Card Surcharges Are Banned and the ATO Is Dropping Credit Cards: What Should Your Venue Do Now?
Card surcharges ended on 1 October 2026, and the ATO's plan to stop taking credit cards has been pushed back to 30 June 2027. Here is what your venue should do about both.
Updating POS and card terminal settings to ensure compliance with the new card surcharge ban.
Since 1 October 2026, Australian businesses can no longer add a surcharge when customers pay by eftpos, Visa or Mastercard, and American Express and UnionPay have adopted the same rule. If your café, restaurant, bar or pub has been passing card fees on to customers, that line now has to come off your POS, your menu, your website and your invoices.
One point of clarity: the surcharge ban is a Reserve Bank of Australia (RBA) reform, not an ATO policy. The ATO's part of the story is a separate decision. Because it can no longer pass card fees on to taxpayers, it announced it would stop accepting credit cards. After a backlash from small business, the Government stepped in on 9 October 2026 and funded a delay until 30 June 2027.
1 October 2026: surcharges banned on eftpos, Visa and Mastercard debit, credit and prepaid cards
30 June 2027: new end date for direct ATO credit card payments (originally 30 November 2026)
0.8% to 0.3%: new cap on domestic consumer credit card interchange fees
$910 million: the Treasurer's estimate of yearly savings for businesses from the lower caps
For hospitality venues running on thin margins, the real question is not what the rule says. It is what your merchant statements, your pricing and your tax-payment plans look like once the surcharge income is gone.
What Changed on 1 October 2026
Briefing hospitality venue teams and managers on updated card surcharge regulations and pricing strategy adjustments.
From 1 October 2026, you cannot add a separate charge because a customer chose to pay by card, whether the payment is made in-store, online or through a digital wallet. The RBA confirmed the change in its Conclusions Paper on 31 March 2026, after an 18-month review.
The ban applies to:
eftpos, Mastercard and Visa debit, credit and prepaid cards
American Express and UnionPay, which have adopted their own no-surcharge rules from the same date
It is enforced through card scheme rules and your merchant agreement, rather than through criminal law. Continuing to surcharge puts you in breach of that agreement, and payment providers have been told to remove surcharging functions from their terminals and software.
The RBA also cut the fees banks charge each other for card payments (interchange), which is the cost behind most merchant fees:
Domestic consumer credit cards: 0.8% down to 0.3%
Debit cards: 0.2% down to 0.16%
Commercial credit cards: unchanged at 0.8%
Foreign-issued cards: a 1.0% cap starts later, on 1 April 2027
What is not banned. Genuine weekend and public holiday surcharges, booking fees and service fees are separate from card surcharges. They still need to be clearly described, and they cannot simply be a card fee under another name. Because penalty rates are a core part of hospitality pricing, check how every extra line on your bill is worded.
What the ATO Decided, and Why It Was Delayed
The ATO will stop accepting direct credit card payments after 30 June 2027, not after 30 November 2026 as first announced. The delay is temporary, not a reversal.
Reviewing venue merchant statements and rebuilding cash flow forecasts post-surcharge ban.
Until now, the ATO passed card costs on to taxpayers with a surcharge of between 0.94% and 2.03% on credit card payments. The new rules stop it from doing that. The ATO said absorbing the fees would cost about $200 million a year, and that card companies did not offer fees low enough to make it workable. So around the day the ban started, it announced it would stop accepting credit cards, with about eight weeks' notice.
The reaction was fast. Business groups warned that many owners use a credit card to smooth cash flow when a tax bill lands. The ATO's own figures show credit cards made up about 2.3% of payments in 2024-25, with roughly 5% of small businesses paying this way.
On 9 October 2026, the Treasurer announced transitional funding so the ATO can keep accepting credit cards, without a surcharge to taxpayers, until 30 June 2027. The cost will be finalised in the mid-year budget update in December. The Government said the ATO would keep talking to card companies and consult small business on options.
After 30 June 2027, the ATO has said it will still accept credit card payments through third-party providers, as well as debit card and bank transfer. The Opposition has called for the ban to be scrapped, and the Greens argue the banks should absorb the fees, so the final settings could still shift.
Key Dates at a Glance
The two deadlines that matter most are 1 October 2026, which has passed, and 30 June 2027, which is your window to change how you pay the ATO.
The RBA confirmed the ban in its Conclusions Paper on 31 March 2026, which locked in the start date and gave payment providers time to update their terminals. On 1 October 2026 the surcharge ban and the lower domestic interchange caps took effect, so card surcharges need to come off everywhere you show prices. Eight days later, on 9 October 2026, the Government funded a delay to the ATO's credit card change, which means you can still pay the ATO by credit card without a surcharge for now.
Looking ahead, the cost of that delay is due to be finalised in the mid-year budget update in December 2026, so watch for any change to the arrangement. On 1 April 2027, a 1.0% cap on foreign-issued card interchange starts, along with extra detail on merchant statements, so venues with many overseas visitors should review their rates. Finally, on 30 June 2027 the ATO stops direct credit card payments, although third-party providers, debit card and bank transfer remain available.
What This Means for Cafés, Restaurants, Bars and Pubs
Analyzing menu margins and operational costs directly with venue owners to absorb card fees effectively.
The ban moves card costs from your customer's bill to your profit and loss, so venues that surcharged will see margin pressure first and any savings later. Four areas are affected:
Margins. Card fees you used to recover are now yours to absorb or price in. Lower interchange caps should reduce what providers pay, but you only benefit if your provider passes the saving on.
Pricing. Many venues will fold the cost into menu prices. Do it in the open and review it alongside your labour, food and energy costs, not as a separate fix.
Bookkeeping. Surcharge income and merchant fees often sit in their own accounts. If your POS, payment provider and Xero mappings are not updated, daily POS reconciliation will stop matching your bank settlements.
Cash flow. If you use a credit card to pay the ATO when BAS or PAYG falls due, you have until 30 June 2027 to line up another way to cover those bills.
Some commentators also expect banks to look for revenue elsewhere, for example through other card fees or rewards. It is another reason to read your merchant statements closely over the next few months.
What to Do Now: A Seven-Step Checklist
Work through these in order. Steps 1 and 2 are the most urgent because they affect compliance and cost today.
Remove every card surcharge.
Check your POS, card terminals, online ordering, booking and function forms, menus, signage, quotes and invoices. Invoices issued before 1 October but paid after it are a grey area, so ask your payment provider how it is handling them.Read your merchant statement.
Ask your provider for your current effective rate, whether the interchange cuts are being passed on, and when. If the answers are vague, get a competing quote.Review your pricing.
If card costs now need to be recovered, build them into menu and function prices openly. Avoid relabelling a card fee as a "service fee" or "admin fee", because that can still be treated as a surcharge.Update your accounting set-up.
Retire or rename surcharge income accounts, check how merchant fees are coded, and confirm your POS integration still reconciles daily sales to bank settlements.List what you pay the ATO by credit card.
Include BAS, PAYG instalments and any payment plan linked to a card, and confirm with the ATO how it will treat those arrangements. Decide now what replaces the card: debit card, bank transfer or a third-party provider, and check the fees of any third party before you use it.Rebuild your cash flow forecast.
If a credit card has been your buffer for tax bills, model a 13-week forecast without it and set aside BAS and PAYG amounts earlier in the cycle.Brief your team.
Front-of-house staff should know that card payments carry no extra charge, and how to answer customer questions about price changes.
Common Traps to Avoid
Most problems come from assuming the delay or a rename changes the rules. It does not.
Treating the ATO delay as a reprieve for your own surcharges. The delay only covers how you pay the ATO. The surcharge ban applies to your venue as of 1 October 2026.
Disguising the fee. A "card handling fee" or "admin charge" that only appears when someone taps a card is a surcharge by another name.
Leaving a terminal or online checkout on its old settings. A terminal that still prompts for a surcharge after 1 October is a compliance problem, not just an awkward moment at the till.
Assuming your costs will fall on their own. Interchange savings only reach you if your provider passes them on, so ask.
Planning around the credit card staying at the ATO. The 30 June 2027 date can still change, but plan as if it will not.
Frequently Asked Questions
Has the ATO stopped accepting credit cards?
Not yet. The Government has funded the ATO to keep accepting them, without a surcharge to taxpayers, until 30 June 2027. After that, credit cards remain possible through third-party providers, alongside debit card and bank transfer.
Is the surcharge ban an ATO rule?
No. It is an RBA reform carried out through the card networks' rules. The ATO's decision to stop taking credit cards was a response to it.
Can I still charge public holiday or weekend surcharges?
Genuine public holiday and weekend surcharges are separate from card surcharges, but they must be clearly described and cannot be a card fee under another label. If you are unsure how your menu or bill is worded, ask us to review it.
Does the ban cover American Express?
Yes. American Express and UnionPay have also moved to remove card surcharging from 1 October 2026.
Will my card fees go down?
They should, because the caps on what banks charge each other have dropped. Whether your own rate falls depends on your payment provider, so ask for your effective rate in writing.
How Evisory Can Help Your Venue
At Evisory, we are specialist hospitality accountants and bookkeepers working with cafés, restaurants, bars, pubs and hospitality groups. The surcharge ban touches your pricing, your POS reconciliation and your tax-payment cash flow at once, which is where a hospitality bookkeeper earns their keep.
We can help you:
Check that POS, Xero and payment provider settings no longer carry surcharges and still reconcile daily
Review your merchant statements against your sales reports
Model the margin impact and test menu pricing options
Build a 13-week cash flow forecast that plans BAS and PAYG without a credit card buffer
Set up weekly reporting so changes in card costs show up early
Not sure where your venue stands? Book a free 30-minute call with an Evisory hospitality accountant. No obligation, just practical advice.