---
title: "How much will absorbing card fees cost your business in 2026?"
description: "After the October 2026 surcharge ban, you'll absorb card processing costs you currently pass to customers. Here's how to estimate the dollar impact."
category: explainer
published: 2026-04-28
source: https://readiness.aps.business/blog/how-much-card-fees-cost-2026
reading_time: 5 min
---

# How much will absorbing card fees cost your business in 2026?

Once surcharges are banned in October 2026, every dollar of card-processing cost comes out of your margin. Here's how to estimate the bite.
If you surcharge today, you're already passing your card processing cost to your customers. After October 1, 2026, you can't. Here's how to work out exactly how much that change costs your business — and what to do before it lands.

## The simple formula

Your monthly absorbed cost equals:

**Card volume × your effective rate**

Your **effective rate** is the percentage of every dollar that goes to your card payments provider. You can find it on your latest merchant statement — divide total fees by total card volume and multiply by 100.

Most Australian SMBs have effective rates between **1.0% and 2.5%**. The variance is huge. Two cafés down the road from each other doing identical volume can pay $400/month vs $1,200/month — same business, different provider.

## Worked examples

| Business type | Monthly volume | Effective rate | Absorbed/mo | Absorbed/yr |
| --- | --- | --- | --- | --- |
| Small café | $25,000 | 1.6% | $400 | $4,800 |
| Hair salon | $40,000 | 1.4% | $560 | $6,720 |
| Mid-size pub | $80,000 | 1.8% | $1,440 | $17,280 |
| Specialty retailer | $120,000 | 2.1% | $2,520 | $30,240 |

## Why your effective rate matters more than your headline rate

Providers love advertising "1.1% flat" or "no monthly fee" — but the headline rate often hides terminal rentals, monthly account fees, scheme fees, and per-transaction charges that push your real cost higher.

The right number to negotiate on is always your **effective rate** — the percentage you actually pay all-in on every dollar of card volume. Get the last 3 months of statements, sum the total fees, divide by total card volume, multiply by 100. That's your real number.

## The interchange cut softens the blow

The same October 1 changes also reduce interchange — the wholesale fee your provider pays to the bank that issued the card. Credit interchange drops from 0.8% to 0.3%, and debit drops to 8 cents or 0.16%. The RBA estimates this saves merchants roughly $910 million per year collectively.

**The catch:** providers don't have to pass this saving on. Whether you see it depends on your contract. Most flat-rate providers will quietly keep the interchange savings as margin unless pushed. Most interchange-plus providers will pass it on automatically because the structure forces it.

Translation: if your provider is on a flat rate, October is a good moment to renegotiate.

## How to cut your absorbed cost

1.  **Get on the right provider for your volume.** Smaller volumes (under $20K/month) usually do best on simple flat-rate providers like Square or Stripe. Larger volumes ($50K+) often save with interchange-plus providers. Run the [rate comparison](/lp/rate-comparison) to see your numbers.
2.  **Enable least-cost routing (LCR).** If you accept tap-to-pay debit cards, ask your provider to enable least-cost routing — it routes the transaction over the cheapest network (usually eftpos), saving roughly 0.2% on average.
3.  **Negotiate the surcharge-ban moment.** Tell your provider you're shopping. Most will offer a rate cut to keep you. The bigger your volume, the more leverage you have.
4.  **Compare APS.** APS offers a flat 1.1% rate, $0 terminal, same-day settlement, and no lock-in. For most AU SMBs, the math is favourable. [Call **1300 096 983**](tel:1300096983) for a free assessment.

## Get your number

Run the [free 60-second readiness check](/) to get your specific dollar exposure, plus a side-by-side comparison of 19 AU providers based on your actual volume.