Amex and the Surcharge Ban: What's Exempt

The RBA’s surcharge ban doesn’t touch Amex at all — it was never part of it. But Amex has made its own rule that gets you to roughly the same place: from its own merchant policy, you’re not allowed to surcharge an Amex transaction either. Two different bodies, two different reasons, one outcome for most merchants.

This is going to affect a lot of businesses in the high-end space in particular, because that’s where Amex usage is heaviest.

Why Amex is different to begin with

American Express is both the card issuer and the merchant acquirer. It’s a closed-loop system — when you use an Amex card, the transaction is processed through Amex itself, not through a bank acting as acquirer the way it works with Visa or Mastercard.

A merchant can go directly to American Express and set up a facility. Amex gives you a merchant ID and a set of codes, you hand those to your bank or acquiring institution, and they plug the details into your terminal so it starts processing Amex. You’re billed by Amex directly as the merchant — your bank doesn’t bill you for the Amex side of it, though some acquirers will charge you a per-transaction fee for carrying it.

That direct-agreement process became annoying for a lot of merchants, so acquirers started reselling Amex facilitation instead. Say you’re a new pizza shop in Toorak — plenty of Amex users there — and you’re already with a provider like Live Payments, Nuvei or Tyro. They’ll handle the Amex onboarding for you, give you one price, and it becomes part of the one relationship instead of a separate agreement you manage yourself. You might still technically sign something with Amex, but the provider carries the process.

That’s made it a lot easier for businesses to say yes to Amex. Accepting it has become close to a tick-box exercise alongside China UnionPay, Zip, Alipay, WeChat Pay and the rest — tick, tick, tick, done. It’s also a lot more expensive to take.

Why the RBA left Amex out

The RBA didn’t include Amex in the surcharge ban. That’s consistent with how Amex has been treated before: it also wasn’t part of the interchange repricing that happened around ten to twelve years ago, when credit card interchange was capped at 0.80% plus GST — the same 0.80% commercial-card ceiling that isn’t moving this time either. Amex was exempt from that too — as, for a different reason, were taxi drivers, who lobbied for an exemption and are why you’ll still see a 5% card surcharge in the back of a cab.

So Amex sitting outside the RBA’s surcharge ban isn’t new territory. What’s new is that Amex has separately decided, off its own back, that merchants can’t surcharge its cards anyway.

Why Amex made that move

This part’s my own read on it, not an RBA position: I think it’s a slightly odd move on Amex’s part. Amex makes money on both sides of the transaction as a closed-loop scheme — when someone spends on the card, Amex collects an interchange-equivalent fee of around 1.6%, well above what Visa and Mastercard now sit at.

My guess is Amex worked out that if merchants can surcharge every other card but not theirs, cardholders start reaching for the Mastercard or Visa or eftpos card instead, and Amex loses share at the point of sale. So the no-surcharge policy reads as a defensive move to protect usage, framed publicly as “you don’t pay more as an Amex customer.”

What it means for merchants

Because Amex now sits alongside every other card as a no-surcharge card, merchants are going to have to seriously think about whether they keep taking it, because you’ll generally be paying more for an Amex transaction than for eftpos or Mastercard — not always, but generally.

In my experience, everyone who carries an Amex card also carries a Mastercard, Visa or eftpos card. Nobody walks away from a purchase because a business doesn’t take Amex. So the real question is why you’d take it at all, and for most merchants the honest answer is a handful of specific clients — the ones with a fleet of 30 cars who want to earn points on it, or the ones putting the family’s business-class flights on Amex and don’t want to think about it. For those clients, keep it switched on. You don’t need to make a thing of it for anyone else.

If margins are tight and the cost of acceptance matters — and for most small businesses right now it does — turning Amex off for everyone else is a legitimate option, the same way working out whether to absorb or reprice the rest of your card costs is worth doing before 1 October. The RBA’s ban itself changes very little about Amex. It’s Amex’s own decision that’s going to push more merchants to reconsider it, and it’s one more line item worth checking alongside what the ban means for your business more broadly.

FAQ

Is Amex included in the RBA’s surcharge ban?

No. The RBA’s surcharge ban does not cover American Express. Amex sits outside the regulated card schemes for this reform, the same way it sat outside the RBA’s interchange cap reforms roughly a decade ago.

So can I still surcharge Amex?

Not in practice. While the RBA doesn’t ban it, Amex’s own merchant policy prohibits surcharging Amex transactions, so the practical effect is the same as if it were covered by the ban.

Why does Amex cost more to accept than Visa or Mastercard?

Amex is a closed-loop scheme — it’s both card issuer and acquirer — and its fees, including an interchange-equivalent cost of around 1.6%, sit well above what applies to Visa and Mastercard debit and credit under the RBA’s caps.

Should I stop accepting Amex?

That depends on your customer base. If a small number of high-value, repeat clients specifically want to pay on Amex, it’s usually worth keeping for them. If Amex is a small share of your transactions and margins are tight, turning it off is a reasonable way to cut cost of acceptance.

Were any other card types exempt from RBA interchange rules before?

Yes. Taxi surcharges are a well-known example — the taxi industry lobbied for and received an exemption, which is why cab surcharges have stayed well above what applies to ordinary card acceptance.