The Australian government's election promise was that the debt card surcharging would be banned. Most in parliament agree, so it's almost sure that this will happen. Now, the Australian Reserve Bank (RBA) wants to stop stores from charging surcharging fees for Visa and MasterCard credit cards as well, these changes, the RBA claims, would save customers about $1.2 billion each year. The first question is who pays for this $1.2 billion savings: the banks, the business community or the consumer (banks are talking about increasing fees for having a card).

Here is what I know now, and if I find out more, I will let you know here. To read our submission to the RBA on the issue, click here.

Here are some FAQ's of questions people have asked me.

Q: When do the changes start?

A: I wrote an article about that and when I sent it for verification was soon contacted and assured that the EFTPOS surcharge bans will probably start on July 1, 2026.

Credit card surcharges are still being discussed. The Reserve Bank has suggested banning these as well.

Q: Can I still charge fees for direct debit payments after the surcharge ban?

A: Yes, you can still charge fees for direct debit payments. Direct debit is different from card payments because it uses bank account details (BSB and account number) instead of card networks like EFTPOS, Visa, or MasterCard. The surcharge ban only covers card payments made through these specific networks. Direct debit fees must still be reasonable and not exceed your actual processing costs, following current consumer protection rules.

It means that businesses offering direct debit can continue charging processing fees for this payment method even after July 2026.

Q: What happens if stores keep charging banned fees?

A: Stores that keep charging EFTPOS fees after they're banned will get in trouble with the government. The competition watchdog now has the power to investigate complaints and fine businesses that break the rules.

Q: Which Cards Are Covered?

A: What types of card payments might be banned?

• EFTPOS debit cards (tap, swipe, or insert)

Strong possibility

• EFTPOS payments online
• Visa and MasterCard credit cards

Unlikely

• Phone payments like Apple Pay and Google Pay
• Overseas premium cards like AMEX

Q: Will stores still be able to charge fees for American Express?

A: Yes, they can still charge extra cards that come from overseas. But American Express cards that come from Australian banks might be included in the ban.

I suspect that cards like Union Pay can probably still have fees.

If you are wondering why, well, so am I.

Q: How Should Stores Get Ready?

A: First, figure out how much money you make from EFTPOS fees each month. Look at your payment reports from the last six months. In particular, look at your low-margin departments.

Next, think about whether you can:

• Raise your prices a little bit to cover the costs
• Pay the card costs yourself without changing prices

Q: What should stores tell customers who complain?

A: EFTPOS fees are still legal until the ban starts. If customers complain about fees, explain that the changes haven't happened yet. You should have a printed notice explaining when things will change.

Many customers think all card fees are already banned because of news stories. Having clear information helps avoid arguments.

Q: Do the rules apply to online stores too?**

A: It depends on which payment method customers use. The surcharge ban will apply to both in-store and online transactions, but the rules are different for different card types

• EFTPOS online: Since it is rarely used for online shopping, this won't affect most websites
• Visa and Mastercard online: These surcharges are still being discussed and may be banned, but no final decision has been made yet
• American Express online will probably still allow surcharges
• Direct debit online: Not covered by the ban, so you can still charge fees for this.

Q: Do small businesses get different rules?

A: No, the rules will be the same for all businesses.

Q: Will bank fees go down?

A: The Reserve Bank wants to lower the interchange fees that banks charge businesses for processing card payments, whether this will result in bank fees going down I think is dubious.

One question I would like to ask, if the RBA were to call me up to testify, is why merchant fees have increased in the last six months since the RBA looked into it?

How are we preparing for the Change

I doubt there is much we can prepare for. When we know what is happening, we will need to make some significant changes to our POS Software.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

I got many questions about my article here

Here are the four questions I received, which generated considerable interest across the Australian retail sector. I explain why I believe this planned policy change will significantly impact how businesses price their products and process payments. I also explain why I think those who disagreed with me are wrong.

1) The Legislative Pathway for Surcharge Abolition

I agree that Labor's commitment to abolishing debit card surcharges will probably require legislation. Now, it was and is Labor policy to abolish these surcharges. Recent polls show strong public dissatisfaction with surcharges on card payments. When I spoke to a senior official in the NAB, I was told 71% of Australians polled. I cannot find any evidence to back this up, but it sounds reasonable to me. This creates significant political pressure for action.

Despite those who argue that the current law blocks a surcharge abolition, I believe a Legislative Pathway for surcharge abolition exists. Labor to put it through will need support from the Greens or the LNP to pass such an abolition through parliament. The LNP and the Greens are now re-evaluating their positions overall as they both lost their leaders in the last election. But before the election, the LNP had stated that surcharges were symptoms of deeper problems in the payment system. Meanwhile, the Greens advocated removing surcharges, with the banks absorbing these costs.

Despite differing policies, there is a cross-party recognition that the current surcharge system needs to be examined and reformed.

2) Potential Impact on Retail Pricing Models

Implementing a surcharge ban, which looks likely, will necessitate adjustments to retail pricing strategies. Most retailers will try to incorporate the cost of debit card processing into their base pricing structure. For example, if your debit card processing cost averages 1%, a product priced at $5.95 would need to be adjusted to approximately $6.01 to maintain margins. There is a marketing problem with making a price of $6.01.

Then there is a bigger problem: this price adjustment creates an unfair challenge for smaller retailers as they typically face higher processing fees than their larger competitors. A supermarket with a 0.5% debit fee will probably keep the magazine at $5.95, while a newsagent with a 1.2% fee would need to charge $6.02 for the same item. This pricing differential highlights the inequitable nature of card processing fee structures across the retail sector today. This assumes the magazine companies are okay with this. The most likely scenario here is that the newsagent loses 1.2%. I doubt any of the three political parties will care about this newsagent.

So, I suggest retailers consider reintroducing cash discounts, equivalent to card processing costs, for customers paying with cash. Our POS System can do that.

3) Understanding Current Surcharge Regulations

There continues to be significant confusion regarding what costs can legally be included in card surcharges under existing regulations. The current interpretation of legislation permits businesses to include only direct costs associated with EFTPOS processing in their surcharges.

This means costs such as:

) EFTPOS terminal rental fees

) Transaction fees charged by payment processors

) Receipt paper for EFTPOS terminals

However, indirect costs cannot be incorporated into surcharges, including:

) Your accounting services related to payment reconciliation, even if done by an outside contractor.

) Internet connectivity costs for payment processing

) Electricity costs for running terminals

The banks will analyse your surcharge rate for you. Our study has revealed that many financial institutions do not comprehensively outline all eligible direct costs when advising merchants on appropriate surcharge levels. This results in businesses underrecovering their actual costs. Check here for details.

4) POS Software Surcharge Considerations

Some retailers use Point-of-Sale (POS) systems that automatically apply surcharges to cover electronic payment costs. We think these surcharges only comply with current regulations if the additional charge is displayed on shelf pricing before the customer reaches the checkout. Few businesses that use such POS systems do that; if your company employs such a system, it is advisable to confirm with your POS provider that your surcharging practices align with current regulatory requirements. Non-compliant surcharging may expose your business to regulatory action from the Australian Competition and Consumer Commission (ACCC). If you do ask them, please let me know their responses.

Conclusion and Next Steps

The proposed abolition of debit card surcharges represents a significant shift in Australia's retail payment landscape. While the exact timeline and implementation details await further political development, Labor is talking of early 2026

Suppose you have specific questions about how these changes might affect your retail operation or require assistance configuring your POS system to accommodate the new regulations. In that case, our team can provide tailored guidance and support. We remain committed to helping Australian retailers adapt to this evolving payment landscape.

Written by:

Bernard Zimmermann is the founding director at POS Solutions, a leading point-of-sale system company with 45 years of industry experience. He consults to various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

Although much of the election still needs to be sorted out, it is clear that now we need to consider the government's announced plan to ban debit card surcharges. It is set to take effect from January 2026. It is being presented as a measure to provide relief for consumers and a "fairer go". However, many of you do not see it this way. Many of you would feel that this will increase your costs, as we face it, it's the retailer that will now have to pay these debt charges. So, let's delve into what this change means, to consider the broader implications for your business.

We must speak here: Australia’s card payment system has, for a considerable time, been structured unfairly. Large national retailers, the supermarket giants and major department store chains, wield significant commercial power. This scale allows them to negotiate highly preferential, often rock-bottom, merchant service fee rates with the banks and international card schemes. Their sheer volume of transactions gives them leverage that an independent retailer cannot match. Currently, it's less of an issue than with cash; both independent and large organisations pay no fees to the bank on money. What makes it particularly bad is that in these government promises, there's no explicit, corresponding guarantee or mechanism announced to ensure that the bank charges the debt fees will be fair. This isn't anecdotal; this issue is acknowledged in reports from government regulatory bodies and industry analyses. On average, an SME business can expect to pay merchant fees for debit card transactions, sometimes two to three times more than what a major retailer pays for the same value and type of transaction.

To put this into perspective, a small business may see debit card fees ranging from 0.5% to 1.5%, and sometimes even more, particularly if newer or less typical card schemes are involved. Conversely, a large retailer might secure rates as low as a few cents flat per transaction, or a tiny fraction of a percent. For a $100 sale processed via a debit card, this disparity means a supermarket might incur a fee of just 20 or 30 cents. However, your local boutique, café, or specialty store could be charged $1.00, $1.50, or even more for that identical transaction. This difference isn't trivial.

Examining the Impact

Suppose the government proceeds with banning debit card surcharges without simultaneously legislating a significant and enforceable reduction in the underlying merchant fees that small businesses pay. In that case, the financial implications are pretty straightforward. The cost of accepting debit cards, which you can recover, will have to be absorbed directly by your business. For many independent retailers, this isn't a minor adjustment; it could translate into thousands, or even tens of thousands, of dollars in lost revenue annually, straight from your bottom line.

Let's consider the probable consequences under such a scenario. Prices are often set by suppliers in their RRP. I doubt that the suppliers will adjust their prices to these debit card increases. Then there is the problem of an item that says $4.95. You cannot increase it to $5.05, as inflation continues, you may be able to put the debt charges into the item, but certainly not immediately.

The other issue is that the surcharges explicitly show the consumer the bank fees; if this is hidden, as it will be in the government plan, what is to stop the banks from increasing it more? Debt fees now, compared to many countries, are high; what is to stop them from going up higher?

The Problem Lies with High Debt Fees

The fundamental challenge, which a ban on surcharging alone does not resolve, is the inherently unfair and often opaque structure of merchant service fees in Australia. Suppose the genuine policy objective is to create a more equitable financial environment for small retailers and deliver real savings. In that case, the primary focus must be on tackling these high debt fees. The proposal treats an effect rather than a cause. No one charges surcharges for cash, as it has no fees. The surcharge is there because of the debt charges.

A Call for Genuine Reform: What Should Change for True Fairness?

If the government is truly serious about fostering a fairer commercial environment, then the policy approach must be more robust. Simply shifting a visible cost (the surcharge) into an invisible, absorbed cost for the retailer doesn't solve the underlying problem of excessive debt fees.

We need a meaningful reform that ensures that banks and card schemes are compelled to offer more equitable and competitive rates to all businesses, regardless of their size. Any ban on surcharges, if it is to be fair, must be intrinsically linked with real, enforceable, and significant reductions in the cost of accepting card payments for all retailers. Without this linkage, the policy risks being perceived not as a measure of support, but as an additional financial impost on an already challenged sector, while letting the major banks and large retailers continue to operate with their existing advantages.

The coming months will be crucial as this policy develops. It is vital that small retailers' concerns are heard and acted upon to ensure a truly equitable outcome.

Written by:

Bernard Zimmermann is the founding director at POS Solutions, a leading point-of-sale system company with 45 years of industry experience. He consults to various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.