Written by: Dylan Murphy (Updated: 04/06/2026)
Understanding evolving payment regulations and tax considerations for small business owners
A potential RBA card surcharge ban in Australia represents a significant shift for Queensland businesses managing transaction costs. As the Reserve Bank of Australia conducts its debit card surcharge review, small business owners should prepare for changes to their revenue and compliance models. This article explores the evolving regulatory landscape to help you proactively manage these shifts.
What the RBA Card Surcharge Reforms Means for Your Business.
From 1 October 2026, Australian businesses will no longer be able to pass card surcharges on to customers. Here’s what’s changing, what’s not, and the pricing, GST and record-keeping decisions you should be making now.
The reforms are confirmed
The Reserve Bank of Australia (RBA) has finalised its card surcharge reforms following an extensive public consultation process. On 31 March 2026, the RBA released its Conclusions Paper, and the Payments System Board has since directed acquirers, including card terminal providers, to remove surcharging functionality from 1 October 2026.
This is not a proposal. The direction has been set.
For businesses that currently recover transaction costs through card surcharges, these reforms require action now, across pricing structures, accounting systems and margin management.
ACCC Enforcement Still Applies in the Meantime.
While the surcharge ban takes effect in October, the ACCC continues to enforce excessive surcharging rules now. Businesses may recover the reasonable cost of accepting card payments, but the surcharge cannot exceed the actual cost of acceptance.
Recoverable costs generally include:
- Merchant service fees charged by banks or payment providers
- Terminal rental or maintenance fees directly associated with payment processing
- Direct third-party payment gateway or processing costs
Review your merchant statements and provider agreements regularly to ensure your rates are accurate and defensible.
What This Means For Your Pricing
If you currently surcharge, you have three practical options from October 2026:
- Absorb the cost into existing margins.
- Adjust your sticker prices to recover transaction costs across all sales.
- Reduce the cost itself through least-cost routing, provider renegotiation, or alternative payment methods.
The interchange cut should help offset some of the lost surcharge revenue, but rarely all of it. Model the impact on your margins before October to avoid surprises. Businesses that act early will be best placed when the rules change.
GST treatment of card surcharges
Until 1 October 2026, the GST treatment of a surcharge follows the underlying transaction. If the sale is taxable, the surcharge is taxable. If the sale is GST-free, so is the surcharge.
Your point-of-sale and accounting systems should be configured to:
- Apply GST to surcharges based on the nature of the underlying supply
- Reconcile surcharge income against actual merchant fees paid in the BAS reporting period
- Exclude internal administrative overheads from surcharge calculations, as these do not form part of the external cost of acceptance
After 1 October 2026, surcharges disappear as a separate line item, but the GST treatment of merchant fees as a business expense remains unchanged.
Record Sales Gross. Not Net.
A common bookkeeping error is recording only the net amount deposited by the acquirer. This understates revenue and creates GST reporting discrepancies.
Always record:
- The full sale amount (including any surcharge) as gross income
- Merchant fees and processing costs as a separate business expense
Supporting records should include tax invoices, merchant statements showing fee deductions, bank statements, and point-of-sale summaries reconciling each.
Merchant Fees are Deductible.
Merchant service fees, EFTPOS terminal costs, online payment gateway charges and transaction processing fees are generally deductible business expenses where incurred in carrying on the business.
This doesn’t change under the reforms. If anything, the deduction becomes more significant once the cost can no longer be passed through to customers.
Use the Lead time: Enable Least-cost Routing Now.
Least-cost routing (LCR) automatically routes multi-network debit card transactions through the network with the lowest processing fee, typically eftpos rather than Visa or Mastercard.
With surcharging disappearing, every basis point saved on the underlying fee goes straight to your margin.
Before October 2026:
- Confirm with your provider whether LCR is enabled on your terminals
- Review merchant statements against expected rates
- Watch for the new fee disclosures from acquirers, they’ll make benchmarking much easier
Consider Alternative Payment methods.
As payment regulations evolve, many businesses are exploring alternatives to reduce transaction costs and improve cash flow. Platforms such as PayID and Osko facilitate direct account-to-account transfers through the New Payments Platform (NPP), often avoiding traditional card processing fees entirely.
- B2B businesses: Direct bank transfers remain common for high-value invoicing and reduce processing costs and chargeback risks
- B2C businesses: PayID integration can reduce administrative complexity where surcharges are no longer permitted
Whatever payment methods you adopt, ensure your bookkeeping system can reconcile them accurately for BAS and income tax reporting.
ATO Reporting.
The ATO’s reporting expectations don’t change with the reforms:
- Gross sales (including any surcharges collected before October 2026) reported at label G1 on the BAS
- GST applied consistently based on the underlying supply
- Merchant fees recorded separately as deductible expenses
Digital accounting systems should be configured to accurately track surcharge income, merchant fees and alternative payment transactions as the framework takes effect.
Key Takeaways
The RBA reforms reshape how Australian businesses recover payment costs, but they also create an opportunity to renegotiate, modernise and tighten margins.
For tailored advice on pricing strategy, GST compliance and merchant arrangements ahead of 1 October 2026, contact the team at Greenhalgh Pickard. Our integrated legal and accounting team can help you prepare across the legal, tax and operational dimensions of the change.
Greenhalgh Pickard’s Accounting Team
Disclaimer: This article provides general information only and does not constitute financial advice. It does not take into account your personal circumstances and should not be relied on as a substitute for professional financial advice. This article contains general tax information only. Tax outcomes depend on individual circumstances. You should seek advice from a registered tax agent before making financial decisions. For advice about your specific situation, please contact Greenhalgh Pickard on (07) 5444 1022 to speak with our accounting team.