Businesses in Australia can no longer add extra surcharge fees for payments made using Visa, Mastercard, eftpos, American Express, and other major card networks following sweeping reforms that took effect on October 1, 2026.
The ban applies to credit, debit, and prepaid card payments across designated networks, both in-store and online. PayPal's aligned no-surcharge rule follows on October 5, 2026.
What is not covered: Other extra charges—such as weekend or public holiday surcharges—are not affected and remain permitted.
Business costs: While merchants cannot pass processing fees directly to customers at checkout, they still face operational costs like terminal rentals and merchant service fees. Many businesses are adjusting overall shelf or menu prices to cover these expenses.
Enforcement: Imposing prohibited surcharges can lead to penalties or directions from payment providers. You can report misleading pricing or ongoing illegal surcharges to the Australian Competition and Consumer Commission (ACCC) or your Australian Taxation Office (ATO) updates, where the Tax Office itself announced a complete halt to credit card processing for tax bills starting December 1.
The small business owner outrage at the decision by the ATO has prompted a response asking the ATO to reverse it’s decision.
In response, the ATO said only about 2.3 per cent of tax payments were made with credit cards in 2024-25, with more than 60 per cent of them made by privately owned and wealthy groups and public and multinational businesses.
“As a government agency, the ATO has decided it would not be appropriate for the cost of credit card merchant fees to be transferred to the community,” the ATO said in statement on Thursday.
“The ATO recognises that some taxpayers currently rely on credit card payments to manage their tax payments and understands this change may require some adjustments.
“The ATO is committed to helping taxpayers transition to alternative payment methods and will continue to support those experiencing financial hardship or other circumstances that make it difficult to meet their obligations.”
Alternative payment options include bank transfers and BPAY.
Currently, the ATO charges taxpayers between 0.9 per cent and 1.5 per cent to pay monthly, quarterly and annual PAYG and GST bills by credit via Visa, Mastercard and American Express.
The decision to cut off credit card payments after November 30 has received strong backlash online, given the potential consequences for small businesses that rely on credit cards to smooth out their cash flow.
Taking to the tax office’s Facebook page, hundreds of commenters questioned the decision and its effect on small businesses — many of which will themselves absorb the cost of credit card payments, or lift their sticker prices to compensate.
The Reserve Bank of Australia says surcharges are no longer effectively driving consumers towards cheaper payment types, and removing surcharges will save Australians $1.6 billion annually.
Taxpayers can still pay with a credit card through November 30, and the new surcharge ban prevents the tax office from applying surcharges to those upcoming payments.
The tax office is now contacting taxpayers with a direct debit linked to a credit card, and has advised taxpayers to assess alternative payment options ahead of the November 30 cut-off.
SOURCES: Smart Company and Financial Review