They "Banned" The Surcharge - But Your Next Holiday Will Probably Cost More

Added: 2026-05-27

[00:00:00]The Australian government is about to ban credit card search charges. So, no more sneaky 1 and a half% line item at the bottom of your grocery bill or at your local cafe. And it sounds like a win, right? Wrong. Because what many people are not telling you is that the search charges are not disappearing.

[00:00:17]They're just going underground. And if you're someone who loves to travel, book cruises, or take holidays, that change could actually cost you more. A lot more. And you won't even see it coming.

[00:00:28]And here's the thing, Australia already had a really good law that covered these search charges. It protected you from being ripped off on search charges, and it feels like almost no one knew it existed. So, if we already had protections built into our consumer system in this country and our economy, why are we blowing up the system? And who, in fact, will it benefit?

[00:00:55]I'm Adrian, the cruise and travel guy, and welcome back to the channel.

[00:00:58]channel. In this video, we're going to dive directly into these upcoming changes and what it means for you, particularly around the cost of your next cruise or holiday because this goes far deeper than just a headline. From October 1st this year, businesses will no longer be able to add a search charge on Visa, Mastercard, or F-POS payments covering debit, credit, and prepaid cards. And this will apply to all businesses processing payments in Australia. That means cafes, supermarkets, travel agencies, airlines, cruise lines. Australians are currently paying almost $1 billion per year in credit card search charges. And that's important because cash transactions in 2025 represented only 15% of total transactions. The Reserve Bank's headline claim is that reforms could save consumers and businesses up to 1.8 billion a year. That's because interchange fees, what merchants pay their banks to process transactions, are being cut from around8% down to.3%.

[00:01:59]That's the RBA's justification for why businesses can absorb these costs going forward. But before I get into why I think this is bad policy and why it will impact your next cruise or holiday booking, I want to tell you a little bit about the legislation that already existed and was doing a pretty good job.

[00:02:15]Since September 1st, 2016, businesses have been prohibited from charging excessive search charges under the Competition and Consumer Amendment Payment Search Charges Act. This wasn't a minor footnote. This was enforcable legislation. It meant that businesses could only pass on the direct cost of processing that payment to the consumer.

[00:02:37]Not $1 more. Businesses were not allowed legally to treat sir charges as a profit-making exercise. And if a business couldn't legally justify that cost, then they were in trouble. The AC was actively monitoring compliance and investigating consumer complaints. That meant that when you purchase something and saw a search charge for 1.2%, that business had to be able to justify that cost. That cost could only be for them processing that payment. The search charge had to match reality and it was a listed separate item which meant that it was traceable and enforcable. If you felt like you were being overcharged or you weren't sure if a kg operator was getting you at the checkout then you could lodge a complaint at the AC. That meant there was a real framework that was enforced and it gave consumers real power. So, if we already had this existing framework, then what exactly is this new legislation coming in on the 1st of October supposed to do? What exact consumer harm will it undo? The RBA's own stated reason for this ban was that search charges are complex and confusing and often not well disclosed.

[00:03:49]But that is an enforcement and communication problem, not a structural one. The answer to poor disclosure is better transparency, not removing it entirely and moving it underground.

[00:04:00]Under the new system, when that search charge is eliminated at the checkout, that doesn't mean the cost has disappeared. And while the cost may have dropped for merchants, they're still going to embed it in the cost of your transaction. Be assured of that. But instead of having any transparency around it, you will be completely blind.

[00:04:18]All consumers will be completely blind as to the actual cost. The 2016 law created a visible, verifiable cost and enforcable framework. And 10 years later, this ban replaces it with an invisible, unverifiable one. The search charge you could see was protected by law. The one you can't is not. Now, I want to talk about something that seems to be glossed over repeatedly, and that is that the cost of doing business doesn't just disappear because a regulator says that it should or that it does. In fact, the cost of doing business with a merchant will still be a part of operating any business. And where in the past they could recoup that price from you and tell you exactly what it was, they won't be able to do that anymore. Now that they can't show it to you on a receipt, they're going to find another way. Businesses going forward will have three choices. They can absorb the cost, they can cut costs somewhere else, or they can increase cost somewhere else. And which one do you think they're going to be doing? Most small and medium businesses are going to struggle with this. And for context, there are over 2.7 million small businesses in this country. They employ over 5 million Australians. And with razor thin margins and everinccreasing red tape and cost to do business in this country, only 75% survive beyond their first year in trading. It's worth also noting that the Australian Retailers Association has warned of this exact scenario, saying that removing the transparency around the search charge will not have a benefit for the consumer. While this is all important, we're going to pivot over to travel now, which is probably why you clicked on this video. It's important to know that in travel, most transactions are completed with a card. And it's not just a one-step process. We're talking about paying a deposit, paying installments, and then paying a final balance. There's also multiple aspects to travel where you might might book a cruise, airfare, hotel, tours, the rest of it. So the impact is broadly speaking across the board. It is a compounding impact and that an increase in costs across the board without those search charges being there as an option for most people will have a direct impact on the cost of travel in this country. Princess Cruises, for very good reason, is one of Australia's most popular cruise lines.

[00:06:33]If you wish to go and book a cruise with them directly on their website or even via a travel agent, there is a credit card sir charge currently levied against payments made with a credit card. Come October this year, Princess Cruisers will not have the option of charging that search charge anymore. That's on land when you're booking your cruise.

[00:06:51]But even on board a Princess Cruis's ship, if you elect to use a credit card for your onboard expenditure, you're currently levied a search charge of around 1.1%. That too will have to stop.

[00:07:02]And remember that under that 2016 law, that processing fee had to represent their actual cost and it was legitimate and disclosed and legally defensible in that case. From the 1st of October this year, Princess cannot charge that anymore. So what happens to that 1.1%.

[00:07:19]That 1.1% doesn't evaporate and even if it drops down somewhat, it doesn't go anywhere. It's still going to be a cost for Princess Cruisers. Will they remove the option of paying for their cruise with their credit card? Unlikely.

[00:07:32]Will they increase the cost of their packages or onboard expenses? Maybe. We have to remember that for a business of that scale, 1.1% multiplied by hundreds of thousands of customers really adds up and contributes to your bottom line.

[00:07:47]Norwegian Cruise Line is actually a genuinely interesting counterpoint because they currently don't charge a visible credit card search charge on direct payments. So, we don't see what that search charge is. Is that price already baked into the price that we pay as consumers? I would imagine so.

[00:08:03]They're not a charitable business, therefore profit. Come October 2026, we're really going to see if this forces every other cruise line like Princess to operate the way that they do. And again, it doesn't make the costs disappear. It maybe just makes them more invisible.

[00:08:20]and facing the potential increase of costs ac across everything from airfares to cruise line bookings to hotels and tours and transfers. The actual hidden cost becomes so much greater than it was in the past. And again, for everyone, even those who wish to pay with a debit card or via EFT cash deposit transfers.

[00:08:40]And don't forget that under the old system, each of those search charges was capped at the actual cost. And under this new system, each price increase, if it happens, is uncapped and unverifiable. But sir charges created more friction and awareness for consumers. So you could choose to spend your money with a merchant or supplier or business that didn't charge you a fee going forward. You're not going to have that transparency. But in all fairness, let's explore a little bit more about why the government thinks this is a good move. Before we do that, if you're enjoying this video, I'd love it if you could give it a like and feel free to subscribe to the channel. The government says that there is an equity argument to be had in favor of these changes. They say that premium rewards credit card users, so those that earn frequent fly points and loyalty status, cashbacks, etc., that they will actually cost more to use and that lower income earners who typically don't have those sorts of credit cards are subsidizing those costs. They also say that the rules and complexity around the current arrangement is difficult for consumers and businesses to follow. And they reference the EU precedent because the European Union has built in the same sort of regulations across their member nations and the sky apparently didn't fall in. They also say that in highly competitive markets, businesses will be forced to absorb the costs, reducing prices for Australians who are shopping within a certain market. To me, those are fairly weak arguments. There might be better ones in support of this change, but I really can't find them.

[00:10:16]Particularly in light of the 1st of September, 2016 legislation that started on that date that already made as transparent as can be and as enforcable as can be the limitations of credit card search charges on consumers. Look, I don't like sir charges either, but I would rather know what the search charge is and know that a legal framework exists, as it currently does until October anyway, that prevents a business from getting more out of me than they're legally able to. Is that a perfect system? Probably not, but at least it's visible. Let's take a travel agent as an example. The cost for you to use a travel agent is typically nothing. They earn their money when they are paid a commission from the supplier. So you might book a cruise, a hotel, an airfare, and that supplier will pay the agent a commission. And that means that the supplier doesn't have to deal with you directly. So they're actually saving money on their back end because the travel agent is now responsible for dealing with you. Currently, that travel agent will charge you a credit card sir charge that their merchant will charge them because of that legislation. It's visible. It's transparent and you can choose to use a credit card and earn your points and rewards as you do and your travel insurance or you can choose to pay via direct deposit and avoid those search charges. The travel agent in this scenario is earning a commission and that's theirs. If you choose to pay with a credit card, that search charge is a separate identifiable traceable line item that you are a willing participant in paying. beyond October this year, the travel agent will have to factor in this cost because all of a sudden, their several hundred commission on your booking will potentially be eaten away by credit card search charge that they can no longer pass along to you legally. This is the perfect example demonstrating how the RBA's approach to this is not going to have a desired effect of making things more competitive. In fact, it's creating a lot of drama for travel agents and other businesses who are trying to figure out how they can still operate a business at a profit as they should without losing money. Because at this point, it seems to be the only ones who are winning are the banks and the merchants who can charge the fees as normal and earn their income and their profit. But the business owners, those people who are willing to go out on a limb and start a business to provide for their family and employ Australians are the ones once again being levied with these costs. So the next time you book cruise or travel and the cost seems a little bit higher, well maybe you'll know why. Because I don't think that what the RBA is doing here is going to have much of a positive effect on the Australian economy, on businesses, consumers, or travelers alike. If you enjoyed this video, please share it. I think it's a deep topic and I'm not saying that my view is necessarily the correct one. But I can say that for many business owners in this country, they're feeling exactly the same way as they try and face what to do with this situation that has been once again been thrust upon them, trying to figure out exactly how they can continue to operate a profitable business when there is yet again another cost that they are not legally able to pass on. And let me know, do you think that businesses will absorb these costs?

[00:13:38]Do you think they're going to pass them on to consumers? What do you foresee happening beyond October when these changes come in? Let me know in the comments. And as always, thank you so much for watching. I hope you enjoyed the video. When you're ready to book your next cruise, head to my website and follow me on Facebook and Instagram to stay up to date with my travels as they happen. Thanks again for watching and I'll see you soon.