From 1 October 2026, Australian businesses will no longer be able to add a surcharge when customers pay using Visa, Mastercard, eftpos or American Express cards.
For customers, this means a clearer price at the checkout. For businesses, it means card processing costs will need to be managed differently.
The change does not remove the cost of accepting card payments. Your bank or payment provider may continue to charge merchant and transaction fees. The key difference is that you will generally no longer be able to pass these costs directly to customers as a separate card surcharge.
If your business currently applies card surcharges, now is the time to understand the impact on your pricing, margins and cash flow.
What is changing?
Visa, Mastercard, eftpos and American Express are introducing rules that prevent businesses from applying surcharges to prepaid, debit and credit card payments from 1 October 2026.
Until 30 September 2026, businesses can continue to apply card surcharges under the existing rules. Any surcharge must not be more than the actual cost of accepting that payment type.
The changes only apply to fees charged because a customer chooses to pay by card. They do not automatically prevent legitimate weekend surcharges, public holiday surcharges, booking fees, delivery fees or other service fees.
However, businesses should not simply rename a card surcharge as a “processing fee” or “service fee.” If the fee only applies because the customer paid by card, changing its name will not avoid the new rules.
Who will enforce the new rules?
Banks, card networks and payment providers will enforce the rules through their merchant agreements and payment systems.
Businesses that continue to apply card surcharges may be required to remove or refund them and could face restrictions on their card-processing services. The ACCC may also act where a business misleads customers or disguises a card surcharge as another fee.
What could this cost your business?
The impact will depend on how much of your revenue is paid by card, the fees charged by your provider and whether you currently recover those costs from customers.
A small percentage can become a meaningful annual expense.
For example, if your business receives $200,000 in card payments each year and pays an average processing fee of 1.5%, this could cost approximately $3,000 annually.
Use this calculation as a starting point:
Annual card payments × average processing fee = estimated annual processing cost
Once you know the figure, you can make an informed decision instead of simply absorbing an unexpected cost.
What are your options?
There is no single approach that will suit every business. You may choose to:
- Build the cost into your pricing: A modest overall price adjustment may help protect your margins while keeping the customer experience simple.
- Absorb the cost: This may be worthwhile if card payments lead to faster payments, stronger cash flow and less time spent chasing invoices.
- Offer other payment methods: Direct debit, bank transfer or other lower-cost payment options may help reduce processing fees.
- Review pricing by customer or service: You may need to reassess the pricing of lower-margin, one-off or higher-risk clients.
- Negotiate with your provider: Ask for a full fee breakdown and compare other payment options or providers.
What happens in Xero?
Xero has advised that its surcharge functionality will be updated automatically from 1 October 2026.
Card payments will continue to work but customers will pay the invoice amount without an additional processing surcharge. Xero has also advised that unpaid invoices containing a surcharge will be updated when the customer pays on or after 1 October.
If you use another accounting, e-commerce, booking or payment system, contact your provider to confirm how the change will be handled.
What should you do next?
Before 1 October:
- Review three to twelve months of card transactions.
- Calculate the processing fees your business currently recovers.
- Check how absorbing those costs would affect your margins.
- Review your customer and service mix to identify where different pricing may be needed.
- Compare alternative payment methods and provider fees.
- Decide whether your pricing needs to change.
- Update your invoices, website, payment pages, signage and customer communications.
This is more than a payment system update. It is a pricing, margin and cash flow decision.
At Falanga & Co, we can help you understand the cost to your business and work through the most practical way forward before the changes take effect.
If you are unsure which option is right for your business, our team can help you review the numbers and prepare for the change.
This information is general in nature and does not take into account your business’s individual circumstances. Businesses should seek professional advice where appropriate.
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