Credit card surcharge ban closes an escape hatch for renters—and reshuffles who pays

From 1 October, businesses across Australia will be prohibited from adding surcharges to payments made on the Visa, Mastercard, and EFTPOS networks. The policy sells itself as a cost-of-living win: the price on the tag is the price you pay. But the mechanics are less tidy. Banning the surcharge does not make card processing free. It moves the cost, and how that cost lands depends enormously on who you are and how you pay.

Banning the surcharge moves the cost — it does not erase it

The surcharge you see on a payment terminal is only the visible edge of a deeper cost structure. Card networks, acquiring banks, and payment processors all take a clip. What a surcharge does is make that cost legible, and attach it to the person whose payment method generated it. Remove the surcharge and the cost does not disappear. It gets spread across all customers through higher base prices, absorbed by the merchant, or avoided altogether by removing the payment option that created it.

The Reserve Bank of Australia is also reducing caps on interchange fees, which should reduce what merchants pay to accept cards. But card payments will remain more expensive to process than direct bank-to-bank transfers. The gap is smaller, not closed.

DEFT's exit signals what the third option looks like at scale

Macquarie Bank's decision to pull card payments from its DEFT platform before the ban even lands is a preview of what the third option looks like at scale. DEFT processes an estimated 40 per cent of Australia's rental payments. Macquarie is steering renters toward PayID, which is free to process. For renters with stable cash flow, this is probably a fine switch and possibly a faster one. The trouble is that not everyone uses a credit card to pay rent because they prefer it. Some use it because rent falls due before their pay does.

The credit card's interest-free period is a short-term cash-flow bridge, not a debt spiral. A renter paid fortnightly whose rent hits on a Wednesday can charge their card, and settle it a fortnight later when their pay arrives, without incurring interest. It is an informal mechanism for smoothing a timing mismatch that the rental market does not otherwise accommodate. Macquarie has acknowledged there is no like-for-like replacement for these tenants under the new system.

A policy designed to protect all consumers from opaque fee structures ends up withdrawing a safety valve that some of the most cash-constrained renters depended on.

Third-party workarounds add friction without solving the underlying problem

For renters in that position, the downstream options are not great. Third-party apps like RentPay currently allow credit card payments for a fee, typically around 1.15 per cent. But that fee may itself become non-compliant under the new rules, and in any case, these platforms layer on their own platform and service charges that sit outside the surcharge ban's scope. The reform produces a kind of Whac-A-Mole effect: suppress the visible fee in one place and the underlying cost reappears in another form, with additional friction attached. Users may also have to create accounts with new platforms and hand over more personal and financial data to do so.

This is consistent with a broader pattern in payment reform that The Bearing has tracked before. When the government moved to regulate cash distribution as digital payments advanced, the structural logic was sound, but the unintended effects tended to cluster at the margins, among people who depend on the legacy system precisely because it gave them flexibility the new one does not.

The question here is similar. A policy designed to protect all consumers from opaque fee structures ends up withdrawing a safety valve that some of the most cash-constrained renters depended on. The Australian Taxation Office is also reportedly reviewing whether to continue offering credit card payment options. A decision to restrict those would compound the same problem for taxpayers managing irregular income.

The reform's cost-of-living case should be tested against who actually bears the cost

Greater price transparency at point of sale is a reasonable consumer protection goal, and lower interchange fees will reduce costs for merchants. But a policy justified on cost-of-living grounds should be assessed against its actual effects on people under cost-of-living pressure. Those renters using credit cards to keep the lights on between rent day and payday are not a marginal edge case. They are, in many respects, the most plausible beneficiary the reform was supposed to reach.

The RBA has flagged that regulators will need to monitor whether card acceptance declines and whether new charges emerge. That monitoring matters. If what follows is cheaper sticker prices for middle-income households who pay by debit, and fewer payment options for renters who most needed the flexibility, the reform will have redistributed costs in the wrong direction.

Frequently Asked Questions

What happens to renters who use a credit card to pay rent after the surcharge ban?
From 1 October 2026, platforms that previously charged a surcharge for credit card rent payments may simply remove the card option rather than absorb the cost. Macquarie Bank's DEFT platform, which processes around 40 per cent of Australian rental payments, has already announced it will do exactly that, directing renters to PayID instead.

Why do some renters pay rent with a credit card in the first place?
For renters paid fortnightly or irregularly, rent can fall due before their pay arrives. A credit card's interest-free period lets them cover rent on the day it is due and repay when their income lands, without incurring interest. It is a timing tool, not a sign of financial distress.

Does banning surcharges mean card payments become free for businesses?
No. Card processing costs still exist — they are just no longer passed directly to the customer at the point of payment. Merchants will absorb the cost, spread it across all customers through higher base prices, or stop accepting cards for that transaction type altogether.

Are third-party rent payment apps a viable workaround after the DEFT change?
Potentially, but with caveats. Apps like RentPay currently allow credit card payments for around 1.15 per cent, but that fee may itself become non-compliant under the new rules. These platforms also carry their own service charges and require users to create accounts and share financial data.

Will lower interchange fees offset the harm from removing card payment options for renters?
The RBA is reducing caps on interchange fees, which reduces what merchants pay to accept cards — but card payments will still cost more to process than direct bank transfers. The reduction narrows the gap; it does not close it, and it has not prevented Macquarie from deciding card acceptance is no longer viable on DEFT.