Card surcharge ban lands on 1 October. What actually changes?

Your patients stop paying the fee, but someone in your practice still has to.

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Today, when a patient pays a private fee by card, most practices add a small surcharge so the patient covers the card cost. From 1 October that stops.

The card fee itself does not go away. The bank and the terminal provider still charge it. The only thing that changes is that the patient can no longer be asked to pay it separately, so someone inside the practice has to.

The Reserve Bank has removed the rule that stopped card networks banning surcharges. Eftpos, Mastercard and Visa have each confirmed a no surcharge rule from 1 October 2026, and American Express has done the same. Terminal providers, including Tyro, have been directed to switch the surcharge function off from that date.

Enforcement runs through your merchant agreement, so the practical effect is the same as a legal ban.

There is a partial offset. On the same day the Reserve Bank lowers the interchange fee caps, the largest wholesale component of what you pay to accept a card, with the cap on consumer credit cards dropping from 0.8% to 0.3%. That should reduce your merchant fees, but only if your bank or terminal provider passes the saving on.

Ask them. Even at the lower cost, the recovery problem is the same: whatever remains has to be found inside the practice.

Merchant fees are not the whole cost either. Online booking and payment platforms are moving at the same time. HotDoc has confirmed that from 1 October the 1.75% plus 30 cent processing fee that practices could pass on to patients paying through its platform will no longer apply, and will be replaced by a flat $2.45 platform fee charged to the patient by HotDoc, regardless of amount or payment method, on appointment types where online payment is enabled.

The Reserve Bank has been clear that booking fees and service fees of that kind are not caught by the change, only fees triggered by paying with a card.

For the practice the practical point is that the option of recovering platform processing costs from the patient goes, and any percentage-based fee the practice still pays on payments taken through its practice software or booking platform has to be found somewhere else.

What you cannot do from 1 October

• Add a fee because a patient pays by card, on any of those networks, whether the card is debit, credit or prepaid.
• Advertise, display or say at reception that a higher fee applies to cover card costs. Displayed prices have to be the price the patient pays.
• Relabel the surcharge as a payment fee, processing fee or administration fee that only applies when a card is used. If it is triggered by paying by card, it is still a surcharge and the terminal will not let you apply it.

What you can still do

• Build the cost into the fee. The Reserve Bank’s own guidance is that businesses reflect card costs in their overall pricing. In a service entity the practice does not set consultation fees, the practitioner does, so this has to be each practitioner’s own decision.
• Offer a discount for another payment method. Discounts are not surcharges. This is rarely practical at a reception desk and needs care so it does not become a surcharge in disguise.
• Change what the practice itself charges. The service fee percentage, and any items the practice charges patients directly at a 100 per cent service fee such as vaccines and consumables, are the practice’s own prices and can be reviewed.

Why this is not a small problem in a service entity

In a service entity, where practitioners run their own practices and pay the practice a service fee for rooms, staff and billing, the question of who carries the cost goes to the heart of how the service fee is set, how fees are set, and whether the arrangement stays a genuine tenant-doctor arrangement rather than drifting into an employment style arrangement with payroll tax and other consequences.

Take one full-time GP billing $400,000 a year, 70% bulk billed and 30% privately billed at reception, mostly by card, on a 35% service fee.

The card and platform costs that can no longer be recovered from patients typically come to somewhere between $2000 and $5000 a year for that GP. The low end is a practice taking mostly debit through Eftpos with least cost-routing on. The high end is a practice that accepts American Express, pays terminal rental and takes a large share of payments through practice software or a booking platform on a percentage fee.

The figures are illustrative and the interchange cut may pull them down, so the only number that matters is the one on your own merchant statement.

Take the upper end. Five thousand dollars does not sound like much until you see where it lands.

If the cost sits with	What it means	To get back to where you were
The practice	$5000 off $140,000 of service fee income, about 3.6%. On a typical practice margin that is a large share of the profit.	Service fee rises from 35% to about 36.25%, or 100% service fee items are repriced.
The practitioner	$5000 off $260,000 of net receipts, about 1.9%.	Private fees rise by about 4%, because only the 30% of patients who pay privately can carry it.

Across most practices we see, the service fee percentage has to move by somewhere between 1 and 3 percentage points to cover the cost, depending on the billing mix. The alternative is that practitioners review their own private fees.

Bulk billing more patients does not fix this. Medicare rebates have not kept pace with inflation, so moving a private patient to bulk billing loses more than the card fee saves, and every additional bulk-billed service adds assignment of benefit compliance obligations that are becoming harder to meet.

Four options, and the trap in each

• Absorb it. Nothing is done and the practice wears it. Viability suffers. The next step is usually cost cutting, and in a medical practice that means the things that keep care safe: sterilisation and infection control, nursing support and administration staff. Practitioners end up carrying more of the workload themselves.
• Practitioners reprice. Each practitioner reviews their own private fees. This is the cleanest answer and it keeps fee setting where it belongs, with the practitioner. It cannot be a practice wide decision or a uniform increase announced by the practice. A practice announcing a uniform fee increase for independent practitioners raises a price fixing question under competition law and is a control indicator for payroll tax and employment purposes, so take advice before doing it.
• Service fee review. The practice reviews the service fee percentage, or its 100 per cent service fee items, by 1 to 3 points. This is the practice’s own price. Most service agreements already require the practitioner to reimburse payment processing costs, so check the wording before anything is varied.
• Eftpos and bank transfer. Debit through Eftpos is the lowest cost way to take a card payment, and least cost routing on the terminal is free and should be switched on. Asking patients to pay by direct bank transfer into a practitioner’s account is a different matter. Busy practitioners do not want to check every day whether a fraud has emptied a bank account that has been advertised to the world on a website and at reception. Attributing each transfer to the right practitioner and patient is also difficult, and cost recovery depends on that attribution.

Practices that already run centralised trust banking, where patient money is collected into a trust account and paid out to each practitioner under the service agreement, are in a better position. They have the automation and the staff to monitor payments, which is exactly what many practitioners pay their service fee for. The practice bills, collects and reconciles. The practitioner practises.

What happens if this is ignored

My expectation is that many practices will do nothing for a few months, then notice the merchant fees climbing on the bank statement, then try to recover the money from the practitioners after the event.

That is when the tension starts. A retrospective recovery, without a conversation and without the numbers, damages trust and can put the service agreement itself under strain.

Everybody is affected. Share the problem early. Sit down with your practitioners now, show them the estimated numbers, and agree an approach together. Handled openly this is an opportunity to demonstrate how the arrangement works and why the service fee is worth paying. Handled quietly it becomes a dispute.

The right order: accountant first, then lawyer

Start with your accountant. Pull together your latest merchant statement, monthly card turnover, the split between debit and credit, whether American Express is accepted, and your current surcharge income.

With those figures your accountant can estimate the impact on your bottom line and on each practitioner, and help you settle a strategy.

Only then go to your lawyer. Lawyers need specific, practical instructions. Walking in with a strategy and the numbers costs far less than asking them to work it out from scratch, and produces a service agreement variation that actually reflects how your practice operates.

From 1 October the surcharge income line disappears from the practice accounts and the merchant fee line grows.

Bookkeeping, BAS and practitioner pay calculations all need to reflect that, and because the cost moves with the card mix it needs monitoring each quarter rather than a one-off fix. Recover on an estimate of actual cost per practitioner, not a fixed dollar amount, because a fixed amount does not track usage and someone always subsidises someone else.

And check whether any practitioner pays their service fee by card, or any tenant pays rent by card. If so, the practice is paying a merchant fee on its own income with no way to recover it. Move those to direct debit.

Before 1 October, remove the surcharge notice from the website, the booking page, front desk signage, fee cards, the on-hold message and SMS and email templates. Check the terminal and any integrated practice software, because a surcharge applied through an integrated system may need to be turned off separately.

And tell reception what to say when a patient asks why the fee has changed.

Key dates: 1 October 2026, surcharging ends on eftpos, Mastercard, Visa and American Express. 1 April 2027, further Reserve Bank fee reforms commence.

David Dahm is CEO and founder of Health and Life, a national accounting and practice advisory firm specialising in medical and allied health practices. Health and Life can prepare a card cost estimate for your practice and take you through the options. Call 1800 077 222 or visit www.healthandlife.com.au for more information and related articles.

Sidebar: card surcharge ban checklist

Work through in order and note who owns each item.

No.	Item	What to do	Owner
1	Get the numbers	Latest merchant statement, monthly card turnover, debit and credit split, American Express share, current surcharge income, terminal rental, platform payment fees, and whether your provider is passing on the lower interchange caps.	Practice manager
2	Accountant estimate	Estimated annual cost, effect on practice profit, effect per practitioner, service fee percentage change needed (typically 1 to 3 points).	Accountant
3	Practitioner meeting	Share the numbers openly. Agree the approach. Each practitioner decides their own private fees. No practice wide fee increase.	Owner
4	Service fee decision	Review the service fee percentage and 100 per cent service fee items such as vaccines and consumables.	Owner
5	Service agreements	Confirm the payment processing reimbursement clause. Brief the lawyer with the agreed strategy and numbers if a variation is needed.	Owner and lawyer
6	Recovery method	Recover on estimated actual cost per practitioner. No fixed fee. No surcharge relabelled as an admin fee.	Accountant
7	Own income by card	Move any service fees or rent paid by card to direct debit.	Practice manager
8	Terminal and platforms	Least cost routing on. Surcharge settings off in the terminal, practice software and booking platform from 1 October 2026.	Practice manager
9	Banking	Keep centralised trust banking and monitoring. Do not advertise practitioner bank accounts for direct transfer.	Practice manager
10	Remove notices	Website, booking page, front desk signage, fee cards, on hold message, SMS and email templates.	Practice manager
11	Brief reception	Script for patient questions about the fee change.	Practice manager
12	Accounts and reporting	Remove surcharge income line, allocate merchant fees per practitioner, update pay calculator and quarterly reporting.	Bookkeeper
13	Monitor	Review the card cost each quarter. It moves with the card mix.	Accountant

David Dahm is a chartered accountant and registered tax agent specialising in medical and allied health practice advisory since 1992.