Australian businesses adapt to new rules as credit and debit card surcharges end

Australians will no longer pay a surcharge on credit or debit card purchases from Thursday, but the changes at the register won’t stop there.

Some businesses are already making changes, with an after-school care provider cutting off card payments and a school canteen service setting $10 minimum checkouts to manage processing costs.

At the same time, major banks and card providers are trimming cardholder benefits to offset their own expenses.

The result is a series of swift rule changes as businesses decide how to handle fees they are no longer permitted to pass on to customers.

A return to cash?

The Reserve Bank says businesses that wish to steer consumers towards other payment methods can do so by providing discounts instead of using surcharges.

The Australian Competition and Consumer Commission (ACCC) has issued similar advice, saying that businesses can offer discounts to consumers who pay using a particular payment method, such as cash or PayID.

In 2025, about 15% of payments were made in cash and around half of Australians used cash in a typical week, according to the RBA. There had been a slight increase in the number of people who carried cash – from 47% in 2022 to 50% in 2025. This was the first time the number of people using cash had increased since the RBA started its monitoring in 2007.

Jason Bryce from Cash Welcome, a group that advocates cash usage, expects cash transactions to become more common again after the end of surcharging. Bryce says it will become more typical to see small businesses display “cash preferred” or “discounts for cash” signage at the point of sale.

“Other countries that have a history of banning card surcharges have a lot more cash-only businesses [and] a lot more cash-preferred businesses,” he says.

France, Germany, Japan and Korea, which have all banned surcharges, have more cash in circulation and more merchants accepting cash than Australia, Bryce says.

No more card payments

Swinburne university’s Prof Steve Worthington, a payment systems expert, says many merchants “have not decided how they want to play this”.

“We’ll have to wait and see whether merchants just increase their prices to compensate for the lack of surcharging or whether they stick with their normal pricing and try to raise money other ways,” he says.

Worthington believes there will be more cash used in the economy after Thursday, as well as more businesses asking consumers to pay via direct debit.

The RBA says businesses and other merchants are generally able to choose which payment methods they accept, which can include adding new payment methods and withdrawing existing payment methods.

Guardian Australia is aware of several merchants who have already informed customers they will stop accepting card payments altogether. For example, the Cubby out of school hours care service has written to families telling them that, “due to the new laws regarding credit card fees, Cubby OOSH has decided to no longer accept credit or debit cards as the payment method”. The company was contacted for comment.

Extra fees and other new rules

Sally Tindall, the data insights director at financial comparison site Canstar, says businesses are in a difficult position, because they’ll have to absorb the costs associated with processing fees, or pass them on through higher prices.

“That’s a difficult decision for lots of businesses,” she says. “And for some businesses, it’ll be a matter of doing a bit of both, absorbing some of the costs and passing some of the costs on.”

Flexischools, an online ordering platform for school canteens, activities and uniforms – which says it is used by 25% of all Australian parents – has told families it will incorporate the costs that had been covered by surcharges into the fees they pay for the service.

In an email to families on 22 September, seen by Guardian Australia, Flexischools said it was introducing a $10 minimum at checkout, “to help manage the cost of processing small payments”, even if an order – such as a canteen item – is less than $10, with any balance to be saved for later use. Additionally, Flexischools says its online order fees would increase by 6c per transaction.

Guardian Australia has contacted Flexischools for comment.

To help businesses absorb the costs, the RBA will further limit interchange fees – which the merchant’s bank pays to the customer’s card issuer to cover the cost of processing the payment. But fees for payment networks cannot be escaped altogether.

“For a small business, there is no such thing as a cost that simply disappears,” says Skye Cappuccio, the chief executive of the industry peak body, Cosboa.

“Every business is different. Some may be able to absorb some or all of the cost, while others may need to review their overall pricing or payment arrangements.”