From 1 October 2026, Australian businesses can no longer charge customers a card surcharge on Visa, Mastercard, or EFTPOS transactions. The RBA surcharge ban is confirmed. If your business currently recovers card costs through checkout surcharges, you need a plan now — not in September 2026. Here is exactly what to do.
APS has made a formal submission to the Reserve Bank of Australia on merchant card payment costs, putting it at the centre of this policy debate. That submission — alongside supporting thousands of independent retailers, cafes, pharmacies, and newsagencies across Australia — means the advice in this article comes from direct operational experience, not theory.
What Is the RBA Surcharge Ban and When Does It Start?
The Reserve Bank of Australia has confirmed that from 1 October 2026, businesses in Australia cannot add card surcharges to Visa, Mastercard, or EFTPOS transactions. This applies at the point of sale — in-store, online, and via mobile terminals.
The RBA announced this change as part of its 2024–25 Review of Retail Payments Regulation, citing evidence that many surcharges charged to consumers exceeded the actual cost of card acceptance.
What the ban covers
- Visa credit and debit surcharges
- Mastercard credit and debit surcharges
- EFTPOS surcharges
- Online card payment surcharges
What the ban does NOT cover
This is the part most media coverage misses. The ban applies to card surcharges — not all surcharges. Key exclusions include:
- Sunday and public holiday surcharges at cafes, restaurants, and hospitality venues — these are penalty rate cost recovery, not card fees, and remain legal
- BPAY fees — subject to separate rules
- Amex and Diners Club — these are three-party schemes and currently sit outside the mandate, though the RBA is reviewing this
The ACCC enforces surcharge rules and can investigate excessive surcharge complaints. After October 2026, any card surcharge — regardless of size — on a covered scheme is non-compliant.
The key date is 1 October 2026. Build your plan around it.
How Much Will This Actually Cost Your Business?
The cost depends entirely on your transaction mix, your average sale value, and whether you have Least-Cost Routing activated. Most small businesses are losing more than they realise.
Here is the core problem in numbers. The difference in cost between processing a standard EFTPOS debit card and a premium frequent-flyer credit card is significant:
| Card Type | Approximate Processing Cost |
|---|---|
| Standard EFTPOS debit (tap-and-go) | ~14 cents per transaction |
| Visa/Mastercard standard debit | ~0.2–0.4% per transaction |
| Visa/Mastercard standard credit | ~0.5–0.8% per transaction |
| Platinum/rewards credit card | Up to 0.8–1.5% per transaction |
At a $15 average transaction — common in cafes, bakeries, and milk bars — the gap between your cheapest and most expensive card transaction is meaningful at scale.
Real scenario: Melbourne café owner
A café in suburban Melbourne currently applies a 1.5% card surcharge across all transactions. Monthly card turnover is $45,000. That is $675 per month in recovered fees — or $8,100 per year — that disappears from 1 October 2026.
To break even, the owner has three options:
- Absorb the cost (reduces net margin directly)
- Increase menu prices by a calculated amount
- Activate Least-Cost Routing to reduce per-transaction costs
Most owners need a combination of all three — and they need their POS system to help them model it.
Real scenario: Newsagency and pharmacy owner
A retailer processing $30,000 per month in card transactions with a blended rate of 1.2% is paying $360 per month in merchant fees. Without a surcharge to pass that on, every dollar of that comes out of margin. For a business with tight margins on lottery tickets, stationery, and fixed-price health products, this is a serious structural problem.
Run your own numbers now. Take your total monthly card turnover from your last three merchant statements. Multiply by your effective rate. That is the annual exposure you are carrying into October 2026.
The Blended Rate Trap — Are You Already Paying Too Much?
If your bank or payments provider charges you a single flat percentage on all card transactions, you are on a blended rate — and it may be costing you more than you realise.
Blended rates sound simple: one number, no surprises. The problem is that they bundle cheap debit transactions together with expensive premium credit card transactions and charge you a single average rate across both. When interchange fees fall (and the RBA has been progressively capping them), your blended rate often does not fall with them. The bank keeps the margin.
How blended pricing works against you
Under interchange-plus pricing, you pay the actual network interchange fee plus a fixed margin for your provider. When interchange drops, your cost drops. Under a blended rate, you pay the same flat percentage regardless — which means the provider's margin expands as interchange falls.
APS made a formal submission to the RBA specifically on this dynamic, arguing that blended rate structures reduce transparency and make it harder for merchants to benefit from interchange reductions.
Questions to ask your provider right now
- "What is my interchange-plus rate, separate from your margin?" If they cannot answer this, you are on a blended rate.
- "Has my rate been adjusted to reflect the RBA's interchange cap reductions?" It should have been.
- "What percentage of my transactions are debit versus credit?" This determines whether LCR will materially reduce your costs.
The Australian Retailers Association has been advocating for transparent fee structures for merchants. The surcharge ban makes this conversation urgent, because after October 2026 you carry the full cost — and you need to know exactly what that cost is.
Least-Cost Routing — The Free Fix Most Retailers Haven't Turned On
Least-Cost Routing (LCR) is a terminal setting that automatically sends contactless debit transactions through the cheapest available network — usually EFTPOS. It costs nothing to activate and can reduce debit card processing costs significantly.
When a customer taps their debit card, the transaction can travel through either the card's international scheme network (Visa or Mastercard) or the domestic EFTPOS network. The EFTPOS route is almost always cheaper — often by 0.3–0.5% per transaction. LCR makes sure you always take the cheaper route.
Why haven't most retailers turned it on?
The RBA has consistently noted that while it has strongly encouraged banks and acquirers to make LCR available, it has not legally mandated activation. Many banks do not advertise LCR to their merchant customers because the scheme network fees fund card rewards programmes and bank revenue. The result: the setting exists, but it is often off by default.
According to the RBA's Least-Cost Routing data, the share of merchants with LCR enabled has grown but remains well below 100% — meaning many businesses are paying more than they need to on every single debit tap.
Three questions to ask your EFTPOS provider this week
- "Is Least-Cost Routing activated on my terminal?" Get a yes or no in writing.
- "If it is not activated, how do I turn it on?" It should be a settings change, not a hardware replacement.
- "What is my current debit transaction volume?" This tells you exactly how much LCR will save you annually.
Activating LCR before October 2026 is the single easiest cost reduction available to most Australian retailers right now.
Cash Discounts, Price Adjustments, and What's Still Legal After October 2026
Surcharging is banned. Cash discounts are not. The legal distinction matters, and it is something APS helps retailers implement correctly through their POS configuration.
The legal framework is straightforward: you cannot add a fee at checkout for paying by card. But you can set a retail price and offer a discount to customers who pay with cash. The end price the customer pays can be identical — the mechanism is what changes.
Legal options after October 2026
- Cash discount pricing: Display your standard shelf price and apply an automatic discount at the register for cash payments. The POS system handles this — no manual intervention required.
- Menu and shelf price increases: Absorb card costs into your pricing structure. A 0.5–1% increase across the board, calculated against your actual card fee exposure, is often invisible to customers but meaningful to margin.
- Membership or loyalty differentials: Legal, provided they are not structured as card surcharges.
Communicating changes to customers
Be direct and simple. A small sign near the register reading "Cash payment: 2% discount applied automatically" is clear, compliant, and builds goodwill rather than friction. What creates compliance risk is language like "card fee" or "surcharge" — avoid both after the ban takes effect.
The ACCC monitors misleading pricing closely. Any pricing structure that effectively recreates a card surcharge under a different name is likely to draw scrutiny.
The Fixed-Price Inventory Problem — Lottery Tickets, Pharmacy Lines, and More
Fixed-price products are the hardest case under the surcharge ban, and retailers carrying these lines are most exposed. If the manufacturer's price is printed on the product — or if a government body sets the price — you cannot reprice it to absorb card fees.
The most exposed business types include:
- Newsagencies — lottery tickets (Tattersalls/The Lott), newspapers, some stationery lines
- Pharmacies — PBS prescription items have regulated co-payments
- Petrol stations — fuel pricing is influenced by multiple factors limiting upward adjustment
- Post offices and licensed outlets — services with fixed government fees
What the numbers look like
A newsagency processing $8,000 per month in lottery ticket sales by card, at a merchant fee of 1.0%, is paying $80 per month — $960 per year — in card fees they cannot currently surcharge and cannot recover through repricing. After October 2026, if they were surcharging, that cost becomes permanent.
Limited but real options
- Encourage cash payment for fixed-price items — signage works; many customers will cooperate
- Offset the loss through higher-margin categories — use your POS data to identify where you can price up to compensate
- Negotiate your merchant fee rate — a better interchange-plus deal reduces the base cost before you start
- Activate LCR — particularly important for debit-heavy transaction types like lottery purchases
There is no perfect solution for fixed-price inventory. The goal is to minimise the damage and compensate through better margin management elsewhere in the store.
How to Use Your POS System to Prepare Before the Deadline
Your POS system is the most practical tool you have for managing this transition — but only if it is configured correctly. A well-set-up POS can flag high-margin items for price increases, automate cash discounts, and run merchant fee reports that show exactly where your margin is leaking.
What to look for in your POS before October 2026
Merchant fee reporting: Your POS should be able to report total card transaction volume by payment type (debit vs. credit, EFTPOS vs. scheme). If it cannot, you are flying blind on your actual fee exposure.
Cash discount automation: A capable POS applies a configured cash discount automatically at checkout — no manual calculation, no staff error, no compliance risk.
Category-level margin analysis: You need to know which product lines can support a 0.5–1% price increase without customer pushback. Your POS data contains this information if you know how to extract it.
Terminal integration: Your POS and payment terminal should be integrated so that payment type data flows back into your reports. Disconnected systems create reporting gaps.
APS is built specifically for Australian independent retailers, cafes, pharmacies, and newsagencies. The platform integrates POS, inventory, and payment reporting in a single system — which means you can model the impact of the surcharge ban on your specific product mix and automate the pricing responses before the October deadline.
APS supports thousands of independent businesses across Australia and has direct experience helping operators navigate exactly this kind of regulatory change — including making a formal submission to the RBA on merchant fee transparency.
Your October 2026 Action Plan — A Step-by-Step Checklist
Start this checklist today. Twelve months sounds like a long time. It is not — especially if you need to renegotiate merchant agreements, retrain staff, or reconfigure your POS.
Step 1: Audit your current merchant fees
- Pull the last three months of merchant statements
- Calculate your effective rate (total fees ÷ total card turnover)
- Identify whether you are on blended rate or interchange-plus pricing
- Ask your provider for a breakdown by card type
Step 2: Activate Least-Cost Routing
- Contact your EFTPOS provider and confirm LCR status in writing
- If it is off, request activation immediately — there is no cost
- Verify activation on your next merchant statement by checking debit routing percentages
Step 3: Review your merchant agreement
- Check your contract term and any exit clauses
- Ask for an interchange-plus pricing proposal
- Compare against at least one alternative provider before October 2026
Step 4: Audit fixed-price inventory
- List every product line with a regulated or printed price
- Calculate your current monthly card fee exposure on those lines
- Decide whether cash encouragement or cross-category margin adjustment is your best response
Step 5: Update pricing on flexible lines
- Use your POS margin reports to identify lines where a 0.5–1% increase is supportable
- Implement price changes before the ban takes effect, not after
- Avoid rounding-induced price anomalies that create customer friction
Step 6: Configure cash discount pricing
- Work with your POS provider to set up automated cash discounts
- Test the workflow end-to-end before going live
- Prepare simple, compliant signage for the register
Step 7: Train your staff
- Brief all customer-facing staff on what changes in October 2026
- Give them simple, accurate language to use if customers ask about pricing
- Make sure they understand the difference between a cash discount (legal) and a card surcharge (banned)
Step 8: Set a review date
- Schedule a merchant fee review for August 2026 — two months before the deadline
- Confirm your POS configuration is working as intended
- Check that LCR is still active and routing correctly
Act Before October 2026 — Not After
The RBA surcharge ban is confirmed. From 1 October 2026, the cost of accepting cards is yours to carry — and the retailers who come out ahead will be the ones who started preparing in 2025.
The practical steps are clear: activate Least-Cost Routing, audit your merchant fees, reconfigure your pricing on flexible lines, and make sure your POS system is working for you rather than against you.
APS supports thousands of independent retailers, cafes, pharmacies, and newsagencies across Australia with integrated POS and payment management tools built for exactly this environment. The team has engaged directly with the RBA on merchant fee policy — so the advice baked into the platform reflects the real regulatory landscape, not generic guidance.
Do not wait until the deadline is six weeks away. Visit aps.business today, and speak with someone who understands what this change means for your specific business.
