The Reserve Bank of Australia (RBA) has introduced reforms that will effectively remove card payment surcharges. From 1 October 2026, organisations will no longer be able to add card payment surcharges to eftpos, Mastercard, Visa or American Express card payments.
If your organisation currently passes card processing fees on to donors, members, customers or service users, this change will impact your operations.
From a financial sustainability standpoint, the key issue is that processing costs (charged by your payment provider) will not disappear. Under the new arrangements, these costs will need to be absorbed; built into pricing where appropriate; reduced through provider review; or managed by encouraging lower-cost payment methods.
For affected clients, we suggest going through the following steps to review your arrangements. Where Purpose is engaged to do your bookkeeping, we will support you on relevant checking processes:
1. Find where fees are currently being passed on. Start by identifying every place your organisation applies card surcharges or fee recoveries. This includes Xero invoices; Stripe; donation platforms; ticketing systems; membership platforms; booking systems; website payment pages and eftpos terminals.
2. Check and update payment system settings. Review any automatic surcharge, ‘pass on fees’ or ‘charge the customer a processing fee’ settings. Note: For clients using Xero online invoice payments, Xero has indicated that card surcharges applied through Xero invoices will stop automatically from 1 October2026. However, it is still worth checking invoice templates, connected payment services and any external payment platforms.
3. Quantify the financial impact. Estimate the annual cost of absorbing card processing fees and consider whether FY27 budgets or fee pricing needs to be updated. This is also a good opportunity to benchmark payment provider fees and consider whether lower-cost payment options, such as bank transfer or direct debit, should be encouraged.
4. Review donation forms carefully. Do not assume that every ‘cover the fee’ option must be removed. A mandatory card-processing charge is different from a genuinely optional additional donation. For donation forms, ask your donation platform or payment provider to confirm how any ‘cover fees’ functionality will operate after 1 October 2026, and ensure the wording is clear, voluntary and not framed as a required surcharge.
5. Update wording and internal coding. Update donation pages, payment pages, invoice footers, FAQs and customer communications so the wording is accurate and not misleading. Also review how payment fees and any optional donor contributions are coded in Xero, particularly where DGR receipting or donation reporting is relevant. A safer donor wording option maybe: ‘Would you like to add an optional donation to help cover fundraising and payment administration costs?’
Don’t hesitate to reach out to your Purpose Client Manager for more guidance, or to discuss further.
