The Surcharge Ban Is Forcing Australian Merchants to Confront the True Cost of Card Payments

The Moment the Music Stopped

For years, Australian merchants absorbed the cost of card acceptance in a way that was largely invisible to consumers. Surcharging allowed businesses to pass interchange fees, scheme fees, and terminal costs directly to the customer at the point of sale. The RBA’s decision to ban surcharging on eftpos, Mastercard, and Visa transactions — effective from 1 October 2026 — has abruptly ended that arrangement.

The ban does not eliminate card costs. It simply relocates them. Merchants can no longer add a surcharge at checkout, which means every card transaction now carries a direct margin impact that must be absorbed or offset elsewhere.

The Structural Disadvantage of Cards

Card payments are expensive for a reason that has nothing to do with technology. The cost is embedded in a multi-party scheme structure: issuing banks, acquiring banks, card networks, and payment processors all take a slice. Interchange fees alone can represent a significant percentage of transaction value, particularly for credit cards and premium debit products.

A2A payments operate on a fundamentally different model. Funds move directly between bank accounts over the New Payments Platform, avoiding card scheme fees entirely. There is no interchange, no scheme fee, and no card network taking a margin. The cost structure is closer to a utility than a commercial scheme.

What the Numbers Look Like

For merchants, the difference is material. Industry analysis suggests that A2A transactions can deliver significantly lower transaction fees than card payments. The exact saving depends on transaction size, volume, and the specific A2A provider, but the direction is consistent: direct bank transfers are cheaper than card rails.

There is also a risk dimension. A2A transfers have lower failure rates — approximately 3% versus 10–25% for cards — although they do not offer chargebacks, meaning disputes follow different legal processes. For merchants with low fraud exposure, the risk-adjusted cost of A2A is even more favourable.

The Merchant Response Is Already Visible

Major retailers are not waiting for the market to settle. Amazon Australia has already introduced Pay by Bank (powered by PayTo), balancing its cost of payments by offering customers a card-free option.

This is not an isolated experiment. The RBA’s reforms have been described as a “line-in-the-sand moment” for A2A payments in Australia, precisely because they force merchants to evaluate payment methods on their true economics rather than on consumer-facing surcharge dynamics.

The Consumer Education Challenge

The transition is not automatic. Consumers have decades of muscle memory around tapping a card. Changing that behaviour requires more than a cheaper rail for merchants — it requires a compelling value proposition for the person at the checkout.

Some merchants are addressing this by offering discounts or loyalty benefits for A2A payments. Others are integrating PayTo into existing checkout flows so seamlessly that the payment method is almost invisible. The common thread is that the merchant, not the consumer, is driving the change — because the merchant is the one bearing the cost.

The surcharge ban has not created a new payment system. It has simply made the existing alternatives impossible to ignore.