finance•Mon, September 21, 2026•5 min read

Australia’s Card Surcharge Ban: The Hidden Cost to Your Credit Card Rewards

Australia is eliminating surcharges on Visa, Mastercard, and Eftpos payments starting October 1, 2026. While the move aims to save consumers billions annually, it has triggered a wave of cuts to credit card rewards and frequent flyer perks. Here is how your wallet will be affected by these major RBA reforms.

A New Era for Australian Payments

From October 1, 2026, the landscape of Australian retail payments will fundamentally shift. A sweeping reform from the Reserve Bank of Australia (RBA) will officially ban businesses from applying surcharges to Visa, Mastercard, and Eftpos transactions. For the average shopper, this means an end to those frustrating 'card processing fees' tacked onto the end of a transaction, with the RBA estimating total consumer savings of approximately $1.6 billion annually.

The Trade-off: Why Your Rewards Are Disappearing

While the end of surcharging sounds like a clear victory for consumers, the financial ecosystem behind your card is undergoing a massive restructuring. The RBA reforms aren't just banning fees; they are also significantly lowering the cap on interchange fees—the revenue banks collect from merchants for processing payments.

Interchange fee caps are dropping from 80 basis points to 30 basis points.
Banks are seeing a 60% decline in revenue generated from these processing fees.
To compensate for lost income, financial institutions are actively reducing frequent flyer points and credit card perks.
Annual card fees may rise as banks move to recoup the lost interchange revenue.

Small Businesses Under Pressure

For merchants, the ban presents a double-edged sword. Small business owners have long struggled with the choice between absorbing high processing costs or passing them on to customers through surcharges. While the ban protects customers from extra fees, businesses are now forced to navigate tighter margins, often leading to difficult decisions regarding their own product pricing and operational costs.

Vendors are stuck between losing their paper-thin profits to bank fees or losing customers to higher prices.
— Nine News

What This Means for You

If you are a serious point collector, the coming months will likely see a devaluation of the rewards you have grown accustomed to. Banks are currently re-evaluating their portfolios, and many have already begun notifying customers of reduced point-earning rates or fewer travel benefits. It is a shift from a system where high-spending reward collectors were partially subsidized by other users, toward a leaner payment environment with lower transaction costs for the general public.

Key Takeaways

Surcharges on Visa, Mastercard, and Eftpos are banned starting October 1, 2026.
The RBA estimates the move will save Australian consumers $1.6 billion a year.
Banks are cutting credit card rewards and perks to offset a 60% reduction in interchange fee revenue.
Interchange fee caps are being slashed from 80 to 30 basis points.
Cardholders may see increased annual fees as banks adjust their business models.

FAQ

When does the surcharge ban begin?

The ban takes effect on October 1, 2026.

Does the ban affect all fees at checkout?

No. The ban only covers surcharges related to using a credit or debit card. It does not prevent businesses from charging booking fees, service fees, or weekend/public holiday surcharges.

Will I lose my credit card points?

Banks are actively reducing the value of rewards and frequent flyer points due to the lower interchange revenue. You should monitor your bank's recent communications regarding your specific card's benefits.

Why are banks changing their rewards programs?

The RBA's reform lowers the interchange fees banks receive from merchants. Because this revenue historically funded credit card rewards, banks are now cutting perks to maintain their profit margins.