Starting from October 1, 2026, Australian businesses will be prohibited from adding surcharges to payments made via eftpos, Visa, American Express, or Mastercard. This change, initiated by the Reserve Bank of Australia (RBA), will eliminate the option to apply a checkout fee for these payment methods.
Businesses that currently pass on card fees to customers will need to adapt their pricing strategies, as these fees will no longer be chargeable. Notably, businesses using Xero to send invoices will see automatic adjustments; invoices issued on or after October 1 will reflect the total amount due without any processing fee.
For those with existing unpaid invoices featuring a surcharge, these will also be updated, ensuring that payments received after October 1 will not include an additional fee. Furthermore, the ability to add processing fees in online payment settings will be removed entirely.
There are several considerations for businesses as they prepare for this change. One strategy could be to incorporate the processing fee into the product or service price, simplifying the payment process for customers. Another option is to absorb the fee as a cost of doing business, particularly if faster card processing improves cash flow and reduces administrative tasks. Additionally, diversifying payment options to include lower-cost methods like direct debit could lead to both cost savings and improved customer payment compliance.
Business owners are encouraged to consult with their accountants or financial advisors to navigate these changes effectively before the new regulations take effect.
Why this story matters
- The change impacts pricing strategies for many Australian businesses, potentially affecting profitability.
Key takeaway
- Businesses must adapt their payment processing practices and pricing strategies by October 2026 to comply with new regulations.
Opposing viewpoint
- Some businesses view surcharging as a necessary tool to cover costs associated with card processing and fear that the ban could lead to increased operating expenses.
