The card fee left the receipt, but not all of its cost went away

Since 1 October, the payment line has gone from Australian airline checkouts. Qantas's schedule of fees now says it "will no longer charge a payment fee for bookings made in Australia" ¹. Virgin Australia's payment page says it "will not apply a payment surcharge to any payment method" ². Most coverage has treated this as a consumer story: a visible fee removed by the Reserve Bank of Australia. What it has not asked is where the airline's cost of taking a card now sits, and which part of that cost the reform actually reduced.

The answer this column reaches is that the ban turns card acceptance from a priced choice into a pooled cost that, on this publication's reading, is probably carried in the fare, and that the interchange relief meant to shrink the pool is weakest in the segments the RBA chose to leave alone or reach last: commercial cards, American Express and foreign-issued cards.

What the RBA decided

The Payments System Board announced its conclusions on 31 March 2026 ³. Surcharging on eftpos, Mastercard and Visa debit, prepaid and credit cards ends from 1 October 2026, together with lower caps on domestic interchange; a cap on foreign-card interchange and some transparency measures follow on 1 April 2027 ⁴³. The mechanism is not a statutory ban. The RBA lifted its own prohibition on the networks' "no-surcharge" rules and expected the networks to reimpose them ⁵. American Express, which sits outside the designated networks, said it would align from the same date ⁶, and the RBA records that American Express, UnionPay and PayPal all chose to remove surcharging ⁷.

The new caps are specific. Domestic consumer credit interchange falls to 0.3 per cent; debit and prepaid to 8 cents or 0.16 per cent; foreign-issued cards get a single 1.0 per cent cap. Domestic commercial credit stays at 0.8 per cent, because the Board judged that cutting it would harm competition in a segment where American Express is "by far the largest issuer" ⁸. The RBA estimates that consumers paid A$1.6 billion of the A$1.8 billion in card surcharges each year, and that issuers lose about A$660 million a year of interchange revenue ⁵.

What the surcharge was doing for an airline

For a carrier, the surcharge did two jobs. It recovered cost, and it priced the choice of payment method. Qantas told the RBA in December 2024 that if merchants absorb the cost of every payment, customers using cheaper methods "such as Account to Account or debit card" will not be rewarded and may "subsidise" those using the most expensive ones ⁹. It also argued that the cost of a card payment now extends past interchange and scheme fees to tokenisation, fraud screening and 3DS ⁹. Virgin Australia's submission said that removing pass-through "may result in the cost of card acceptance being passed on to all consumers as higher prices" ¹⁰.

The RBA's reply was that the price signal had largely stopped working. Only about 5 per cent of merchants surcharged debit and credit at different rates, and surcharging merchants had a credit card share only 0.9 percentage points lower than others ¹¹. The Board also rejected the idea, raised in submissions, of allowing surcharges on card-not-present payments only ¹¹, which is the variant that would have left airline web sales largely as they were.

Where the cost goes now

It can go three places; the airlines' statements point to the first.

The fare. Australian Frequent Flyer reported in June that it "understands" Qantas planned to raise fares when the change took effect rather than absorb the cost ¹². That is a trade report without a named source, and this column found no public Qantas statement confirming it. It is consistent with what Qantas told the regulator in its 2025 submission: the inability to recover these costs "will ultimately create upward pressure on the price of flights" ¹³. That fares absorb the cost is, on this evidence, probable; how much is unresolved, because neither carrier publishes its acceptance cost.

The payment mix. Discounting remains legal. The RBA's FAQ says businesses "can continue to offer discounts for particular payment methods" ⁷, and its survey found that over half of card users would switch to cash for a 1 per cent discount on a A$50 purchase ¹¹. So far both carriers have done the opposite and removed payment fees across the board ¹². Virgin still lists PayID, a bank-account payment, as an option ². Qantas warned in 2024 that some free payment options might not be possible to offer without a cost-recovery mechanism ⁹.

The parts the relief misses. This is the publication's reading, and it is possible rather than established. The interchange cuts land mainly on domestic consumer cards. Commercial cards keep their 0.8 per cent cap ⁸; foreign cards wait until April 2027 for theirs ⁴; American Express is not price-regulated, and one outlet notes it has announced no cut to its merchant fees ⁶. Corporate travel and inbound tourism are the kind of spending that runs through those three segments, which suggests the cost an airline can no longer surcharge is concentrated where the reform did least to reduce it. Qantas also argued that scheme fees tend to rise after interchange reform, citing a UK estimate that businesses pay at least £170 million a year more in scheme and processing fees than seven years earlier ¹³.

Agency and BSP sales

Indirect sales split the problem in two. In a BSP card sale the agent accepts the customer's card under the airline's merchant agreement ¹⁴, so the airline pays to accept it. The industry tool for passing that cost on is the OB-F form-of-payment fee, which only the validating carrier can impose and which pricing systems return when a card number is entered ¹⁵. Whether Qantas and Virgin have withdrawn OB-F fees for Australian points of sale is unresolved: the Qantas agency policy page did not load for this column, and Virgin Australia's agency policy was not checked. Where the agency is the merchant and remits to BSP as cash, the agency carries the cost instead. Booking and service fees fall outside the ban ⁷, so the service fee is where an agency can recover it. Business-to-business card payments are not exempt unless a network's own rules exempt them ⁷, which leaves corporate-card surcharging on airline and agency counters to scheme rules, not regulation.

The other markets

Australia went further than the UK and New Zealand. The UK ban of January 2018 did not apply to commercial cards ¹⁶. New Zealand's bill, as it stood after its first reading in September 2025, covered in-store payments only and excluded online transactions ¹⁷, which would leave most airline sales outside it. Australia's version is the broadest of the three: online as well as in person, since the Board rejected a card-not-present carve-out ¹¹, and business cards too unless a network's rules exempt them ⁷. Other regulators now have a live case of an online-heavy, high-ticket merchant without a surcharge.

What to watch

The RBA's first network and acquirer data publications are due on 30 October 2026, and the first interchange pass-through report on 30 January 2027 ⁵.

The test of this reading is narrower. If the pooled cost is as large as the airlines told the regulator, at least one of Qantas, Jetstar or Virgin Australia should by October 2027 offer a priced incentive, a discount or bonus points, for paying by bank account rather than card. If none does, and PayID stays available at no extra price, the cost they could no longer surcharge was smaller than their submissions implied, and this column's reading of where it went was wrong.

The connection drawn between these sources is this publication's reading, not a statement by the Reserve Bank of Australia or by any airline. Terminair carries no byline.