Business card interchange isn't being cut — and if you sell to trade, your costs could go up

Business card interchange in Australia is not being cut. While consumer credit falls from 0.80% to 0.30% on 1 October 2026, commercial credit cards stay exactly where they are — at 0.80% — and if a decent share of your customers are trade paying on a business card, you can genuinely end up worse off out of a reform that’s supposed to make card acceptance cheaper.

That’s the line almost nobody is writing about, and it’s the one that matters most if you’re a supplier.

The mechanics of the cuts themselves I’ve set out separately — the caps, what each one changes to, and whether it reaches your bill. This piece is about what happens next.

The banks are about to fall in love with business cards

Think about what an issuer is giving up here.

Twelve years ago interchange on a credit card was something like 1.6%. That’s how everyone got a card for free — the bank made that on every dollar you spent. Then it dropped to 0.80% and, if you remember, overnight you suddenly had to pay an annual fee.

Now consumer credit is going to 0.30%.

So expect consumer credit cards to keep the interest-free period and not much else. Points either disappear or you pay a decent whack for them, because there’s only 30 basis points funding the whole thing — and with interest rates where they are, there isn’t a lot of fat left to hand back to the cardholder.

Business cards, meanwhile, still earn the issuer 0.80%. Nearly three times as much.

You don’t need to be a genius to work out where the marketing budget goes. The banks will push business cards hard, and they’ll make them worth having, because that’s now where the issuing margin lives.

New Zealand already ran this experiment

This isn’t uncharted territory. New Zealand cut consumer credit and debit significantly and left business cards up high — something like 1.6%.

And I think the reasoning is the same in both countries. Businesses do it tough. Sometimes they need that interest-free period purely for working capital, so they want a card. If you drop the interchange too far, the bank can’t fund those 30 days out of the interchange it’s receiving — so it either withdraws the card or starts charging properly for it.

Nobody wants to do that to small business. So business cards get a break and keep working the way they do.

Perfectly sensible policy. It just lands the cost somewhere.

It lands on whoever is selling to them

Say you’re an electrical wholesaler. Your customers are sparkies, buying conduit, wire and TPS cable. A lot of them are paying on a business credit card, because that’s how they manage their working capital.

Your interchange isn’t coming down. And once the banks start pushing those cards properly, the share of your turnover arriving on one goes up. Your costs could go up a fair bit.

Same for a hardware store next to a building site. Same for anyone whose customers are businesses rather than consumers.

Some of that trade goes out on account, bank to bank, and that’s fine — no cards, no interchange, no problem. But the counter sales are where you’ll cop it.

What do those businesses do? It’s a genuine question and I don’t think there’s a tidy answer yet.

Although honestly, a lot won’t notice and a lot more won’t know. Plenty are on a blended rate anyway, in which case nothing changes for them either way — their provider absorbs it, or quietly doesn’t.

Meanwhile, the consumer businesses win

For contrast: anywhere with a high consumer credit share is about to do well out of this. The nail salon in Woollahra, the café in Toorak — those businesses see real money come out of their cost of transactions.

Your mechanic in Frankston, running mostly debit, sees much less, because the debit cap barely moves.

So the reform doesn’t hand out a uniform saving. It redistributes, along lines most merchants have never had a reason to think about — and it’s your card mix, not your industry, that decides which side you land on.

And there’s a second-order effect worth watching. As consumer credit stops being worth carrying, cardholders migrate to debit. That pushes debit’s share up further, which on its own lowers the average cost of acceptance over time — separately to anything the RBA did.

What to actually do about it

Get your card mix. Ask your provider for a breakdown of turnover by card type — debit, consumer credit, commercial, foreign-issued. They can produce it. If commercial is a real share of your volume, you need to model this reform with the credit cut taken out, because you’re not getting it.

Then ring them and ask for a better rate anyway. From 1 October you can’t surcharge, so the cost stops being your customer’s problem and becomes yours — it hits your bottom line directly. At the same time your provider is handed a cost reduction on the consumer side that they’re under no obligation to pass on. Most won’t, unless you ask.

Across most businesses there’s somewhere between 7 and 12 basis points available. Doesn’t sound like much. It’s over a thousand dollars for every million dollars of turnover at the top of that range. That’s not chump change.

And the margins in this industry are high. Some of these payment companies, excuse the French, take the piss.

Check your routing while you’re there. If least cost routing isn’t switched on, you’re sending dual-network debit down the expensive rail and none of the cap changes reach you anyway.

Or get someone to do the asking. I’ll declare the interest straight up — I’m behind Eftpos Choice and Eftpos House, both brokers in this market. There are others. Most of them do the work for nothing, because the provider pays them.

The honest summary

Business card interchange in Australia staying at 0.80% is the quiet half of this reform, and it decides who wins. If you sell to consumers you’re probably better off on 1 October without lifting a finger. If you sell to other businesses, you might be worse off, and you certainly won’t be better off by accident.

The UK didn’t see a rush of merchants renegotiating when surcharging was banned there, and I suspect plenty of Australian businesses will be the same — they’ll cop it and move on. With the cost of living where it is, that’s a shame, because every dollar saved is a dollar won.

Make a couple of calls. Get a rate. Work out what you should be repricing to, and start saving.