The RBA’s October 2026 reforms end card surcharging— and open up some questions worth thinking through carefully and new opportunities for Australian independent schools.
Update — 23 July 2026: Since we first published this in June, a few details have firmed up — the final interchange figures are confirmed, providers have begun publishing their implementation timelines, and the likely shift in parent behaviour has come into sharper focus. We’ve added a short update at the end of the article. The core message hasn’t changed.
Over the past few months, a pattern in our conversations with school Business Managers and Finance teams has emerged: questions about card surcharges keep coming up. What’s changing, when, and what does it actually mean for us? It’s come up often enough that we thought it was worth putting what we know in one place.
First thing to note is that this isn’t authoritative guidance, specific advice or the definitive story. But we spend a lot of time talking to banks, payment providers and finance teams schools. So this reflects what we’ve learned so far and some things that might be useful as you work through the implications for your school.
The headline that you might be aware of: from 1 October 2026, card surcharges on Visa, Mastercard, and EFTPOS are banned. There are no carve-outs for education, and only very narrow exemptions where existing legislation allows. And while there’s action required before October, the changes may be more manageable than they might first appear.
What’s changing — and what isn’t
Three things happen from 1 October 2026:
- Surcharges banned — no surcharges on Visa, Mastercard, or EFTPOS — debit, credit, or prepaid. The price families see is the price they pay.
- Interchange fees reduced — underlying card processing costs are expected to come down, particularly for consumer credit cards. This is designed to offset the removal of surcharges for merchants. Stay tuned for further updates on this.
- Fee transparency increases — card networks and large acquirers will be required to publish fees, making it easier for schools to benchmark and have informed conversations with providers. This we like since we’ve always been big advocates for fee transparency.
Since the RBA’s announcement, American Express has also recently confirmed it will align with the surcharge ban from 1 October 2026 — a voluntary move, but a significant one. In a statement to merchants, Amex noted that surcharging “creates a poor and inconsistent experience for consumers” and confirmed its merchant terms and conditions will be updated accordingly. So in practice, all major card schemes will be surcharge-free from October. Updated merchant terms are expected to be available from 1 August 2026.
What it might mean for your processing costs
From what we’ve heard, the net financial impact for most schools is expected to be modest. Debit card processing is already low-cost, and consumer credit card interchange is understood to be coming down meaningfully under the new caps. Bank payment methods — direct debit, bank transfer, PayTo — carry no percentage-based fee at all, which makes them particularly cost-effective for high-value transactions like school tuition fees.
That said, how much of the interchange reduction actually flows through to your school depends on how your payment processing is structured — whether you’re on a flat all-inclusive rate or a model where the underlying network costs are separated out. It’s worth understanding which applies to you, because the two can behave quite differently when the underlying rates shift. Your payment provider is best placed to explain this in the context of your specific arrangement.
Smart Business Managers are already starting to think about their overall ‘cost of acceptance’ — what it costs the school to collect a dollar of fees, and what that looks like in a world where surcharges can no longer be passed on. It’s a good lens to bring to the conversation with your banker or payment provider.
The question schools are starting to grapple with
Here’s the dynamic that’s comes up in most conversations we’ve had on this topic.
Many parents have historically avoided paying school fees by credit card because of the surcharge — $30 on a $3,000 invoice is real money. Remove that surcharge, and the calculation changes. Credit card becomes cost-neutral for families while offering personal benefits: points, rewards, interest-free periods. It’s reasonable to expect more parents will want to pay by card once the surcharge is gone.
Schools have traditionally preferred BPAY and direct debit — lower cost to process, easier to reconcile. The shift in parent behaviour could put pressure on that preference in a way schools haven’t had to manage before. We’ve heard schools thinking about this in a few ways:
- Remove credit card as an option — simplifies things, but genuine risk of adding friction with families who were looking forward to using their card.
- Absorb the processing cost — treating it as a cost of doing business folded into the broader fee structure. Straightforward, but it does shift a cost that families were previously carrying.
- Offer an incentive for lower-cost payment methods — a modest discount for families who pay by direct debit or BPAY, or even more interesting – PayID. This flips the surcharge model on its head. Interesting option, though it comes with its own communication considerations.
There’s no obviously right answer. What does seem clear is that assuming parent behaviour won’t shift may not be a safe position.
Some things worth working through before October
Start the conversation with your bank or payment provider
This is probably the most useful thing you can do right now. Even before the final scheme rates are released, your banker or payment provider should be able to walk you through your current cost of acceptance, explain how your pricing model works, and flag what’s likely to change. They may not have all the answers yet — providers are still waiting on Visa and Mastercard to publish their new rates — but the conversation is worth starting. With 2027 fee schedules typically being set leading up to October, understanding your processing cost position before that process begins rather than during it will make for a more considered outcome.
Audit your payment ecosystem — and use it as a reason to modernise
Most schools’ payment setups have accumulated over time rather than been designed — a direct debit from one era, a BPAY biller code from another, a card portal added later. October is a genuine forcing function to map the whole picture: where surcharges are applied, which methods you’re offering, and whether the sum of it still makes sense. Confirm with each provider that surcharging will be switched off — don’t assume it’s automatic.
But beyond the compliance task, ask the harder question: is your current payment mix actually serving your school and your families, or has it just persisted because there hasn’t been a compelling reason to change it? There is now. We’ve been helping schools work through this kind of stocktake so feel free to reach out and we can help map your setup and spot where there’s room to simplify.
Use the change as a communication moment — and a strategic one
Families are already aware of the changes — it’s been in the news. That gives you a credible, externally-driven reason to communicate changes to how you collect fees: not “we’ve changed our payment process” but “in line with national regulatory changes, here’s what’s different for your family.” That framing gives you genuine cover to make more meaningful changes than you might otherwise feel confident announcing. If you’ve been considering moving families away from BPAY toward more modern options, this is the moment — the regulatory change provides the context, the communication provides the vehicle. Which brings us to what we think is the most interesting part of this conversation.
The opportunity worth watching: real-time, account-to-account payments
The surcharge ban raises a genuine strategic question: if you can no longer pass on card processing costs, and parent demand for credit card payments may increase, how do you manage the cost of acceptance over time?
The answer the RBA is promoting — and that we think deserves serious attention from schools — is real-time, account-to-account payment via PayTo and PayID. These methods carry no percentage-based processing fee, settle in real time, and give families a modern, transparent way to manage their payment agreements directly through their banking app. For high-value transactions like school fees, the cost difference compared to card payments is material.
These new payment methods are not niche or experimental. The infrastructure is available now, adoption is growing across industries, and the underlying payment rails that traditional direct debit runs on are expected to eventually transition to real-time alternatives. Schools that start thinking about this now are better placed than those who wait.
In a world without surcharges, real-time account-to-account payment resolves much of the tension schools are navigating — lower cost than card, more capable than traditional direct debit, and a genuinely better experience for families.
Modern payment platforms like Feesable are being built to make this transition as seamless as possible — where cards, direct debit, and real-time bank payments sit alongside each other in a single workflow, without adding complexity to how schools manage and reconcile fees.
What’s firmed up since we published
A few things have become clearer since June.
The interchange numbers are confirmed. From 1 October 2026, the cap on consumer credit card interchange drops from 0.8% to 0.3% — a cut of more than 60%. Debit and prepaid fall to 8 cents or 0.16%, commercial credit cards stay at 0.8%, and a 1% cap on foreign cards follows in April 2027. For context, Australians pay an estimated $1.6 billion a year in surcharges, and merchant card costs are expected to fall by around $910 million annually. For most schools the direction is clearly downward — though how much reaches you still depends on how your provider prices your account.
Providers have published their timelines. The major banks and payment providers have set out how they’ll implement the changes, with software updates rolling out from around July to September ahead of the 1 October start. One detail worth acting on: some have flagged that recurring or scheduled card payments may need to be manually updated to remove surcharges — they won’t all switch off automatically. If your school runs recurring card payments, that’s a specific question for your bank or provider.
The shift in parent behaviour is coming into focus — with a wrinkle. Both industry data emerging across the sector and what we’ve seen in similar cases overseas point the same way: when the surcharge comes off, card usage rises, modestly but measurably. For high-value fee payments, even a single-digit shift can move your overall cost of acceptance. But there’s a nuance worth understanding — because interchange funds credit card rewards, banks are widely expected to trim points and lift fees in response to the cuts, much as they did in 2017. So expect more card usage, but don’t over-plan for a permanent surge. The more durable shift is toward lower-cost, real-time bank payments.
Where this leaves us
October isn’t a crisis — but it does reward those who engage with it early. Start the conversation with your provider, understand your cost of acceptance, and think deliberately about which payment options you want to offer families going forward.
We’ll keep sharing what we learn as scheme rates are confirmed and the picture becomes clearer. We hope this has been a useful starting point.
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If you’re working through the payment implications of these changes and want to think it through with someone, we’d love to start a conversation.
Feesable is an Australian edtech company focused on school fee management and payment facilitation for schools. We don’t process card payments, handle funds or earn interchange revenue — which means we have no stake in how the fee structure settles, and every reason to share what we know as clearly as we can. This article is for informational purposes only and does not constitute financial advice or a recommendation. Please speak with your bank, payment provider, or a qualified financial adviser for guidance specific to your school’s circumstances.