---
title: "Interchange fees explained — and what's changing in October 2026"
description: "What interchange fees are, who pays them, why the RBA is cutting them, and what the October 2026 changes mean for AU merchants."
category: explainer
published: 2026-04-28
source: https://readiness.aps.business/blog/interchange-fee-changes-explained
reading_time: 6 min
---

# Interchange fees explained — and what's changing in October 2026

Interchange fees are the wholesale cost of card processing. They're dropping in October 2026. Here's what that actually means for what you pay.
When you accept a card payment, the fee you pay your provider isn't just their margin — most of it is "interchange," a wholesale cost paid to the bank that issued the card. The RBA is cutting these interchange fees from October 1, 2026, and it materially changes the economics of card processing in Australia.

## What is interchange, exactly

When a customer pays with a Visa or Mastercard, four parties are involved in the transaction:

1.  **The customer** (paying with the card)
2.  **The issuer** (the bank that gave the customer the card — e.g., CommBank, ANZ, NAB)
3.  **The acquirer** (your payment provider — e.g., APS, Tyro, Square)
4.  **The merchant** (you)

Money flows from the customer through their issuer to the acquirer to you. At each step, fees are deducted. The biggest of those fees is **interchange** — paid by the acquirer to the issuer for handling the transaction.

Your acquirer (your payment provider) bundles this interchange cost into your merchant service fee (MSF) — the percentage you see on your statement. Their margin is the difference between the MSF and the underlying interchange + scheme fees.

## What's changing in October 2026

The RBA's [Conclusions Paper (March 2026)](https://www.rba.gov.au/payments-and-infrastructure/review-of-merchant-card-payment-costs-and-surcharging/) sets new caps:

| Card type | Old cap | New cap (Oct 1, 2026) |
| --- | --- | --- |
| Credit (Visa, Mastercard) | 0.80% | 0.30% |
| Debit (Visa, Mastercard) | ~0.20% or 12c | 0.16% or 8c |
| eftpos | ~5c-10c | Largely unchanged (already low) |

The RBA estimates these reductions save Australian merchants approximately $910 million per year collectively.

## Will you see the savings?

This is the question that matters. The interchange caps are set on the wholesale cost — what your acquirer pays. Whether your acquirer passes the saving on to you depends on your pricing structure:

### Flat-rate providers (Square, Zeller, Stripe, APS, Tyro flat plans)

Likely to keep the savings as margin unless explicitly competing. The flat rate doesn't change unless they choose to change it. Watch for: providers who reduce their flat rate around October are passing savings on; providers who don't aren't.

### Interchange-plus providers (Tyro IC+, Adyen, ANZ Worldline)

Pass the savings on automatically because the structure forces them to. Your "plus" margin stays the same; your interchange cost drops. This is a real reason to consider interchange-plus pricing if you're large enough to qualify (typically $100K+/month volume).

## How to make sure you capture the savings

1.  **Ask your provider directly:** "Will my rate change after October 1 to reflect the new interchange caps?" If they say no, that's leverage to renegotiate.
2.  **Compare quotes around October 1:** Pricing from competing providers will be sharper than usual in this period. Get 2-3 quotes.
3.  **Consider a switch to APS** at 1.1% flat — already below the new interchange-plus break-even for most volumes.

## Why the RBA is doing this

Two reasons in the official paper:

1.  **Cost competitiveness:** AU merchant fees are among the highest in the developed world. The cuts bring them closer to international norms.
2.  **Surcharge ban offset:** The interchange cuts are paired with the surcharge ban precisely so merchants have something to absorb the cost shift. The two changes were designed to offset each other.

## The combined effect on your business

For most AU SMBs, the two October changes net out something like:

-   **Surcharge ban:** Lose 1.0%-2.0% of card revenue you were recovering.
-   **Interchange cut:** Save 0.2%-0.5% on processing costs (if your provider passes it on).
-   **Net hit:** 0.5%-1.5% margin compression unless you take action.

The action that closes the gap: switch to a cheaper provider, enable least-cost routing, or both.

## Get your specific number

Run the [free 60-second readiness check](/) to see how the combined changes affect your specific business, plus a comparison of 19 AU providers.