From 1 October 2026, Australian businesses will no longer be permitted to apply payment surcharges on card transactions through major payment networks such as Visa, Mastercard and EFTPOS. The change forms part of broader reforms aimed at simplifying payments and reducing costs for consumers.
While many businesses may view this as a minor operational change, failing to prepare could have a significant impact on profitability, particularly for businesses that invoice customers for products, materials or third-party costs.
Why Some Businesses Face Greater Risk
For many service-based businesses, a customer invoice may include both labour and pass-through costs such as materials, parts, accommodation, flights or other supplier charges. Historically, any card surcharge helped recover the merchant fees (the fees charged by banks and payment providers for processing card payments) associated with accepting those payments.
From October, those costs can no longer be separately charged to the customer and may need to be absorbed by the business.
Example:
Consider a carpenter who charges $3,000 for labour and project management for a home renovation project.
- Labour fee: $3,000
- Materials and hardware: $15,000
- Total invoice: $18,000
If the customer pays by card and the merchant fee is 1.5%, the processing cost is $270. The merchant fee therefore consumes almost 9% of the carpenter’s labour fee income. If the business completed four similar projects each month, the annual cost could exceed $12,900.
Five Steps to Take Before October
1. Review Your Pricing Model
Assess whether your current pricing adequately covers payment processing costs. Businesses that previously relied on surcharges may need to adjust pricing structures to protect margins.
2. Understand Your True Merchant Costs
Review recent merchant statements and identify how much your business pays in card processing fees each month. The impact may be larger than expected, particularly if a significant portion of your invoices relates to supplier costs.
3. Update Payment Systems
Speak with your payment provider or point-of-sale (POS) supplier to ensure surcharge functionality is disabled before 1 October 2026 and that your systems remain compliant with the new rules.
4. Revise public information
Remove any notices, signs, website text, or menus that mention card surcharges.
5. Review Your Merchant Agreement
The reforms will also reduce certain interchange fee caps and increase transparency around merchant fees, making this an ideal time to compare providers and negotiate better rates.
For some businesses, the removal of surcharging may have only a small effect. For others, particularly those invoicing significant third-party costs, it could quietly erode profit margins if no action is taken.
If you’re unsure how these changes may impact your pricing, profitability or billing processes, speak with the team at dmca advisory. We can help you review your current arrangements and ensure your business is prepared before the changes take effect.