Australians will no longer be charged separate surcharges for using credit and debit cards from today, with Prime Minister Anthony Albanese saying the reform could save consumers $1.6 billion a year.
“Pay by card? From tomorrow, your morning coffee could be cheaper,” Albanese said in a statement ahead of the changes taking effect.
“Millions of Australians pay by card every day. And when you tap, you could pay an additional card surcharge.”
The surcharge ban, introduced as part of broader reforms to Australia’s payments system, means businesses can no longer pass eligible card payment costs directly on to customers through a separate surcharge.
The government estimates consumers will save around $1.6 billion a year, while changes to interchange fees and other payment rules are expected to save small businesses about $910 million annually.
The reforms are intended to make card payments more transparent and reduce costs for consumers and businesses.
However, the changes have also raised concerns among small-business groups, with some businesses warning that they may need to absorb payment-processing costs or increase prices to protect their margins.
The Reserve Bank of Australia confirmed the surcharge changes in March, giving businesses several months to prepare for the new rules.
While major businesses and payment providers have generally had time to update their systems, some smaller operators remain uncertain about how the changes will affect their businesses.
Brian Laul, founder of the Australian Multicultural Community and Business Chamber, told SMH that migrant-owned businesses and operators for whom English is not a first language could be particularly vulnerable to confusion about the new requirements.
“A lot of businesses are quite ill-prepared,” Laul said, adding that there were still questions about how the changes would work at the checkout.
He said smaller businesses might not have the infrastructure or resources to make the necessary changes quickly.
Laul also called for patience from customers and flexibility from authorities during the transition, saying some businesses could breach the rules because they did not understand the changes rather than deliberately attempting to circumvent them.
Restaurant and hospitality industry representatives have similarly warned that businesses using older payment terminals may not automatically receive software updates required to remove surcharges.
Wes Lambert, CEO of the Australian Restaurant & Cafe Association, told SMH some businesses using modern integrated payment systems could see surcharge functions disappear automatically, while older systems could present compliance challenges.
“For many, especially where English is not a first language, the surcharge ban will actually come as quite a surprise.”
The Reserve Bank says businesses can offer discounts for particular payment methods, including cash or PayID, rather than imposing card surcharges.
The reforms are also having consequences beyond the checkout. A lower cap on domestic interchange fees — the fees merchants pay to a customer’s bank when accepting card payments — has prompted major banks to reduce some credit-card rewards and sign-on benefits.
The Australian Taxation Office has also removed credit cards as a payment option, saying it was not appropriate for the cost of credit-card merchant fees to be transferred to the wider community.
The ATO said only 2.3 per cent of tax payments in the 2024 financial year were made using a credit card, with most of those payments made by high-net-worth individuals or major organisations.
The end of card surcharges could also encourage some consumers to reconsider how they pay.
The RBA says businesses can choose which payment methods they accept and can encourage customers towards particular methods through discounts.
Cash remains a relatively small part of Australia’s payments landscape, but recent RBA data indicates that its use may have stabilised.
In 2025, around 15 per cent of payments were made using cash, while about half of Australians reported using cash in a typical week.
Cash-use advocates expect some businesses to introduce “cash preferred” policies or discounts for customers who pay with cash.
Some businesses have already chosen to stop accepting card payments altogether, while others are introducing minimum transaction amounts or encouraging customers to use alternative payment methods.
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