The 62.5% cut to wholesale card costs — and why your bill may not budge

While the surcharge ban grabs the headlines, the quieter half of the RBA's October reform is the one that decides whether card acceptance actually gets cheaper for your business: a cut to the wholesale "interchange" cap on domestic credit cards from 0.8% down to 0.3% [1]. That's a 62.5% reduction — in the cap. What lands in your bank account depends entirely on how your provider prices you. For many merchants, the honest answer is: nothing, unless you act.

First, what interchange actually is

Every time a customer taps a card, your payment provider pays a wholesale fee — interchange — to the customer's card-issuing bank. It's the raw material cost of card acceptance. Your merchant service fee is built on top of it: interchange + scheme fees + your provider's margin.

From 1 October 2026, the RBA caps interchange on domestic credit transactions at 0.3%, down from 0.8% [1]. Debit interchange caps also tighten. The stated aim is for small businesses to benefit most [1].

The number to be careful with

You'll see "62.5% cut" quoted everywhere. Here's what it is and isn't:

• It is the reduction in the cap on credit-card interchange — one wholesale input, on one card type.
• It is not a 62.5% cut to your merchant fees, and it is not close.

Your card mix is mostly debit (typically 60–75% for in-person merchants), debit interchange is already low, and interchange is only one layer of your rate. Work it through a realistic card mix and the genuine blended saving available to pass through is roughly 0.1–0.25% of your card turnover [3]. Real money — on $50,000/month that's $50–$125 every month — but a very different claim from "fees drop 62.5%".

Any provider, broker or comparison site implying the larger number is doing you a disservice. Compayr's engine and content use the realistic range, always.

The fork in the road: who captures the saving

This is where your pricing model decides everything.

Interchange-linked (cost-plus) pricing — common with the major banks — is built as interchange + margin. When the wholesale cap falls on 1 October, the interchange component of your bill falls with it, mechanically. The saving passes through by design.

Flat-rate pricing — Square, Zeller, Tyro's standard plans, and the banks' "simple rate" products — charges you the same percentage regardless of what interchange costs your provider. When their wholesale cost drops in October, your 1.4% or 1.6% stays 1.4% or 1.6%. The difference doesn't vanish; it becomes provider margin. No flat-rate provider is under any obligation to cut its rate [3].

Neither model is "wrong" — flat rates buy simplicity and predictability. But from 1 October, the price of that simplicity quietly goes up, because you're now also forgoing a wholesale saving you'd capture on interchange-linked pricing.

What to do about it

1. Work out your card mix from your statement (debit vs credit split).
2. Estimate your pass-through value — our calculator below does the honest arithmetic: what the cap cut is worth on your mix and turnover, and which pricing model captures it.
3. Ask your provider one direct question: "How will the October interchange reductions be applied to my account?" An interchange-linked provider can answer specifically. A flat-rate provider's honest answer is "your rate doesn't change" — which is your cue to compare.
4. Compare card processing costs, not model ideology. A flat rate with no rental can still beat cost-plus with a $27/month terminal at low volumes. The ranking depends on your numbers.

What this means for you

The interchange cut is real and it favours merchants — but only merchants whose pricing is built to transmit it. If you're on a flat rate, October's reform is invisible on your bill until you switch or renegotiate. That's not a scandal; it's a structure. Know which side of it you're on.

See what your provider keeps: use the pass-through calculator below, then run a full market comparison at your turnover. Compare now →

Figures are indicative estimates based on published RBA caps and typical card mixes, last verified July 2026. Your actual saving depends on your card mix, provider and negotiated terms.