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Here’s a bit of business history that surprises younger bookkeepers and business owners: there was a time when, by law, you were not allowed to pass on the cost of accepting a credit card to your customer.
Then that changed.
And now, in a fascinating full circle, the rules are changing back. If you handle the books for a business, understanding this history — and the big change coming in October 2026 — matters more than ever.
The Old Days: The “No-Surcharge” Rule
Decades ago, if a customer paid you by credit card, you simply had to absorb the merchant fee the card company charged you. You couldn’t add it on. This was because the international card schemes (Visa and Mastercard) imposed what was called a “no-surcharge rule” on merchants — a rule that flat-out prevented businesses from surcharging for card transactions.
According to the Reserve Bank of Australia, these rules had a real cost hidden inside them. As the RBA explains, the no-surcharge rules “had masked price signals to cardholders about the relative costs of different payment methods” and “had also contributed to the subsidisation of credit card users by all other customers, as merchants would build the costs of accepting card payments into the overall prices of their goods and services, which were paid by all customers regardless of the payment method they used.”
In plain English: because businesses couldn’t charge card users directly, they baked the cost into their prices for everyone. The customer paying cash was quietly subsidising the customer paying with a rewards credit card.
When It Changed: 2003
The turning point came in 2003. As part of a major reform of the card payment system, the Reserve Bank stepped in and removed the schemes’ no-surcharge rules.
The RBA’s own record is precise about the dates: it “imposed standards that required the removal of the schemes’ no-surcharge rules”, and these “Standards became effective from 1 January 2003 for the MasterCard and Visa credit card systems and from 1 January 2007 for the Visa Debit system.”
The goal, in the RBA’s words, was that the initial reforms “required the removal of the card schemes’ no-surcharge rules and allowed merchants to pass on the cost of credit card and scheme debit card transactions, resulting in improvement in price signals.”
So from 2003 onward, that card surcharge you’ve seen on so many receipts became legal for the first time. It took a while to catch on, but eventually surcharging became a normal part of Australian business life.
The Full Circle: The Surcharge Ban from 1 October 2026
Now, more than two decades later, the pendulum is swinging back. The Reserve Bank has concluded it is in the public interest to remove surcharging altogether. In the RBA’s own words: it “has concluded that it is in the public interest to remove surcharging for all designated card networks (eftpos, Mastercard and Visa) from 1 October 2026.”
Here’s the crucial part for businesses, again straight from the RBA: “Businesses will still incur costs when accepting card payments after surcharging is removed. Those costs can be reflected in a business’s overall pricing, rather than charged as a separate surcharge.”
Read that carefully, because it’s the whole story for bookkeepers.
The cost of accepting cards doesn’t disappear on 1 October 2026 — it just stops being a separate line item and goes back to being built into the sticker price. In other words, we’re returning to the pre-2003 world, where the cost is absorbed into overall pricing. The RBA notes this matches what customers actually want — “consumer preferences for sticker prices to be all-inclusive.”
One important clarification the RBA makes: the change “only apply to surcharges added because a customer pays by card. They do not apply to weekend surcharges, public holiday surcharges, or booking fees or service fees.”
So that weekend café surcharge isn’t going anywhere — only the card-specific one.
Read about our Cafe Case Study.
What This Means for the Books
For anyone doing bookkeeping, this is a genuine practical change to prepare for. From 1 October 2026, businesses that currently add a card surcharge will need to stop doing so and instead factor those merchant costs into their pricing.
That affects how invoices and receipts are set up, how point-of-sale systems are configured, and how merchant fees appear in the accounts.
Merchant fees don’t vanish — they just move from being recovered via a surcharge to being a cost of doing business that pricing has to cover.
Understanding where those fees land in the profit and loss, and helping a business reprice sensibly, is exactly the kind of value a good bookkeeper adds.
The Bigger Conversation: Digital vs Cash
All of this sits inside a much larger shift — the steady move from cash to digital payments. And here the official data is genuinely interesting, because the story isn’t quite what you’d assume.
According to the Reserve Bank’s 2025 Consumer Payments Survey, the long decline of cash has actually slowed down.
The RBA reports that “cash use in Australia has stabilised in recent years. In 2025, around 15 per cent of payments were made in cash and around half of Australians used cash in a typical week.”
Cards remain dominant, but the RBA notes the “share of payments made using cards declined from 76 per cent in 2022 to around 73 per cent in 2025”, with debit cards now making up around half of all payments.
Crucially, cash still matters to a significant group of Australians. The RBA found that “one-third of Australians would face hardship or major inconvenience if cash was difficult to access or if shops did not accept cash,” and that “older Australians and lower income households tended to use cash somewhat more often than others.”
The RBA frames cash as playing an “important role in an inclusive and resilient payments system” — a fallback when electronic systems go down, and a lifeline for people who rely on it.
This is why the “just go cashless” conversation is more complicated than it looks. The Reserve Bank has stated it is “committed to supporting the Australian Government’s policy objective to ensure cash remains a viable means of payment for as long as Australians want or need to use it,” noting that “cash supports economic inclusion, serves as a fallback if electronic payments are unavailable, and is an important store of value, particularly during periods of economic uncertainty.”
The Takeaway for Business Owners and Bookkeepers
Payment rules are not set-and-forget. The very same practice — passing on card costs — was banned, then legalised in 2003, and is now being wound back from October 2026.
A business that isn’t paying attention could find itself surcharging illegally, mispricing its services, or alienating the one-in-three customers who still value cash.
This is precisely why understanding payments, pricing and how it all flows through to the accounts is a core skill for modern business admin. It’s the kind of real-world, keep-you-current knowledge we build into our training.
Explore our bookkeeping courses across MYOB, Xero and QuickBooks
The wheel has turned full circle — and knowing why puts you ahead of every business owner still wondering what happened to their card surcharge.
Sources: All payment-rule and payment-behaviour facts in this article are drawn from the Reserve Bank of Australia (rba.gov.au), including its Review of Card Payments Regulation, surcharging standards documentation, the FAQs on removal of payment surcharges from 1 October 2026, and the 2025 Consumer Payments Survey Bulletin articles. This article is general information only, not financial, legal or tax advice.
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