Are you seeing new ‘service fees’ since the card surcharge ban? Here are the rules

Since Australia’s card surcharge ban took effect on October 1, social media users have questioned new “service fees” and “daily surcharges” appearing on their bills. Some businesses have simply raised their prices.

A recent Reddit discussion captures some of this frustration.

So are these new fees illegal?

Not necessarily. But a business cannot make a card surcharge permissible simply by giving it a different name.

A different label does not change the substance

From October 1, the card networks Visa, Mastercard, EFTPOS and American Express no longer allow businesses to add a surcharge when customers pay with their cards, as explained in the Reserve Bank’s guidance on the new rules.

The consumer regulator, the Australian Competition and Consumer Commission, says businesses can still charge genuine service, booking or other fees that are unrelated to how a customer pays.

But it also warns businesses not to get around the new rules by describing a card payment surcharge as another type of fee. Doing so may amount to misleading conduct.

The practical test is simple: what triggers the charge? If a fee appears only because you paid by card, calling it a “service fee” does not change what it is.

The card costs have not disappeared

The Reserve Bank estimates about 16% of businesses had card surcharges before the ban, including many cafes and restaurants, grocers, Aldi and some online stores. Most large retailers did not apply a card surcharge.

Overall, the central bank says consumers paid about A$1.6 billion in these surcharges in 2024–25, ranging from 0.5% to 1.5% per transaction.

Businesses still pay banks and payment providers to accept cards. Removing the surcharge does not remove those costs.

Businesses can absorb them, find a cheaper payment provider, or build them into the prices of the goods and services they sell. The Reserve Bank has acknowledged that these costs may instead be reflected in overall prices.

There are already media reports that some cafes and restaurants raised their menu prices on October 1 to offset the costs they still need to pay to the card providers.

This may mean customers paying cash or using a cheaper payment method also bear some of the cost of accepting cards, unless a business offers a discount for payment methods such as cash or PayID. The discounts must be clearly disclosed.

There is also a trade-off in transparency. Under the old system, a separate surcharge showed customers how much extra they were paying to use a card. Under the new system, that cost can be folded into the advertised price.

The final price may be clearer, but consumers may no longer know how much of it reflects the cost of accepting their payment method. In other words, the reform improves transparency about what you will pay — but it also reduces visibility over why you are paying it.

What if prices rise by more than the old surcharge?

For example, one Reddit user reported that a purchase was shown as $17 before they tapped their card, but the payment terminal displayed $17.30 after the card was tapped.

The user suspected the 30-cent increase was effectively replacing the old card surcharge, although a sign at the business said a service fee applied to all transactions.

But this does not by itself establish that the business has broken the rules.

More generally, the ACCC says businesses are generally free to raise prices and can incorporate card processing costs into overall prices, but they must not mislead customers about the price or why it increased.

A compulsory everyday “service fee” must also comply with normal price display rules. If it is unavoidable and can be calculated in advance, it generally needs to be included in the displayed total price.

Weekend and public-holiday surcharges for restaurants and cafes have a specific exception. They can still be shown separately, but the menu must prominently state the surcharge percentage and the days it applies.

Will this add to inflation?

This may add to inflation, but it helps to separate a measurement effect from an actual increase in what consumers pay.

The Reserve Bank estimates that folding existing card surcharges into advertised prices could lift the consumer price index by around 0.1%. The index measures changes in the prices households pay for goods and services.

This is largely a one-off measurement effect, because card surcharges are not included in the index, while higher advertised prices are.

But if businesses raise total prices by more than the surcharge they previously charged, consumers are genuinely paying more. If that happens widely, it could add further upward pressure to inflation.

For consumers, the practical questions remain simple: what is the final price, what triggers any extra fee, and is that clear before you order?

Read more: Card surcharges are banned from October 1. What’s changing at the checkout?