20 October 2026
Card surcharges: where things stand after the ATO issue
Jim Chalmers has changed his mind on a lot of things, so here is play on Card Surcharges.
The short version
> The ban on card surcharges is still in force. It started on 1 October and nothing that has happened since changes it for your business.
> The ATO has delayed, not scrapped, its plan to stop accepting credit cards for tax payments. Credit cards stay available until at least 30 June 2027.
> The final arrangement is not settled. The Treasurer has said more consultation was needed and has not confirmed whether the ATO decision will be reversed entirely.
How we got here
It has moved quickly, so here is the sequence as reported:
- 1 October. The Reserve Bank's ban on surcharges for EFTPOS, Visa and Mastercard payments took effect. At the same time, the cap on what banks charge businesses to process a card payment (interchange) fell from 0.8% to 0.3%.
- 1 October, same day. The ATO announced it would stop accepting credit card payments from 30 November. It said the merchant fees would cost it almost $200 million a year, and that it had explored lower fees with card companies but none were low enough.
- Early October. Business groups pushed back, saying two months was not enough time to adapt. The Australian Chamber of Commerce and Industry estimated around 5% of Australia's 4.9 million active small businesses could be affected, roughly a quarter of a million.
- 9 October. The Treasurer announced extra funding for the ATO to push the deadline out to 30 June 2027. The cost will be finalised in the mid-year budget update in December.
- 14 October. The Treasurer said "more consultation should have happened" and that the ATO was being given resources to take more time. He would not confirm whether the decision would be overturned entirely, saying more conversations were needed.
After 30 June 2027, as it stands, the ATO says it will still accept payments through third parties, debit cards and bank transfers. The detail of how third-party payments will work, and what they will cost, has not been spelled out in the reporting we've seen.
What hasn't changed
It's easy to read the ATO story as the surcharge ban being wound back. It hasn't been. The delay is about what the ATO accepts, not about what your business can charge.
- Surcharges on these card payments are still banned. Renaming the surcharge a "service fee" or "handling fee" doesn't change that.
- Cash and PayID discounts are still allowed, provided your everyday price already reflects your card costs and the full price is shown clearly.
- The lower interchange caps still apply. Whether your provider has passed that saving on to you is still a question worth asking.
The Reserve Bank also noted that 85% of small merchants weren't surcharging before the ban, so for most small businesses the change at the till has been small.
The catch
The ATO's argument was that card fees are a real cost. About 2.3% of tax payments in 2024-25 were made by credit card, and it said that was costing close to $200 million a year. That is true, and it is also true for the café, the plumber and the hairdresser. The difference is that a small business can't ask the Treasury to cover its card costs.
We're not arguing the surcharge ban was wrong. It was designed to stop customers paying more at the checkout. But the episode is a useful reminder that card acceptance has a cost somewhere in the system, and that when the surcharge is removed, the cost moves rather than disappears.
What this means for you
> If you've used a credit card to pay a tax bill, you have until at least 30 June 2027 under the current arrangement. That is not a reason to leave it to the last minute. The rules could change again once the consultation finishes.
> Don't build your cash flow around it. If a credit card has been your bridge between a tax bill and incoming customer payments, work out what the alternatives look like now. Options include setting money aside earlier, paying by debit card or bank transfer, or talking to the ATO about a payment plan.
> Count the real cost of the card. Interest on a business credit card is usually far higher than the rewards points are worth, and several card providers are cutting rewards and raising annual fees at the moment. Check the numbers on your own card before assuming it still pays.
> Keep your own pricing in order. Make sure the surcharge is gone from your terminal, invoices, payment links and website, and check what your provider is charging you now that the caps have fallen.
What's still unsettled
- Whether the ATO's decision will be reversed or just delayed. The Treasurer hasn't said.
- How much it will cost the government to keep accepting cards. That figure is due in December.
- What the ATO and card companies agree on fees, if anything. The Treasurer has said those talks will continue.
We'll keep an eye on it. If something changes that affects how you pay your tax, we'll say so.
Where to start
If you're not sure how the surcharge ban, the card fee changes or the ATO's plans affect your business cash flow, get in touch before you change how you pay or price. A conversation costs far less than a rushed decision.
Sources
SBS News, Why the ATO tried to ban credit card tax payments and what changed (9 October 2026); CityNews, ATO delays start of credit card fee ban after backlash (October 2026); The New Daily, Treasurer insists he wasn't rolled on ATO card backflip (14 October 2026); Central Western Daily (October 2026); Reserve Bank of Australia, Review of Merchant Card Payment Costs and Surcharging. Information as at 15 October 2026.
