Australia card surcharge ban: why shops are raising prices in October 2026

Australian consumers are navigating a significant change in the way they pay at cafes, restaurants and shops. From 1 October 2026, major card networks introduced rules preventing merchants from adding an extra surcharge simply because a customer pays with a card. Yet reporting from New South Wales on 11 October shows that some businesses have responded by raising their ordinary menu prices or considering discounts for cash payments. The distinction matters: a ban on a separate card surcharge does not mean merchant processing costs have disappeared, nor does it guarantee that every item will become cheaper.

What changed on 1 October?

The Reserve Bank of Australia's review concluded that card surcharging was increasingly complex and difficult for customers to avoid. The RBA removed its prohibition on no-surcharge rules for designated networks, enabling eftpos, Visa and Mastercard to prevent surcharging under their scheme rules. American Express, UnionPay and PayPal also announced corresponding changes. This approach is more precise than saying the RBA personally issues a fine to every merchant that enters a surcharge: network providers and payment acquirers apply the relevant contractual rules, while consumer law still governs misleading price displays.

Which payments are covered?

The RBA's explanatory material covers eligible debit, credit and prepaid payments on the participating networks. The banned amount is an extra charge imposed because the buyer chooses a particular card. Other charges, such as a properly disclosed weekend surcharge, public holiday surcharge or a genuine booking fee, are not automatically prohibited by these card-network changes. Businesses must still comply with broader Australian Consumer Law requirements. A shop cannot simply rename an unlawful card fee to avoid a rule if the charge is in substance imposed for paying with a card.

Why are some cafes increasing menu prices?

ABC News reported on 11 October that Sydney hospitality operators faced substantial annual merchant fees and were trying different ways of absorbing them. One cafe group reported spending around $150,000 a year on these costs. Some operators had already raised selected menu prices while others were considering future increases. That is an account of individual businesses, not evidence that every Australian cafe has increased prices by the same percentage. Retailers must balance rent, wages, energy, ingredients and payment fees, so the portion attributable to card acceptance is not identical across venues.

Are bank processing fees banned too?

No. The fee a business pays its bank or payment provider to accept transactions is different from a surcharge shown to the customer at the checkout. The RBA's broader reform also aims to reduce some interchange costs and improve transparency, but merchant service fees can still exist. A small business should examine its acquiring contract, terminal rental and transaction mix before estimating the impact of the ban. A consumer should look at the final advertised price rather than assume that merchants now process all electronic payments free of charge.

Can a business offer a cash discount?

Yes, provided the presentation is not misleading. The Australian Competition and Consumer Commission told ABC that retailers may offer discounts for certain methods, including cash or PayID, but those discounts should be clearly displayed before customers order or pay. Businesses must not make the discounted price the only visible price when most customers may pay the higher ordinary price. Imagine a cafe advertising a $5 coffee to the general public while quietly requiring cash to obtain that price: the display may mislead customers if the condition is unclear.

How do advertised prices need to work?

Australian consumer law generally expects people to be able to understand the amount they will pay before committing to a purchase. Where a business has separate prices linked to a legitimate payment discount, the difference should be transparent and not disguised in fine print. If a mandatory fee applies in every case, businesses need to consider component pricing obligations. For a customer, the simplest practical test is to compare the shelf, menu or booking price with the final terminal amount and ask which part represents a payment-specific addition.

Does the reform cover Sunday and holiday surcharges?

Not by itself. The RBA specifically distinguishes card surcharges from weekend and public holiday surcharges. Cafes often use those charges to cover higher penalty rates for staff, rather than card acceptance. A weekend surcharge can therefore still be displayed where permitted, though it must satisfy applicable price-display rules. A customer should avoid concluding that every extra line on a receipt breaches the payment reform. The reason for the charge, whether it was disclosed before ordering and the type of merchant all matter.

What about PayID, cash and bank transfers?

Some businesses may experiment with incentives for payments that cost them less. PayID allows transfers using a registered identifier, while cash avoids certain card processing fees but creates other operational expenses, including counting, transport and security. A business must assess not just the headline fee but also the time and risk involved in each method. For customers, payment choice may depend on convenience, consumer protections, fraud risk and keeping reliable transaction records. A lower price is useful only if the method is appropriate for that purchase.

Do higher menu prices cancel the consumer savings?

Not necessarily, and it is too early to make a categorical claim. The RBA expects broader payment reforms to lower aggregate transaction costs, but the actual retail response differs among industries and firms. Some businesses may absorb the cost, others may raise prices and some may switch providers when better deals become available. It is also possible that competition constrains the extent of increases. Analysing one coffee shop after a week does not reveal the national effect on consumer welfare or annual inflation.

What should small businesses review?

Check whether the terminal and checkout software have removed prohibited card surcharges.
Review merchant-service contracts and compare offers from different acquirers.
Make full standard prices visible before customers decide to pay.
If offering cash or PayID discounts, disclose the conditions clearly.
Distinguish ordinary menu price changes from any legitimate weekend fee.
Train staff to explain price differences without inventing regulatory claims.

What should shoppers do if a surcharge still appears?

Keep the receipt and take a screenshot of the price displayed before payment if practical. Ask the merchant to identify the charge and whether it is linked specifically to using a card. A technical mistake may be resolved at the counter. If the business continues to display a potentially misleading price, consumers can check guidance from the ACCC or relevant state consumer authority. Avoid assuming that a legitimate service or booking fee is prohibited merely because it appears on the same receipt as a card purchase.

What happens next for the payment industry?

The RBA's payment reforms also introduce transparency requirements and changes to interchange fee limits on different dates. Some measures took effect in October 2026; other components, including aspects involving foreign-issued cards, are scheduled for April 2027. Businesses should check the exact commencement dates rather than treating the full package as a single event. Consumers will benefit most when payment costs and final prices are understandable and merchants face effective competition for payment services.

Frequently asked questions

Can I still pay with Visa or Mastercard? Yes, the reform concerns extra surcharges rather than card acceptance itself. Must every cafe lower prices? No, businesses set menu prices subject to consumer law and competition. Can I receive a cash discount? Yes, if the offer and standard price are clearly disclosed. Are public holiday surcharges banned? Not by the RBA card-surcharge changes. Should a terminal still add a separate card fee? Participating network rules generally prohibit that from 1 October, subject to applicable exceptions.