The card surcharge is gone. Where that cost went, and what it does to your earnings

From 1 October 2026 a business can no longer add a surcharge when a customer pays with eftpos, Mastercard or Visa. Debit, prepaid and credit are all covered, and American Express removed surcharging on its own cards from the same date. The Reserve Bank made the decision on 31 March under powers it already had, which is why it took effect without a bill going through Parliament.

If you never surcharged, the change may leave you slightly ahead. If you did, a line in your accounts stopped on a Thursday, and a buyer looking at this year will want to know where it went.

Both sides of it

The Reserve Bank's case. Its Payments System Board found the surcharging framework was "no longer achieving its intended purpose". It estimates consumers were paying $1.6 billion of the $1.8 billion in surcharges charged each year. Alongside the ban it lowered the caps on interchange, the wholesale fee underneath every card payment, which it says will cut merchants' costs by around $910 million a year. Its media release says "small businesses should benefit the most because they tend to pay fees closer to the existing caps".

The small business case. About 16 per cent of merchants surcharged, on the RBA's own figure. For them the recovery stopped in full on day one. The saving from lower interchange arrives through the payment provider, and it is smaller than a surcharge that was recovering the whole merchant fee. A nursery owner in regional South Australia told the ABC he expected to raise prices anyway, and that his card fees ran to tens of thousands of dollars a year. A bakery owner in Mount Gambier who had never surcharged said he paid $5,785 in card fees last financial year.

The RBA does not dispute the first effect. Its paper says it "anticipates that the 16 per cent of merchants that currently surcharge may increase their advertised prices to cover the cost of accepting card payments". So the argument is not really about whether the cost exists. It is about who shows it, and where.

Where the cost went

It did not go anywhere. It moved from a separate line the customer could see to somewhere inside your prices or your margin.

Take an illustration, and it is only that. A business turning over $1.2 million, with 85 per cent of it paid by card, at a merchant fee of 1.2 per cent, pays $12,240 a year to accept cards. If a surcharge was recovering all of that, there are now three possibilities.

You repriced and volumes held. Earnings are where they were. The evidence is your gross margin by month from October onward.

You absorbed it. Earnings are lower by up to $12,240, less whatever your provider has taken off your rate.

You pushed customers toward cash. Card fees fall, and so does the share of your revenue that arrives with a bank record attached. Cash that is banked and declared is fine. It is also revenue a buyer has to work harder to verify.

None of those is wrong. Each one leaves a different trail, and a buyer will read whichever one you left.

How it reads in the accounts

This is the part that catches owners out, because the surcharge was never recorded the same way twice.

Some bookkeepers posted it to sales. Some posted it to other income. Some netted it off against merchant fees so the expense line looked small. Whichever yours did, FY27 now holds three months of the old treatment and nine of the new one.

Posted to sales, your revenue appears to step down in October with no fall in customers. Netted against fees, your merchant fee line appears to jump. Either way somebody comparing FY27 with FY26 sees a change with no explanation beside it.

A buyer restates your earnings to today's cost base whether or not you do. The surcharge is the same exercise as the wage rise, on a smaller line. One page settles it: what the surcharge recovered in the last full year, where it was posted, what the merchant fees are now, and what happened to prices on 1 October.

What to do this quarter

• Ask your payment provider, in writing, what your rate is from 1 October and how much of the interchange reduction has been passed through. The RBA has said it expects the reductions passed on in full and will publish which providers do.
• Find out how the surcharge was posted in your accounts and make a note of it against FY27, so the comparison with FY26 is explained once.
• Check nothing is still surcharging. A terminal, an online checkout or an invoice template that still adds a fee on those cards is a problem your provider will raise, and a question a buyer's solicitor will ask.
• Watch margin by month, not by year. By February you will have enough months to show whether the repricing held.

The honest version

On a turnover of a million dollars this is a small number. It matters at a sale for a different reason: it is a change to earnings that happened on a known date, and a buyer tests how well you understand your own accounts on exactly that kind of item.

An owner who can say what the surcharge was worth, where it went and what replaced it has answered a question about more than card fees. If you want to see how a buyer builds up the earnings figure that question feeds into, it is set out line by line.