Surcharge ban raises more questions than answers for hospitality
Australia's Reserve Bank has confirmed it will end card surcharges from October 1, but the hospitality industry is warning the decision amounts to a political fix that fails to deliver real relief for pubs, restaurants and small operators.
It will also disadvantage cash and debit card users.
Advocacy group Cash Welcome’s Jason Bryce, said people who pay in cash will ultimately bear the cost.
“I'm concerned cash users are going to end up paying for the frequent flyer points and the benefits that accrue to people using fancy credit cards,' he said.
'So who is losing? Ordinary bank account holders with a debit card, cash users, people budgeting - and I can't see how small businesses are going to like this at all.'
From October 1, surcharges on debit, credit and pre-paid card transactions across EFTPOS, Mastercard and Visa networks will be abolished — a move framed by Treasurer Jim Chalmers as being about "getting a better deal for consumers." But industry groups are pushing back on the framing, arguing the structural problems driving costs haven't been resolved, merely obscured.
For years, consumers paying with debit — their own money — have typically been charged the same surcharge rate as credit card users, despite credit transactions costing businesses three to five times more to process. That imbalance has persisted largely because payment service providers encourage small businesses like pubs and restaurants to use "blended" rates that bundle multiple fee types into a single flat charge.
The Australian Hotels Association went into the debate advocating for the removal of surcharges on debit cards only, arguing this approach was more equitable and would have the least impact on advertised prices. The RBA's decision to ban surcharges across the board means debit card users will continue to subsidise credit card holders, who may also be benefiting from interest-free periods and rewards points.
Of particular concern to the AHA is that the ruling contains no compulsion for terminal providers and payment companies to pass on the savings generated by lowered interchange fee caps.
"It's a political fix to a political problem," AHA CEO Stephen Ferguson said.
"The ship has sailed on surcharging. It's gone.
"Our greatest concern is there is no compulsion for providers to pass benefits and cost savings back to hotels."
The AHA has pointed to Canada as a cautionary example, where a reduction in interchange rates saw terminal providers retain the savings rather than passing them downstream to businesses or consumers.
Australian Restaurant and Café Association chief executive Wes Lambert said the RBA decision was disastrous.
“Today was a sad day for restaurants and cafes around Australia,' Lambert said.
“If a business does not raise its menu prices by at least what it pays in merchant fees, its profit will fall. That is not an opinion, it is simple maths.”
The RBA has acknowledged the reform will not reduce the price of a beer or coffee, as businesses will need to either absorb processing fees or adjust menu pricing accordingly. Scheme and Acquirer fees — charged by merchants and terminal providers — also remain entirely uncapped and unregulated, and are reportedly growing at pace.
Ferguson says the AHA's focus has now shifted to scrutinising whether the safeguards promised by the Prime Minister and Treasurer have actually been delivered through the RBA's ruling — a position the Association believes "they have not."
"The RBA has attempted to address Interchange fees, but not gone far enough in ensuring the cost savings that will come from that not passed back to pubs.
"We're going to keep encouraging government and the RBA to take action in those areas."
All operators are urged to review their current terminal provider agreements and payment arrangements well ahead of the October 1, implementation date.
Jonathan Jackson, 6th April 2026
