Card Surcharges Are Now Banned in Australia: What Tutoring Companies Should Do Instead

Last checked 5 October 2026. Card rules in Australia are changing quickly, so check the linked official sources before you act.

On 1 October 2026 Australia stopped tutoring companies, and every other business, from adding a card surcharge on most cards. If you used to add a line for the card fee, or were thinking about it, that option has gone. You now carry the cost yourself, so the useful question is how to keep it small.

I run a tutoring company in Victoria, so the Australian sections are written as an operator. The UK and US sections at the end are research from cited sources, not experience. The numbers below are an illustrative example, not EquateIt’s figures.

Can a tutoring business charge families a surcharge for paying by card?

In Australia, mostly no, from 1 October 2026. The Reserve Bank of Australia (RBA) has banned surcharges on debit, prepaid and credit cards on the eftpos, Mastercard and Visa networks. In the UK, no: consumer card surcharges have been banned since 13 January 2018. In the US, usually yes for credit cards only, with a network cap and state exceptions. For a tutoring business in any of these markets, pricing the cost in works better than adding a fee line.

General information, not legal or financial advice. ClassQuill is a software company, not a law firm or accountant. Surcharging rules are set by regulators and card networks and change often. Check the sources linked here, and speak to your accountant or a lawyer before changing how you charge families.

What changed on 1 October 2026 in Australia?

The RBA published its final decision on 31 March 2026. From 1 October 2026 businesses can no longer surcharge debit, prepaid or credit cards on the eftpos, Mastercard and Visa networks. The same decision lowers the caps on domestic interchange fees, with foreign card caps and transparency changes following on 1 April 2027 (RBA media release).

It covers almost every family paying with an Australian-issued Visa, Mastercard or eftpos card. What the ban does not do is lower your processor’s price. Your provider sets its own pricing, so check whether yours has changed. The RBA is also requiring large acquirers to start publishing how lower interchange fees flow through to merchant fees from 30 January 2027 (RBA FAQs).

For anything outside the ban, the older ACCC rule is the one to know: the ACCC has long said a surcharge cannot exceed what it costs you to accept that payment (ACCC card surcharges). In practice that space is small, because American Express, UnionPay and PayPal have said they are dropping surcharging too (RBA FAQs, linked above). A mixed policy where some payment types carry a fee and most do not is hard to explain to families, so most tutoring companies will not bother.

Can a tutoring business get around the surcharge ban?

You cannot add a card surcharge on Visa, Mastercard or eftpos, but you can legally recover or avoid the cost. Build it into your rates, take fewer and larger payments, and make cheaper methods (direct debit, PayID, bank transfer) the easy default. What you cannot do is rename the surcharge.

Allowed:

• Build the cost into your rates. One rate review covers it (option 1 below).
• Bill in blocks or by the term. Fewer transactions means fewer fixed fees (option 2).
• Steer families to direct debit, PayID or bank transfer (options 3 and 4).
• Offer a discount for a cheaper payment method. The RBA’s FAQs say “Businesses can continue to offer discounts for particular payment methods” (RBA FAQs). Keep it a genuine discount off a price that is not inflated for card payers, and have your accountant confirm the wording.
• Fees that apply whatever the payment method. The RBA says its changes do not apply to “booking fees or service fees”, which are fees for a service, not payment surcharges.

Not allowed: a card-only fee under another name. An “admin fee”, “booking fee” or “convenience fee” that only card payers pay is a card surcharge by another name. The RBA says the ban applies to surcharges “added because a customer pays by card” and not to “booking fees or service fees” (RBA FAQs), so the test is whether the fee depends on how the family pays. If every family pays the same fee whether they use a card or not, it is a service fee, and it needs to be disclosed upfront and clearly.

Billing 10 sessions at once. Moving from per-session to 10-session blocks, and from card to direct debit, is the biggest legal lever you have. On the worked example below it cuts fees from 2.15% to 0.58% of revenue, and you reconcile once a term instead of every week.

Your options now

You have four. They are not exclusive, and the first is the default whether you like it or not.

1. Absorb the fee and build it into your rate

A card fee of around 2% on an $80 lesson is $1.60. If your rates already account for your costs, you carry it the same way you carry software and insurance. One rate rise for new clients covers it, as the pricing spoke explains.

2. Reduce the number of transactions

This is the lever you actually control, and it matters more than the percentage. Card fees have two parts: a percentage and a fixed amount per payment. You cannot change the percentage. You can change how many payments you take.

Here is a worked example (Illustrative, using Stripe’s published rates as at October 2026; check current pricing. Stripe’s published Australian domestic card rate is 1.65% + A$0.30; BECS Direct Debit is 1% + A$0.30, capped at A$3.50 per transaction; source: Stripe AU pricing, checked 5 October 2026). Every scenario is a tutoring company turning over $1 million a year. These are not EquateIt’s figures.

The percentage portion on cards is identical: $16,500 either way, because it is 1.65% of the same $1 million. The whole difference is the fixed fee, which falls from $5,000 to $500. Billing in blocks of 10 saves $4,500 a year on the same revenue. Billing by the term moves you further in the same direction.

3. Move families to direct debit

Direct debit is cheaper per payment (see the table above). With Stripe’s $3.50 cap, direct debit on a term-sized invoice can cost under 1% (a $480 term invoice costs $3.50, or 0.73%; an $800 term invoice costs $3.50, or 0.44%), which makes term billing by direct debit very cheap. Separately, one provider quoted us around 1.3% for direct debit. That is a quote we received, not a published rate. At 1.3%, $1 million would cost $13,000 a year before any failed-debit charges. The catch is that if a family has insufficient funds, I was told you get charged $5 for the failed debit. A failed debit is also a late payment you now have to chase. ClassQuill does not offer direct debit or PayTo today, so this post is about the choice, not a feature.

4. Bank transfer or PayID

This is the cheapest option for you, with no processing fee. The cost is time: someone has to check who has paid and who has not, and for weekly or monthly invoices that checking never stops. The RBA’s FAQs confirm a discount for a cheaper payment method is still permitted. A line in your service agreement saying bank transfer is preferred costs nothing and does not breach any surcharge rule.

What I would do: bank transfer plus per-term billing

Bank transfer on its own is not the answer, and neither is cards on their own. Bank transfer plus billing per term is far better, for three reasons:

• You check payments once a term, not every week. The admin that makes bank transfer painful mostly disappears.
• You get the revenue upfront. Cash flow improves because the term is paid before it is delivered.
• Students cannot cancel sessions they have already paid for. A weekly payer can drop out any week. A term payer has committed.

The fee question mostly takes care of itself, because with one payment per family per term the fixed-fee cost barely registers whichever method they use. Pair it with card as the convenient fallback for families who will not do a transfer. For how invoicing, payment methods and reconciliation fit together, see how to handle payments and invoicing.

What are the rules in the UK and US?

Cited research, not experience.

UK. Since 13 January 2018, UK businesses cannot charge a surcharge for paying by consumer credit card, debit card, charge card or electronic payment services such as PayPal. The ban covers any amount, and a family charged a banned surcharge can ask for it back (Business Companion). Corporate cards are outside the ban, even when used for a personal purchase. See also the Consumer Rights (Payment Surcharges) Regulations 2012.

US. There is no single federal ban, so the card networks and each state apply. Visa limits credit card surcharges to 3% and never more than your cost of acceptance, and does not allow debit card surcharging at all (law firm summary; check Visa’s current rules). Connecticut prohibits credit card surcharges, and other states add caps, disclosure rules or legal uncertainty, so check each state you serve. A US tutoring business serving families in several states carries a real compliance burden, which is one more reason to price the cost in.

Frequently asked questions

Can I charge a card surcharge on my tutoring invoices in Australia? From 1 October 2026, not on Visa, Mastercard or eftpos cards. American Express, UnionPay and PayPal have also said they are removing surcharging. Check the RBA and ACCC pages for anything else.

Is it legal to surcharge in the UK? No, for consumer credit and debit cards and similar payment methods, since January 2018.

Can I surcharge in the US? In most states you can surcharge credit cards (not debit) up to 3% on Visa and never above your cost. Some states ban or restrict it.

What replaces the surcharge for a tutoring business? Build the cost into your rate, bill in blocks or by the term to cut the number of payments, and make bank transfer the easy default.

A note on tracking

Whatever you decide, record how each family actually pays. That way you can see what each method really costs you before you change your rates. This post is not about any one provider.

You can no longer pass the card fee on, but you still control how many times you pay it.

Sources used: RBA media release, 31 March 2026, RBA FAQs, ACCC card surcharges, Business Companion, legislation.gov.uk, Stripe AU pricing.