How Much Should Restaurants Pay In Credit Card Processing Fees

Ask a restaurant owner in Sydney or Melbourne what they pay in card processing fees and you will usually get a shrug before a number. Most operators know the figure sits somewhere between 1.5% and 3% of the value of card transactions, buried inside a merchant statement full of interchange codes, scheme fees and processor markups that nobody has time to reconcile line by line. That vagueness has always been a problem. It is about to become a bigger one.

From 1 October 2026, the Reserve Bank of Australia is banning surcharging on eftpos, Mastercard and Visa transactions, following the conclusions of its Review of Merchant Card Payment Costs and Surcharging. For years, many venues have covered their card acceptance costs by adding a surcharge at the till. Once that option disappears, the cost of accepting a card does not go away. It simply has nowhere left to hide. Every restaurant in the country is about to face the same question at once: does the business absorb that cost, or does it show up in the price of everything.

What merchant fees actually cost in Australia

Card processing fees are made up of three layers. Interchange goes to the customer's card-issuing bank and is the largest component. Scheme fees go to the network, Visa, Mastercard or eftpos, for running the rails the transaction travels on. On top of both sits the processor's own margin, which covers the payment terminal, reporting, fraud monitoring and support that keep transactions moving through service.

The RBA’s new caps should make card processing costs easier to predict than they’ve been for years. Debit and prepaid interchange stays at 8 cents per transaction. Consumer credit card interchange drops from a benchmark of 0.8% to 0.3%, which should lower acceptance costs for most venues. Commercial credit cards remain capped at 0.8%, while foreign-issued cards will be capped at 1.0% from April 2027. That change will have the biggest impact in areas with more international visitors.

For a typical full-service restaurant taking a mix of debit and credit cards, total acceptance costs, including interchange, scheme fees and processor margin, have generally landed between 1.3% and 2.2%. Venues on transparent interchange-plus pricing should see that range tighten once the new caps take effect. Those on inflated flat-rate plans are unlikely to see much benefit because those prices were never closely tied to the underlying costs. That’s why the pricing model matters just as much as the headline rate.

You can see current payments options and how they integrate with front-of-house hardware, which is worth understanding before you renegotiate anything.

The end of surcharging, from 1 October 2026

Roughly 16% of Australian merchants currently apply a surcharge, and consumers pay an estimated $1.6 billion a year in surcharges across the economy, according to the RBA's own modelling. The regulator's view, after an eighteen month review, is that surcharging has stopped doing the job it was designed for. Cash use has fallen so far that avoiding a surcharge is no longer realistic for most diners, and a growing number of businesses apply the same flat surcharge regardless of what it actually costs them to process that particular card.

Wes Lambert, chief executive of the Australian Restaurant & Cafe Association, has been blunt about what he expects to follow. He has argued that venues which have always passed the merchant fee straight to the customer will now face a cost they have never carried on their books, and that most will have little choice but to lift menu prices to cover it. Treasurer Jim Chalmers has taken the opposite framing in public comments, pointing to research showing most consumers dislike unexpected fees appearing at the point of payment.

Both things can be true. The surcharge line disappears from the docket. The cost of accepting cards doesn’t, it just gets folded back into the price of the meal, the coffee or the bottle of wine, whether that happens gradually through a price review or all at once.

Comparing pricing models once the rules change

Most restaurants choose one of three pricing models. Flat-rate pricing bundles every cost into one percentage. Interchange-plus breaks out the interchange fee from the processor’s margin. Subscription pricing combines a fixed monthly fee with a lower charge on each transaction.

Flat-rate pricing is easy to understand but difficult to scrutinise. Interchange-plus lets you see exactly how much goes to interchange, which is now capped and coming down, and how much stays with your processor. That margin is still open to negotiation. Subscription pricing generally makes more sense for busy venues, where the monthly fee is spread over a higher number of transactions.

With interchange caps coming down regardless of which model you use, the comparison question is not which model is cheapest in isolation. It is which model actually lets you see the new caps flow through to your rate, rather than trusting a provider to pass the saving on. Reviewing statements against your restaurant POS provider's reporting tools, rather than relying on the summary line at the top of a monthly statement, is the only reliable way to check.

What this means for margins and menu pricing

Card processing costs are only one part of the picture. Profitability is already the biggest challenge facing Australian restaurant operators, with 44% naming it as their top concern in our Voice of the Australian Restaurant Industry report, ahead of employee management and compliance. Food prices have climbed by around 30% since 2019. In response, 60% of operators have raised menu prices, and a similar share are keeping a much closer eye on ingredient costs than they did a few years ago.

Card fees have generally sat lower down the list of concerns than food and labour costs, largely because surcharging let many venues treat them as a pass-through rather than a true cost of doing business. That assumption runs out on 1 October 2026. Building merchant fees into a proper cost review now, using the same reporting tools you would use to check which menu items are actually profitable, gives you a head start on a decision every venue in the country will be forced to make within the next few months regardless.

The surcharge line on an Australian restaurant receipt has been around for two decades. Its removal will not lower the actual cost of accepting a card by much on its own, but it will force every operator to understand that cost properly, decide who carries it, and build it into pricing deliberately rather than hiding it in a surcharge.

FAQ

How much do restaurants in Australia pay in credit card processing fees? Most Australian restaurants pay somewhere between 1.3% and 2.2% of a transaction's value once interchange, scheme fees and processor margin are combined, though the exact figure depends heavily on card mix and pricing model.

Can restaurants still add a card surcharge in Australia? Yes, until 1 October 2026, provided the surcharge does not exceed the actual cost of accepting that card. From that date, surcharging on eftpos, Mastercard and Visa transactions is banned, so venues will need to build acceptance costs into their prices instead.

Does the surcharge ban apply to American Express or Afterpay? No. The RBA's ban only covers eftpos, Mastercard and Visa, so American Express, Diners Club, PayPal and buy now, pay later providers are not affected by this particular reform.

What is the difference between interchange fees and merchant fees? Interchange is one component of the total merchant fee, paid to the customer's card-issuing bank, and it is the piece the RBA directly regulates through its caps. The overall merchant fee also includes scheme fees paid to the card network and a margin kept by the payment processor.

Should restaurants absorb card fees or raise menu prices to cover them? There is no single right answer, since it depends on margin, positioning and how price-sensitive a venue's customer base is. Industry commentary suggests most operators currently surcharging will lean toward folding the cost into menu prices rather than absorbing it outright, though clear communication about why prices have moved tends to matter more to diners than the increase itself.