Merchant Backlash and Political Fallout: Inside the Resistance to Australia’s Card Surcharge Ban

A Reform That United Consumers but Divided Businesses

The Reserve Bank of Australia’s decision to ban card surcharging from 1 October 2026 delivered a clear win for consumers, who will no longer pay an estimated $1.6 billion annually in checkout fees. But the reform has ignited an escalating backlash from small business operators who argue they have been made to bear the cost of a policy designed to benefit shoppers.

The discontent crystallised in October 2026 when mortgage broker Joseph Daoud and accountant Belinda Raso launched a national advertising campaign featuring dozens of business owners who say they are footing the bill for bank transaction fees they can no longer pass on to customers.

The Political Contradiction at the Heart of the Debate

The campaign’s most potent ammunition came not from business advocates but from within government ranks. Emergency Management Minister Kristy McBain publicly suggested that while the RBA made the right decision to ban surcharges, it should have gone further and stopped banks from charging small businesses merchant fees altogether.

McBain questioned why banks, already collecting account-keeping fees from business customers, should continue profiting from card transactions when SMEs can no longer recover those costs directly from shoppers. “These banks are making billions of dollars in profits every year and small businesses are already paying account keeping fees,” she said.

The ATO’s Retreat and the Opposition’s Attack

The political tension intensified when the Australian Taxation Office announced it would stop accepting credit cards entirely from 30 November 2026, citing an inability to absorb processing costs within legislated tax liabilities. Commissioner of Taxation Rob Heferen stated that absorbing these costs would result in “less revenue being collected by the ATO”.

Labor intervened to delay the ATO measure until July 2027, but the damage to the government’s messaging was done. Opposition leader Angus Taylor highlighted the contradiction: “While small businesses are being told to absorb the cost of accepting credit cards, his own Tax Office has decided it won’t”.

The Grassroots Campaign Against Merchant Fees

Daoud’s advertising campaign, funded independently and running on national television and billboards at Canberra Airport, urges the government to “stop putting a surcharge on running a small business”. He argues the government targeted the wrong end of the payment system: “If they wanted to get rid of the surcharge, you ban it at the source. You don’t make small business owners absorb the cost”.

Tash O’Dwyer, founder of Gold Coast business The Vinyl and Thread Bar, is among those featured in the campaign. Despite the ban, “the bank fees haven’t gone anywhere,” she said.

What the RBA Actually Changed—and What It Didn’t

Technically, the RBA did not outlaw surcharges itself. It lifted the prohibition on “no-surcharge” rules for designated card networks, allowing eftpos, Mastercard, Visa, and American Express to enforce their own prohibitions on surcharging. The RBA simultaneously reduced interchange fee caps, cutting the maximum rate on consumer credit cards from 0.8 per cent to 0.3 per cent.

The RBA estimates these measures will save businesses $910 million annually. However, the distribution of those savings remains contested. Businesses that previously surcharged at rates exceeding their actual acceptance costs may see net gains, while those that surcharged only to recover genuine costs may find themselves worse off during the transition.

The Road Ahead

The merchant backlash shows no signs of abating. With the ATO’s credit card deadline delayed to July 2027 and the next federal election on the horizon, card payment costs are poised to remain a politically charged issue. For small businesses, the immediate challenge is operational: navigating the new compliance landscape while advocating for structural changes that address the root cause—the fees banks and card networks charge merchants for accepting digital payments.