Australian small businesses have been left reeling after it was announced the Australian Taxation Office (ATO) would no longer accept credit card payments from November 30, 2026.

The move comes after the national credit card surcharge ban came into effect on October 1, which now allows card networks – Visa, MasterCard, and Eftpos – to ban surcharges for credit, debit and prepaid card payments both in-store, online, and via mobile wallets. The move also means businesses are no longer allowed to charge an extra fee when a customer pays by card.

According to The Sydney Morning Herald the move lower the processing costs for merchants by capping the interchange fees, which are the fees paid between banks each time a customer taps a card. That fee will be reduced from 0.8 per cent to 0.3 per cent on Australian consumer credit cards.

The move will also force businesses to either absorb the costs themselves or be forced to pass them onto their customer through increased prices, as previously the majority of surcharges added to the cost of card transactions went directly to paying the associated bank and provider fees associated with accepting cards.

The ATO announced shortly afterwards that they will stop accepting credit card payments, citing the transaction fees would now need to be passed on to taxpayers.

“As a government agency, the ATO has decided it would not be appropriate for the cost of credit card merchant fees to be transferred to the community,” an ATO spokesperson said.

Monarch Cakes manager Nikki Laski told AAP the move would be the final straw in terms of keeping many stable for their many regular customers.

“We’re going to have to raise the prices,” she told the publication.

“We were due to anyway because everything else has gone up.

“But this is going to be the straw that broke the camel’s back.”

Ms Laski said although businesses like Coles and Woolworths were already absorbing the costs because they could afford to, it wasn’t an option for smaller businesses.

“It’s the small businesses that do [put prices up] that because they have to in order to survive,” she said.

Despite being heralded as a positive move by both Prime Minister Anthony Albanese and Treasurer Jim Chalmers, who said the ban would save consumers $1.6 billion in card surcharges and save businesses $910 million each year, Ms Laski said there were other things to consider.

“That whole seven cents off your coffee might mean that your favourite coffee shop closes,” she said.