The Big Picture
From 1 October 2026, the Reserve Bank of Australia is making the biggest changes to card payments in over a decade. Two headline reforms:
- Card surcharges are banned — no more 1.5% fees tacked on at checkout
- Interchange fees drop from 0.8% to 0.3% for consumer credit cards — a 62.5% reduction
These changes will save Australian consumers an estimated $1.6 billion per year in surcharges alone, while reducing the revenue banks earn from interchange by $660 million annually.
What Are Interchange Fees?
Every time you tap your card, the merchant pays a fee to accept the payment. A chunk of that fee is the interchange fee — money that flows from the merchant's bank to your card-issuing bank. Your bank uses this revenue to fund credit card rewards programs, interest-free periods, and other perks.
Current vs. new interchange fee caps:
| Card Type | Current Cap | New Cap (Oct 2026) |
|---|---|---|
| Consumer credit cards | 0.80% | 0.30% |
| Commercial credit cards | 0.80% | 0.80% (unchanged) |
| Debit & prepaid cards | 8c + 0.20% | 8c + 0.16% |
| Foreign-issued cards | ~2.4% (unregulated) | 1.0% (from Apr 2027) |
No More Surcharges
The surcharge you see at cafés, airlines, and online checkouts? Gone from 1 October 2026. The RBA found that surcharging "is no longer achieving its intended purpose" — businesses were charging the same surcharge on all cards regardless of cost, turning it into a revenue stream rather than a price signal.
This applies to all eftpos, Visa, and Mastercard transactions. American Express and other three-party networks may be brought into the framework following a public consultation in mid-2026.
What this means for you: The price you see is the price you pay. No more mental arithmetic at checkout wondering if card or cash is cheaper.
What Happens to Credit Card Rewards?
This is the question everyone's asking. With interchange revenue dropping by $660 million, banks will have less money to fund rewards programs. Here's what to expect:
Likely Changes
- Lower earn rates — cards currently earning 1-2 points per dollar may drop to 0.5-1 point
- Higher annual fees — banks may increase fees to offset lost interchange revenue
- Fewer sign-up bonuses — the generous 100,000+ point offers may become rarer
- Tiered earn rates — more cards may offer higher rates only in specific categories
What Won't Change
- Commercial cards are exempt — the 0.8% cap stays for business cards, so business rewards programs are less affected
- Amex (for now) — as a three-party network, American Express isn't covered by these specific reforms yet, though the RBA flagged a mid-2026 consultation on this
The Maths
On a card with a 1x earn rate (1 point per dollar) and $3,000/month spending:
- Before reform: Bank earns ~$288/yr in interchange → funds ~36,000 points/yr
- After reform: Bank earns ~$108/yr in interchange → funds ~13,500 points/yr
The gap has to come from somewhere — either higher fees, lower earn rates, or both.
Winners and Losers
Winners
- Consumers — save $1.6 billion/yr in surcharges
- Small businesses — pay less to accept cards (they currently pay closest to the caps)
- Debit card users — already pay less, now won't be surcharge-penalised
- Online shoppers — no more surprise surcharges at checkout
Losers
- Rewards maximisers — earn rates will likely drop across the board
- Premium card holders — the value proposition of $400+ annual fee cards gets harder to justify
- Banks — $660 million less interchange revenue annually
Foreign Card Cap: April 2027
A separate reform kicks in on 1 April 2027: interchange fees on foreign-issued cards (used by tourists and international online purchases) will be capped at 1.0%, down from an unregulated average of around 2.4%. This is a big deal for tourism and hospitality businesses.
What to Look At
Before October 2026
- Issuer announcements: banks announce earn-rate and fee changes ahead of the reforms
- A balance carried: on a card that carries a balance, purchase interest usually outweighs the rewards earned
After October 2026
- Earn rates: BankMate's credit card comparison reprices every card on the spend you enter as issuers publish new terms
- Annual fees against rewards: at a given spend, a $0-fee card with lower rewards can be worth more than a $295 card whose rewards were cut
- A card you hold: the portfolio shows a card's rewards less its fees on your spend
Timeline
| Date | Change |
|---|---|
| 1 October 2026 | Surcharges banned on Visa/Mastercard/eftpos; consumer credit interchange drops to 0.3% |
| 30 October 2026 | First network aggregate data publications; acquirer merchant fee data due |
| 30 January 2027 | First interchange pass-through reporting due |
| 1 April 2027 | Foreign card interchange capped at 1.0%; enhanced merchant statement transparency |
| Mid-2026 | Public consultation on mobile wallets, Amex, BNPL, and e-commerce platforms |
The Bottom Line
The surcharge ban is an unambiguous win for consumers. The interchange fee reduction is more nuanced — you'll pay less at the register but may earn fewer rewards. The net effect depends on your spending patterns and which cards you hold.
Earn rates and fees on cards held today may change after the reforms. BankMate compares cards on the spend you enter and will reflect post-reform earn rates as issuers publish them.
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Sources: Reserve Bank of Australia — Review of Merchant Card Payment Costs and Surcharging Conclusions Paper, March 2026.
Factual information and general comparison, not financial advice. BankMate doesn’t consider your objectives, financial situation or needs, and isn’t licensed to give advice. Read the provider’s PDS, target market determination or key facts sheet before deciding.