The policy shift stems from Reserve Bank of Australia reforms targeting merchant fees, leaving small businesses to absorb processing costs.
ATO Surcharge Elimination Metrics
- Merchant Fee Burden: The ATO estimates accepting credit cards costs nearly $200 million annually in merchant fees, funds that would otherwise support public services according to taxation commissioner Rob Heferen.
- Payment Share: Credit cards account for just 2.3 per cent of total payments received by the tax office, yet over 60 per cent of those card payments by value originate from wealthy groups, public entities, and multinationals.
- Small Business Usage: Approximately 5 per cent of small businesses utilize credit cards to manage their tax liabilities and maintain short-term liquidity.
Emergency Consultations Triggered by Tax Office Decisions
Taxation commissioner Rob Heferen stated that the ATO “would have preferred to continue accepting credit cards” but noted that card networks declined to offer sufficiently low processing rates. According to ABC News, the announcement last week set a strict transition deadline of November 30, after which taxpayers must rely on alternatives such as BPAY, direct debit, electronic funds transfer, Australia Post, or phone options.
The decision prompted the ATO to call a special forum with members of its small business stewardship group. Business leaders expressed intense frustration during these discussions, arguing that the timing coincides with acute financial strain. Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry (ACCI), pointed to a stark operational divide.
As McKellar stated to ABC News, “There is a clear double standard here.”
Broader Payment Ecosystem Adjustments Across Australia
The Reserve Bank of Australia’s mandate to scrap card surcharges from October 1, 2026, intended to save consumers approximately $1.6 billion annually. However, the policy change has created immediate ripple effects across corporate and consumer payment channels, as reported by Yahoo Finance Australia. Rather than absorbing transaction costs, multiple entities and platforms have altered their operational frameworks.
Macquarie Bank’s payment processing service, DEFT, ceased accepting debit and credit card payments starting October 1, 2026, directing users toward BPAY, PayID, or direct bank transfers, as detailed by Finder.com.au. Similarly, Stratapay announced that strata schemes utilizing the platform can no longer process card payments unless individual schemes formally vote to absorb associated transaction costs. Platforms such as RentMate have likewise eliminated card options for residential rental payments.
| Entity or Platform | Action Taken | Effective Date | Alternative Payment Methods |
|---|---|---|---|
| Australian Taxation Office (ATO) | Ceasing credit card acceptance | November 30, 2026 | BPAY, Direct Debit, EFT, Australia Post, Phone |
| DEFT (Macquarie Bank) | Terminated card payment processing | October 1, 2026 | BPAY, PayID, Bank Transfers |
| Stratapay | Ended default card payments for strata levies | October 1, 2026 | Direct transfers, scheme-approved card options |
| RentMate | Halted credit card rental transactions | October 1, 2026 | BPAY, Direct Debits |
Regulatory Scrutiny on Alternative Transaction Fees
As traditional surcharges disappear from checkout terminals, consumer watchdogs are monitoring alternative fee structures. According to Yahoo Finance Australia, hospitality ordering platforms like me&u and Bopple have faced customer criticism regarding newly introduced platform or service fees. The Australian Competition and Consumer Commission (ACCC) noted that while the rules do not prohibit genuine fees for specific ordering software, businesses are strictly barred from disguising card surcharges under alternative names.
Meanwhile, The Age reported that card providers have adjusted interchange fee margins, resulting in scaled-back consumer perks and reduced complimentary travel insurance. However, American Express remains unaffected by standard merchant surcharge rules while voluntarily ending merchant levies to capture market share, and business credit cards retain their reward structures for entities operating under an Australian Business Number (ABN).
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
