What Changed on 1 October
The Reserve Bank of Australia published the conclusions of its review of merchant card payment costs and surcharging in March 2026. The headline decision took effect today: businesses can no longer surcharge payments on the eftpos, Mastercard and Visa networks. That covers debit, prepaid and credit cards, Australian and foreign, whether the customer taps at the counter, pays online or reads out a card number over the phone. American Express has announced its own no-surcharge rules from the same date. If you take other payment methods, check how each one is treated with your provider.
At the same time the RBA is lowering the interchange caps behind card fees and making card networks and large payment providers publish what they charge. The RBA estimates consumers were paying $1.6 billion a year in surcharges, and that the lower caps will cut wholesale card costs for merchants by about $910 million a year, with small merchants benefiting most. Roughly one in six Australian businesses was surcharging, so for most it is a change at the counter and on paperwork rather than a crisis.
The examples below are illustrative
The figures are round numbers chosen to show the method, not measurements of any real business. Use your own card turnover and your own merchant statement. This is general information, not financial or legal advice.
Worked Example: The Cafe
Picture a busy suburban cafe taking $40,000 a month on cards. Its payment plan charges a blended 1.1% on every card, so accepting cards costs $440 a month. Until yesterday it added a 1.1% surcharge, so customers were covering almost all of that. From today they are not. Here are four ways the month could look.
Absorbing the whole cost means $5,280 a year out of the cafe's margin, which is real money for a small hospitality business. But look at the other lines. If a call to the provider moves the cafe to a plan that passes on the lower interchange caps and gets the effective rate to 0.8%, the monthly cost falls to $320. Covering that through prices means lifting the average sale by 0.8%. On a $5.50 coffee that is about four cents, which in practice means a five cent rise on coffee and nothing else, or a small rise on a few popular items.
| Scenario (illustrative) | Monthly card cost | Price change needed to cover it |
|---|---|---|
| Absorb it on the current plan | $440 from margin | None, but $5,280 a year |
| Reprice on the current plan | $440 covered | About 1.1% on average |
| Better plan, then absorb | $320 from margin | None, $3,840 a year |
| Better plan, then reprice | $320 covered | About 0.8% on average |
The order matters. Ring the provider first, then set prices. Reprice first and you may lock in a rise you did not need.
Worked Example: The Plumber Who Invoices
Now a two-van plumbing business. It invoices about $30,000 a month, and around $12,000 of that is paid by card, mostly through payment links on the invoice and a few payments taken over the phone. The invoice template carried a line: "1.5% fee applies to card payments." That fee recovered about $180 a month.
The money is smaller than the cafe's, but the work is spread across more places, because this business takes payment in three different ways.
The invoice template
Remove the fee line from the template in the accounting software, and from any recurring invoices for maintenance contracts.
The payment link
The fee is often set inside the payment link settings, separately from the invoice. Pay a test invoice by card and check the total.
Payments over the phone
Whoever takes card details on a call needs a new script without the fee, and the virtual terminal needs its surcharge setting turned off.
One more: customers already holding a quote that mentions a card fee will ask about it. A short note when the job is booked avoids an argument when it is paid.
For covering the cost, $180 a month across roughly 120 jobs is $1.50 a job. The plumber could absorb it, or add a dollar or two to the call-out fee and change nothing else. Either way the customer sees one clear price, which is the point of the reform.
The pattern in both examples
Surcharges felt like they were recovering a lot, because they appeared on every receipt. Spread across all sales, the cost is usually well under 1%. Check your own numbers before assuming you need a big price rise.
What You Can and Cannot Do Now
The rules are simpler than the old ones, which is part of why the RBA made the change. Here is the short version.
The grey area businesses ask about most is the renamed fee. A "processing fee" or "service fee" that only appears when someone pays by card is still a surcharge, whatever it is called, and calling it something else is likely to mislead customers. A genuine fee that applies to everyone, however they pay, such as a delivery charge, is a different thing. If you are unsure about a particular fee, ask your payment provider or adviser.
Ring Your Provider Before You Reprice
The lower caps are the part of the reform that can put money back in your pocket, but only if they reach your plan.
0.3%
New interchange cap on Australian consumer credit cards
8c
New debit and prepaid cap, or 0.16% of the transaction
1.0%
New cap on foreign issued cards, from 1 April 2027
Interchange is the wholesale fee your provider pays the card issuer. What you pay, the merchant service fee, adds scheme fees and your provider's margin on top. On a cost plus plan, lower interchange should flow through to you automatically. On a simple flat rate plan, it may not unless the provider decides to pass it on. Commercial credit cards keep their 0.8% cap, so if many of your customers pay with business cards, your saving will be smaller.
When you ring, ask four things: whether your rate will fall now the caps are lower, whether least-cost routing is switched on for dual network debit cards, when your statement will show the new standardised breakdown, and whether surcharging has been turned off on every terminal and gateway on your account. Card networks and large providers must also publish their fees, which makes it easier to check whether the rate you are quoted is fair.
The Question Your Phone Will Get All Month
"Do you still charge for card?" It sounds trivial, but multiply it by every caller, every booking and every invoice query in October and it adds up. For a busy small business the best answer is one nobody on the team has to give, because the phones and messages give it for them.
- Your AI phone agent: add a line to its knowledge, for example "We do not charge card surcharges. We accept eftpos, Visa, Mastercard and cash." It will answer accurately at 2pm or 2am and move on to the booking.
- Your greeting and on-hold message: if either mentions payments or surcharges, update it today. A short on-hold line saying you no longer charge card surcharges answers the question before it is asked.
- One SMS to regulars: a friendly message from your business number, not a staff mobile, is enough. It is good news, so it is a good reason to be in touch.
- Payment links by SMS: for phone payments, sending a secure link is quicker than reading out a card number, keeps card details off your call recordings, and shows the customer the exact amount with no fee.
- The staff script: write down one sentence everyone uses, so the answer is the same whether it comes from the owner, a casual or the AI.
If you have not set up an AI agent yet, this is a tidy first job for one: a common, simple question with one right answer. Our guide on whether AI can answer your business calls covers what they handle well, and business SMS from your phone system explains sending messages and links from your main number.
Squeeze the Other Fixed Costs Too
The surcharge ban lands in the same week the RBA lifted the cash rate to 4.60%, its fourth rise of 2026. Between higher repayments and card costs moving onto the price list, plenty of owners are looking for savings. Your phone and internet bills are among the easiest to check, because they repeat every month and often carry lines nobody uses any more: an old fax number, handsets in a storeroom, seats for staff who left.
Our guide to why your phone bill is higher than the quote shows where the extra usually hides. If you are also paying a separate internet provider, bundling can cut both bills. VOCPhone currently offers 50% off any nbn plan for your first three months when you add a VOCPhone Voice plan on a 12 month contract. See our nbn plans for speeds and prices at your address.
How VOCPhone Helps
VOCPhone does not process card payments, so we cannot change your merchant fees. We can make sure every part of your phone system gives customers the same clear answer. We will update your greeting and on-hold message, add payment and surcharge answers to your AI phone agent, and set you up to send payment links and messages by SMS from your business number. VOCPhone is Australian owned and runs its own network, with 99.99% uptime and support from our team in Australia, and AI agents that answer your calls whenever you cannot.
If you are reviewing costs this month, send us your current phone and internet bills. We will tell you honestly whether you would save, and by how much.
Frequently Asked Questions
Are card surcharges banned in Australia now?
Yes, for the main card networks. From 1 October 2026 businesses can no longer surcharge payments made on eftpos, Mastercard or Visa, covering debit, prepaid and credit cards, Australian and foreign, in store, online and over the phone. American Express announced its own no-surcharge rules from the same date. The change follows the Reserve Bank of Australia's review of merchant card payment costs and surcharging, whose conclusions were published in March 2026. Check how any other payment methods you accept are treated with your provider.
How much do I need to raise prices to cover card fees?
Usually less than you think. Work out your monthly card cost from your merchant statement and divide it by your total sales. In our illustrative example, a cafe with $40,000 a month in card sales at a 1.1% rate pays $440 a month, and covering that needs about a 1.1% average price rise, or about 0.8% if it moves to a plan with an effective rate of 0.8%. A plumber invoicing $12,000 a month by card at 1.5% recovers about $180, which is roughly $1.50 a job. Ring your provider about the lower interchange caps before you reprice.
Can I offer a discount for cash instead?
Yes. The RBA's conclusions say businesses can continue to offer discounts if they choose, including to customers who pay cash. What you cannot do is add a surcharge to eftpos, Mastercard or Visa payments. A fee that only appears when someone pays by card, whatever it is called, is still a surcharge. Make sure any discount is presented honestly, with the normal price clearly shown.
Will the surcharge ban lower my merchant fees?
It may. The RBA has cut the interchange cap on Australian consumer credit cards to 0.3% and on debit and prepaid cards to 8 cents or 0.16%, with a 1.0% cap on foreign issued cards from 1 April 2027. It expects wholesale card costs for merchants to fall by about $910 million a year, with small businesses benefiting most. Whether your own fee falls depends on your plan. On a cost plus plan it should flow through. On a flat rate plan, ask your provider whether it will pass the savings on, and whether least-cost routing is turned on.
What should I tell customers about the surcharge change?
Keep it short and say it everywhere once: a no card surcharges sign at the counter, an updated website FAQ, one SMS or email to regular customers, and updated wording in your phone greeting and on-hold message. If an AI phone agent answers your calls, add the answer to its knowledge. If you have adjusted prices, a simple line such as we have stopped charging card surcharges and adjusted some prices slightly instead is honest and usually well received.
How do I take phone payments without a surcharge?
Remove the fee from the script staff use when taking a payment and turn off the surcharge setting in any virtual terminal you use to key in card numbers. Many businesses now send a secure payment link by SMS instead of reading card numbers aloud, which is quicker, keeps card details out of call recordings and shows the customer the exact amount. Brief everyone who answers the phone, including casuals and any AI phone agent, so the answer to do you charge for card is always the same.
Can VOCPhone help with the surcharge ban?
VOCPhone does not process card payments, so it cannot change your merchant fees. It can update your greeting and on-hold message, add accurate payment and surcharge answers to your VOCPhone AI agent, and set up SMS from your business number for customer messages and payment links. If you are reviewing costs, VOCPhone can also check your phone and internet bills, and currently offers 50% off any nbn plan for the first three months when bundled with a VOCPhone Voice plan on a 12 month contract. Call 1300 663 222.
