8 billion of surcharges**. It also found poor disclosure, enforcement difficulties and payment providers offering merchants effectively “fee-free” arrangements by automatically passing their charges to customers. So the RBA has changed where it wants the competitive pressure to operate. From 1 October, it will stop prohibiting Visa, Mastercard and eftpos from imposing no-surcharge rules. Those networks have chosen to do so. American Express, UnionPay and PayPal are also removing surcharging, although they are not covered by the same RBA regulation. The cost of accepting a card does **not** disappear. A merchant must absorb it, negotiate a cheaper payments deal, or incorporate it into the advertised price. Consumers using cheaper payment methods will consequently again bear some of the cost of more expensive cards. That is why the reform is a package rather than simply the end of surcharging. From the same date, the RBA is reducing domestic interchange caps and requiring greater disclosure of card and merchant-service fees. Australia is therefore returning to something resembling the pre-2003 pricing model — but in a world where cards dominate payments and cash is no longer obviously the cheaper alternative. Australia's card surcharge experiment From no surcharging → surcharging → back to no-surcharge rules | Pre-2003 | **Card networks prohibit surcharging** Visa and Mastercard rules generally prevent merchants charging customers extra for paying by credit card. | | --------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | 2003 | **RBA gives merchants freedom to surcharge** The RBA prohibits card networks from imposing no-surcharge rules. Objective: expose consumers to payment costs and encourage lower-cost payment choices. | | 2013 | **Surcharging is constrained** Card schemes are allowed to limit surcharges to a merchant's reasonable cost of accepting the card. | | 2016 | **Excessive surcharging prohibited by law** Merchants cannot surcharge above their permitted cost of acceptance. The ACCC receives enforcement powers. | | 2025 | **Payments have fundamentally changed** Cash falls to around 15% of in-person payments. Around 16% of merchants surcharge designated cards. Estimated surcharges reach $1.8 billion. | | 1 Oct2026 | **Card networks restore no-surcharge rules** The RBA stops prohibiting no-surcharge rules. Visa, Mastercard and eftpos then use their scheme rules and contracts to prevent merchants surcharging their cards. | **The key point:** the RBA is not directly banning merchants from surcharging. It is removing the regulatory prohibition that has prevented card networks from imposing their own no-surcharge rules since 2003\. **What doesn't disappear?** The cost of accepting cards. Merchants will still pay payment-processing costs. These can be absorbed, negotiated down or incorporated into the general prices of goods and services. **Source:** Reserve Bank of Australia; ACCC. Surcharges disappear. Payment costs don't. | **Today** | Merchant can pass card acceptance cost directly to the card user | | ------------------ | ------------------------------------------------------------------------------------------------------- | | **From 1 October** | Merchant absorbs the cost, negotiates a lower payment fee, or incorporates the cost into general prices | The reform changes **who sees the payment cost and how it is recovered**. It does not make card payments free.