Interchange cap cuts from October 2026 explained
The interchange caps fall on 1 October 2026. What each cap changes to, why the cut may not reach your bill, and what it is actually worth.
On 1 October 2026 two things happen at once. Surcharging ends, and the wholesale interchange caps that sit underneath every card payment are cut. The second is meant to be the compensation for the first.
The cuts are real and they are worth having. They are also smaller than the surcharge you are losing, they do not reach every business equally, and for a good number of merchants they will not show up on the bill at all.
This page explains what each cap changes to, and what has to be true for the saving to land in your account rather than someone else’s.
What interchange actually is
Interchange is a wholesale fee inside the card system. When a customer taps, your payment provider — the acquirer — pays an interchange fee to the bank that issued the card. You never see that transfer. You see its consequence: the acquirer recovers it in what it charges you.
It’s the biggest single wholesale input into what it costs you to accept a card, and it’s the only one the Reserve Bank caps directly. That’s why interchange is where the ban’s compensation aims.
Two things follow, and both matter later on. Interchange is a cost your provider really does pay, not a fee it made up — so a cap cut genuinely lowers what it’s out of pocket. And because the money moves between two banks, you’ve got no way of checking from your own statement that the cut got passed on to you.
The caps, before and after
| Interchange category | Before | From 1 October 2026 |
|---|---|---|
| Domestic consumer credit | 0.80% | 0.30% |
| Domestic debit and prepaid | 0.20% ex GST, or $0.10 | 0.16%, or $0.08 |
| Domestic commercial and business credit | 0.80% | 0.80% — unchanged |
| Foreign-issued cards | No cap | 1.0% from 1 April 2027 |
A note on how the debit cap is written, because it confuses people. The RBA expresses it as 8 cents per transaction, or 0.16 per cent where a scheme sets its rate in percentage terms. Those are two ways of writing one ceiling for two ways of setting a rate — not a test applied transaction by transaction. If you ever read a scheme’s published interchange schedule you will find both forms in it, which is why the wording exists.
Commercial cards do not move
The commercial and business credit cap stays at 0.80 per cent. This is the most overlooked line in the whole reform, and it changes who benefits.
A café with a consumer card mix gets close to the full advertised benefit. A wholesaler, a trade supplier, an accountant, a freight business — anyone whose customers pay on a company card — gets a fraction of it, because the cards they take are the ones whose ceiling did not move.
If you sell to other businesses, the headline numbers are not about you. Model the reform without the credit cut and you will be much closer to your actual position.
Whether the cut reaches you depends on how you are priced
This is the part that decides whether any of it matters.
On interchange-plus pricing, interchange is passed through at cost and your provider’s margin sits on top as a separate line. A cap cut reaches you automatically, on the first transaction after the date, without anyone having to do anything. You can also see it happen.
On a blended or bundled rate — one percentage across everything, or a flat fee per transaction — your provider’s cost falls and your price does not, unless your provider chooses to reprice or you ask it to. There is nothing improper about that. It is what the contract says. But until it is renegotiated, the saving is your provider’s.
Most small Australian merchants are on the second kind. That gap is the whole distance between “$910 million a year in lower wholesale costs” and what a given business notices in October.
If you do not know which one you are on, that is the single question to answer this month. It is in your merchant agreement, and any provider will tell you if you ask.
The benchmarks are being abolished, and that matters more than it sounds
Alongside the caps, the weighted-average benchmarks on credit are being removed. The consumer credit benchmark — previously 0.50 per cent — goes entirely, and so does the commercial one. The debit benchmark stays at 8 cents.
Caps and benchmarks do different jobs. A cap limits any single interchange rate. A benchmark limited the average across a scheme’s whole book over a rolling twelve months, which gave schemes room to set some rates high provided others were low enough to pull the average back. Removing the credit benchmark and lowering the ceiling swaps an average you cannot verify for a number no card may exceed.
For merchants that’s a good trade, plain and simple. The rates sitting well above the average were the premium and rewards cards — the expensive ones you’re not allowed to knock back. A hard ceiling bites those hardest.
Foreign-issued cards, from 1 April 2027
Cards issued outside Australia have never carried an Australian interchange cap. From 1 April 2027 they get one: 1.0 per cent, applied uniformly across debit, prepaid and credit, and across both card-present and card-not-present transactions.
If you’re in tourism, CBD or tourist-town hospitality, or you sell online to overseas customers, that’s the bigger of the two dates for you — and it lands six months after you lose the surcharge. Plan for the gap rather than getting surprised by it.
Scheme fees are not capped
Interchange is the biggest wholesale component. It is not the only one. Scheme fees — what Visa, Mastercard and eftpos charge acquirers and issuers for running the network — are not capped by these standards at all. Australian acquirers and issuers paid around $1.8 billion in net scheme fees in 2023/24.
I’ll say it plainly: tighten one wholesale input and leave the other uncapped, and you’ve created an obvious spot for the cost to pop back up. Watch the scheme fee line on your statement, and watch it in the months after October, not the week after.
What the cut is actually worth
Ceiling to ceiling, the cuts are 0.50 percentage points on consumer credit and 0.04 percentage points on debit. Apply that to a card mix.
Take a business turning over $40,000 a month on cards, on interchange-plus, with 70 per cent debit, 25 per cent consumer credit and 5 per cent commercial:
| Card type | Monthly volume | Cap reduction | Saving |
|---|---|---|---|
| Debit and prepaid | $28,000 | 0.04pp | ~$11 |
| Consumer credit | $10,000 | 0.50pp | ~$50 |
| Commercial credit | $2,000 | nil | $0 |
| Total | $40,000 | ~$61 a month |
Now the comparison nobody puts next to it. If that business was surcharging at 1.3 per cent, it was recovering about $520 a month. The interchange cuts hand back roughly an eighth of that.
That’s the honest maths of 1 October, and it’s why “the interchange cuts will offset it” needs pulling up every time you hear it. They offset a slice. The rest is a pricing decision, and it’s yours to make on purpose rather than by accident.
Illustration only. It compares ceiling to ceiling, which overstates the saving for any card type already priced below the cap, and it assumes full pass-through.
The transparency measures are the sleeper
The same changes make large acquirers and the card schemes publish their fees, and make merchant statements show fee information in a standard format.
This gets a fraction of the attention the surcharge ban gets and it may end up being worth more. The reason small merchants pay more than large ones is not mainly interchange — on debit the RBA puts the gap at about 0.13 percentage points per transaction between smaller merchants and the largest. It is that comparing two merchant offers has been close to impossible without knowing what to ask. A standardised statement is the thing that makes shopping around actually work.
What to do
- Find out whether you are on interchange-plus or a blended rate. Everything else follows from that answer.
- If you are blended, ask your provider in writing what it is repricing from 1 October — and ask before the date, not after.
- Get your card mix as a share of turnover: debit, consumer credit, commercial, foreign-issued. Your provider can produce it.
- If commercial cards are a real share of your volume, model the reform with the credit cut removed.
- Diarise 1 April 2027 if you take foreign-issued cards.
FAQ
Will my merchant fees fall on 1 October 2026?
Automatically, only if you are on interchange-plus pricing. On a blended or bundled rate your provider’s cost falls and your price stays where the contract puts it until it is renegotiated.
What is the new interchange cap on debit cards?
8 cents per transaction, or 0.16 per cent where a scheme expresses its rate in percentage terms, from 1 October 2026. The previous ceiling was 10 cents, or 0.20 per cent.
Are commercial card interchange fees being cut?
No. The commercial and business credit cap stays at 0.80 per cent. Its weighted-average benchmark is removed, but the ceiling itself does not move.
Why is the debit cut so small when debit is most of my volume?
Because the debit cap was already low. Moving from 0.20 to 0.16 per cent is four hundredths of a percentage point, where consumer credit moves half a percentage point. Debit is where your volume is; credit is where the reduction is. Most businesses have the bulk of their transactions on the card that changes least.
Should I switch providers because of the cuts?
Not on their own. What the cuts do is make the basis of your pricing worth checking before 1 October, because that is what decides whether they reach you. If you are on a blended rate and your provider will not reprice, that is a reason to look.
How much is the reform worth overall?
The RBA estimates the package lowers wholesale card payment costs for merchants by around $910 million a year, with issuer interchange revenue falling by about $660 million a year. Whether your share of it arrives depends on the pricing question above. The key dates are here.