Changes to surcharging rules: what it could mean for your business

Following a review of Merchant Card Payment Costs and Surcharging in Australia, the RBA has announced 3 key changes to help ensure Australia’s payments system is safe, efficient and competitive as a technology. These changes take effect from 1 October.

Surcharging refers to an extra free charged by a merchant to a customer for using a particular car to pay for something. Surcharging on eftpos, Mastercard and Visa transactions has been removed. American Express, JCB and UnionPay sit outside the RBA's rule, however American Express will voluntarily stop surcharging from the same date.

An interchange fee is a transaction fee paid between banks for processing card payments. It’s set by card schemes and applies each time a customer uses a card to buy something from your business. The fees get passed on to you as part of your overall merchant fees. From October:   

• Australian-issued eftpos, Mastercard and Visa debit and prepaid cards: Interchange rate reduced to 8 cents (or 0.16% on an ad-valorem basis) down from 0.20% or $0.10.
• Australian-issued Mastercard and Visa consumer credit cards: cap lowered to 0.3%.
• Australian-issued Mastercard and Visa commercial credit cards: keep the same interchange cap at 0.8%.

And in 2027, new interchange caps will be introduced for all foreign-issued card transactions at 1%. 

Card networks and the banks and payment processors that handle card transactions (acquirers) face new reporting requirements from October. Large acquirers (those processing more than $10 billion a year in eftpos, Mastercard and Visa transactions) need to publish their average merchant fees every quarter, so businesses can compare providers more easily.

When the surcharge removal change comes into effect, the cost of accepting cards won’t go away with it. Businesses may still pay a fee to their bank or payment provider every time a customer taps a card. Businesses could handle that cost two ways: 

1. They might build it into pricing, spreading it across products so it's already covered
2. They might absorb it themselves and take the hit to margin instead. 

Building it into pricing keeps costs visible but may mean prices shift slightly. Absorbing it keeps prices steady but leaves less profit on each card sale, unless something else offsets it. Which approach fits better will vary. It may come down to margins, how price-sensitive customers are, and what similar businesses are doing. If you’re unsure, it could be worth working through with a bookkeeper or accountant. 

Credit card rewards programs are typically funded by interchange fees. When that revenue shifts, some issuers may respond by adjusting earn rates or card benefits.

This is a pattern that's played out before: a number of banks revised their rewards structures after the last round of interchange changes. Because the interchange cap for business credit cards isn't changing under this reform, cards in that category may see less direct pressure than personal credit cards used for business spend.

Not every business payment platform relies on interchange revenue to fund its rewards. At pay.com.au, rewards are funded differently, so the rate you earn at isn't linked to this reform.

With pay.com.au, you can add PayRewards Points on top of your regular credit card rewards, or when making bank transfer payments to pay off your business expenses. From there, PayRewards can be transferred to programs like Qantas Business Rewards, Virgin Australia Business Flyer or Qatar Airways Privilege Club, among others.

To learn more about pay.com.au and how it works visit pay.com.au/nrma.