How hospitality businesses can prepare for the end of card surcharging

Across the economy, card payments accounted for 73% of transactions in Australia in 2025, according to the Reserve Bank of Australia (RBA)¹ . That makes accepting cards a necessity for businesses, while giving customers more choice in how and when they pay. 

Hospitality businesses, including pubs, cafes and restaurants, have traditionally been able to pass on the cost of accepting a card payment by adding it to a customer’s bill as a card surcharge. For example, when someone uses a card to buy a drink at the local pub for $10 with a 1.2% card surcharge, they pay $10.12 at the counter.

The changes to surcharging are designed to make pricing simpler and more transparent for customers, so the advertised price of an item is closer to what people actually pay. It is also now up to businesses to manage the cost of accepting card payments. 

“These reforms represent a significant change for many hospitality businesses. Understanding where surcharges exist today and planning will help venues make a smoother transition ahead of October 2026."
– Albert Naffah, General Manager Payment Acceptance, CommBank

And the second change happens behind the scenes. The RBA is lowering the limits on what’s known as ‘interchange fees’, which are fees paid to the bank or other financial institution that issued the customer’s card. Card networks like eftpos, Visa and Mastercard set these fees which must fall within RBA limits. Lowering interchange caps are designed to take some of the cost out of accepting card payments, particularly for smaller businesses. The benefit of this change for each venue will depend on factors such as its pricing plan, the types of cards customers use and its mix of in-person and online transactions

The reforms will also give businesses clearer information about what they pay to accept cards. The transparency measures are being introduced in stages and are intended to make it easier for operators to understand their costs, compare providers and negotiate a better deal. Some of these measures begin from October 2026, while the requirement for additional information to be included on businesses’ fee statements becomes mandatory from April 2027.

“These reforms represent a significant change for many hospitality businesses. Understanding where surcharges exist today and planning will help venues make a smoother transition ahead of October 2026," says Albert Naffah, General Manager Payment Acceptance at CommBank.

So, what should hospitality businesses be doing? Here are the top considerations.

Check your merchant service fee 

Australian Hotels Association CEO, Stephen Ferguson, says operators first need to be aware of the overall merchant service fee they are being charged and their payments service setup.

“Many hospitality businesses, especially smaller ones, already operate on thin margins, and removing surcharging means payment costs can impact the bottom line,” Ferguson says. “The first thing I say to businesses is look at the rate you’re on.”

“A recent survey of AHA members showed that around one in three are paying over 1.6% per transaction and two in three over 1.2%, which is too high. Across thousands of transactions, those costs can add up."
– Stephen Ferguson, CEO, Australian Hotels Association

"A recent survey of AHA members showed that around one in three are paying over 1.6% per transaction and two in three over 1.2%, which is too high. Across thousands of transactions, those costs can add up," says Ferguson.

“If that’s your business, you should be asking your provider whether they can move you to a more competitive pricing structure. With the changes coming in, now’s the time to understand your options and be prepared to switch providers if they don’t come to the table.”

Understand how you’re being charged

The new RBA rules will give businesses more visibility of what makes up the fees they pay and how payment services are priced. This will include a breakdown in statements sent to businesses. For CommBank customers, statements already have a table titled ‘cost of accepting payments by card type’, which can vary by merchant.

Ferguson explains that while payments industry language can be confusing, “there are three terms worth understanding that can have a material impact on your business: Flat transaction rate, Interchange Plus (IC+) or Interchange Plus Plus  (IC++) and Least Cost Routing. It could be the best five minutes you'll spend with the potential to save you bucket loads of money.”

• Flat transaction rate: When different payments costs are bundled into a simple overall rate and is also known as a single rate per transaction or blended pricing. For businesses on a flat or blended rate, lower interchange fees may not automatically change the rate they pay. Operators can check their agreement or speak with their payments provider to check whether the reforms will impact fee s. 
• IC+ and IC++: Interchange Plus pricing structures separates the interchange fee from the payment provider’s other charges. Because costs are separated, it can be easier for a business to see the different costs behind each transaction and identify how changes to interchange fees impact the cost of accepting payments.
• Least Cost Routing: This allows eligible debit card payments to be sent to the lowest cost card network, for example eftpos where that is the cheapest option. 

Ask the right questions

Of the new changes, Kerryn Saward, Executive General Manager, Specialist Sales and Client Solutions at CommBank, says, “If you don’t know which plan you are on, check your statement or talk to your banker. With greater pricing transparency, hospitality businesses can also seek a better payments acceptance deal to ensure they’re not overpaying for services.”

To achieve this, Ferguson says that the AHA recommends that hospitality operators on a blended rate speak to their payments provider and ask:

• Are my transactions being least cost routed? 
• If Least Cost Routing is turned on, are the savings being passed on to me?
• Will my rate change when the new interchange limits are introduced?
• Can you offer me IC+ or IC++  pricing with Least Cost Routing?

“If the answer is yes, your payments provider will offer you IC+ or IC++ pricing with Least Cost Routing, then ask your provider for a comparison with your blended rate so you can make an informed decision about total costs,” Ferguson adds.

“If you don’t know which plan you are on, check your statement or talk to your banker. With greater pricing transparency, hospitality businesses can also seek a better payments acceptance deal to ensure they’re not overpaying for services.”
– Kerryn Saward, Executive General Manager, Specialist Sales and Client Solutions, CommBank

Switch off surcharging and review pricing

While many hospitality businesses will have already turned off surcharging, all others simply need to remove it by 1 October to comply. 

Every hospitality business has a different mix of transaction sizes, card types and payment channels, so there is no single pricing model that will be right for every operator. The important step is to understand what you are paying today, ask how the reforms will affect your costs and compare the total price and service offered, not just the headline rate.

“That means checking your terminals, as well as any connected point-of-sale systems, online payment channels, practice management software, payment gateways or third-party systems where surcharging may be configured,” Naffah says .

When removing surcharging, businesses may also need to review their menu and advertised prices if card acceptance costs will now be absorbed by the business. Any changes should be considered as part of the venue’s broader pricing strategy, rather than treated as an automatic price increase. This may also mean updating and reprinting menus, boards, websites and other customer-facing materials where required, to reflect the changes.

“From 1 October 2026, CommBank will reduce its standard Merchant Service Fee from 1.10% to 0.99%, including GST, for eligible customers. Customers on Interchange Plus (IC+) or Interchange Plus Plus (IC++) pricing will have applicable interchange fee changes automatically reflected in their merchant service fees,” Naffah says.

“Each payments provider may respond differently, so it’s worth asking your provider what changes apply to your business so you’re on the best pricing structure for the short- and longer-term,” Naffah concludes.