Small retailers are being warned they could be hit hardest by a major change to Australia’s payments system, after the Reserve Bank of Australia confirmed card surcharges on debit and credit cards will be banned from 1 October 2026.
The Australian Retail Council says the move may sound simple on the surface, but for many businesses, especially smaller operators already under pressure, it removes one of the few ways they have been able to recover the rising cost of accepting card payments.
ARC CEO Chris Rodwell said while some parts of the Reserve Bank’s announcement are welcome, including lower interchange fees and stronger transparency measures, the overall change will still create fresh strain for retailers trying to manage already stretched budgets.
“Retailers don’t surcharge by choice. Lower interchange fees and greater transparency are welcome steps, but they do not eliminate the cost of accepting card payments, nor do they guarantee that savings will be passed through in full. Removing surcharges reduces the flexibility retailers have to cover those costs, and that pressure will be felt most by smaller businesses already facing a cost-of-doing-business crisis,” he said.
The concern from the retail sector is that although surcharge bans may be popular with customers, the underlying card payment costs do not disappear. Instead, retailers may be forced to absorb them at a time when many are already juggling higher wages, power bills, rent, compliance requirements and supply chain costs.
For small businesses in particular, that could mean yet another expense being folded into already tight operating margins, with less room to move when costs rise elsewhere.
Rodwell said the real priority should now be making it cheaper and easier for businesses to operate, rather than removing another tool that helps them manage unavoidable overheads.
“This is another layer of cost in a system where retailers are already dealing with rising expenses across wages, energy, rent, compliance and supply chains. The focus must now be on reducing the overall cost of doing business, not adding to it,” he said.
The surcharge ban is set to come into effect nationally from 1 October 2026, giving businesses time to prepare, but retail groups are already making clear that many smaller operators will feel the impact.
For shoppers, the change is likely to mean fewer surprise fees at the checkout. For retailers, though, the question will be whether promised reforms to fees and transparency go far enough to offset the loss of one of the sector’s key cost recovery options.
