From October 1, Australian businesses will no longer be able to on-charge credit card surcharges to customers in the way many do today.
On the surface, this looks like a pricing or compliance change.
But underneath, it represents something more important: a structural shift in how businesses absorb payment costs and how that flows through to margins, pricing, and cash flow.
For many businesses, especially wholesalers, distributors, and B2B suppliers, this change will quietly reshape how payments are managed and how profitability is protected.
So what does it actually mean in practice?
And how should businesses respond?
Why credit card surcharges existed in the first place
Credit card surcharges were originally introduced as a way for businesses to recover the merchant fees charged by payment providers when customers paid by card.
Instead of absorbing the cost, businesses passed it directly to the customer at checkout or invoice stage.
This worked as a simple equation:
- Customer chooses card payment
- Fee is added as a surcharge
- Business receives full invoice value
It created transparency but it also shifted complexity onto the customer experience.
Now, that mechanism is being removed which means businesses need to rethink how they manage payment costs entirely.
What changes on October 1
From October 1, the Reserve Bank of Australia’s changes mean businesses will no longer be able to apply surcharges in the same way for card payments.
In practice, this means:
- Businesses can no longer separate card fees as a visible line item
- Payment costs will need to be absorbed into pricing or overhead
- The “true cost” of payments becomes less visible to customers
- Margin pressure becomes more central to payment strategy
While the exact impact varies by industry and payment setup, the direction is clear:
payment processing costs are shifting back into the business.
The hidden impact: margins quietly compress
The most immediate effect of this change is not operational, it’s financial.
When surcharge recovery is removed or limited, businesses typically face three options:
- Absorb the cost (reducing margin)
- Increase pricing (risking competitiveness)
- Change payment behaviour (encouraging cheaper payment methods)
For many B2B businesses operating on tight margins, even small percentage changes in payment costs can have a meaningful impact over time.
And unlike obvious cost increases (like fuel or wages), payment fees are often “invisible costs” spread across hundreds or thousands of transactions.
That makes them harder to track, and easier to underestimate.
Why payment behavior will start to matter more
As surcharge recovery becomes less flexible, businesses will naturally start focusing more on how customers pay, not just whether they pay.
This shifts the conversation from:
“How do we recover payment costs?”
to:
“How do we reduce expensive payment behaviour in the first place?”
This is where payment mix becomes critical.
For example:
- Card payments = fast but higher cost
- Bank transfers = lower cost but slower and manual
- Automated payment methods = lower friction and better control
The more efficient the payment process, the less exposure businesses have to rising payment costs.
Why this will increase pressure on cash flow
At the same time as margin pressure increases, many businesses are already dealing with tighter cash flow conditions from other macro factors.
When payment costs rise or become harder to pass on, businesses often respond by tightening financial control in other areas, including:
- Reducing payment delays
- Improving debtor collection processes
- Re-evaluating credit terms
- Increasing focus on AR performance
In other words, cash flow management becomes more aggressive and more important.
And that naturally puts more pressure on accounts receivable teams.
The role of payment friction in all of this
One of the most overlooked factors in payment cost management is friction.
When paying is slow or complicated, businesses default to inefficient methods:
- Manual bank transfers
- Delayed approvals
- Batch payments
- Extra reconciliation steps
When paying is simple and immediate, businesses are more likely to pay in ways that are:
- Faster
- More automated
- Easier to reconcile
This is why modern payment systems are increasingly focused on reducing friction at the point of payment, not just processing transactions.
Because friction doesn’t just slow payments down.
It increases cost, delays cash flow, and adds operational overhead.
Why automation becomes more important in a post-surcharge world
As businesses lose the ability to easily pass on payment costs, efficiency becomes the next lever of control.
This is where automation plays a major role in protecting cash flow.
Modern payment and accounts receivable systems can help businesses:
- Reduce manual payment processing
- Automate payment reminders
- Encourage faster payment methods
- Improve reconciliation accuracy
- Reduce dependency on high-cost payment channels
Instead of reacting to payment costs after the fact, businesses can actively design systems that reduce those costs at the source.
The bigger shift: from payment recovery to payment optimisation
The removal of surcharging flexibility signals a broader shift in B2B payments.
We are moving from a world where businesses recover payment costs after transactions happen to a world where businesses design payment systems that minimize cost and friction upfront.
This is a subtle but important change, because it means payments are no longer just a financial back-office function, they are becoming a core operational lever for cash flow and margin control.
Final thought
The RBA’s credit card surcharge changes might seem like a small regulatory adjustment.
But for many businesses, it will accelerate a much bigger shift:
- From passing on costs → to absorbing and optimising them
- From manual payment systems → to automated payment workflows
- From reactive cash flow management → to proactive payment design
Businesses that adapt early will be better positioned to protect margins, improve cash flow, and reduce payment friction.
Those that don’t may find that payment costs quietly start eroding profitability in ways that are harder to control.