Why the ATO is ending credit card payments after 30 November

The Australian Taxation Office announced on 1 October that it will stop accepting credit card payments in Australia after 30 November 2026, following the Reserve Bank’s payment reforms. Taxpayers with direct debit arrangements linked to credit cards will need to update their payment method before their next instalment due after that date.

The ATO says it “would not be appropriate for the cost of credit card merchant fees to be transferred to the community”. Credit cards accounted for approximately 2.3% of tax payments in 2024–25, according to the agency, although it acknowledges that some taxpayers rely on them to manage their payments.

When do ATO credit card payments end?

The ATO’s announcement gives a specific cutoff: it will stop accepting credit cards after 30 November. The 1 October milestone concerns separate changes to card surcharges and payment fees. Both developments follow the RBA’s Review of Merchant Card Payment Costs and Surcharging, but they change different parts of the payment process.

From 1 October, the RBA removed its prohibition on card networks imposing no-surcharge rules. Eftpos, Mastercard and Visa each introduced those rules from that date. They govern extra charges for paying by card; the ATO has separately decided to withdraw credit cards as an accepted payment method.

Why is the ATO stopping credit card payments?

The tax office frames its decision around who would bear the merchant fees. As a government agency, it says transferring those costs to the community would be inappropriate. Its announcement does not quantify the savings it expects from ending credit card acceptance.

Removing a surcharge does not remove the underlying cost of accepting a card. The RBA explains that businesses still incur those costs and can reflect them in their overall prices. Its wider reforms are also intended to lower payment costs and improve transparency about the fees merchants pay.

The ATO says more than 60% of card payments were made by privately owned and wealthy groups and public and multinational businesses. Its 2.3% figure measures the proportion of tax payments made by credit card, rather than the proportion of taxpayers affected or the share of tax revenue collected that way. The release gives no count of affected taxpayers.

What happens to credit-card-linked payment plans?

The ATO says it is writing directly to taxpayers whose payment plans are linked to credit cards, explaining the changes and the steps they need to take. For direct debit arrangements linked to credit cards, its stated deadline is before the next instalment due after 30 November, to maintain compliance with the payment plan.

The agency acknowledges that the change will require adjustments for some taxpayers. It says it will help people move to alternative payment methods and continue supporting those experiencing financial hardship or other difficulties meeting their obligations.

The release directs taxpayers to the ATO’s howtopay page for alternative payment options and managepaymentplan guidance for changing a plan’s payment method. For extra support, it points to its supporttolodgeandpay page, the telephone number 13 11 42 during business hours, or a registered tax professional.

Why are credit card rewards changing too?

Alongside the surcharge changes, lower interchange fee caps for domestic card transactions took effect on 1 October. The RBA says some card issuers had indicated that reduced interchange income could prompt changes to rewards and other benefits. Pricing and rewards remain commercial decisions for individual financial institutions.

In ABC Lifestyle’s reporting on the wider card market, financial literacy expert Nicole Pedersen-McKinnon described “a massive clawback of the perks of credit cards and a complete repricing”. Her comments concern bank card offerings, rather than the ATO’s decision.

Pedersen-McKinnon told ABC that changes predominantly involved frequent-flyer points earning rates, with some interest rates and annual fees rising and some benefits, such as complimentary travel insurance, being reduced. Those observations do not establish identical changes for every card or a net gain or loss for any individual customer.

Senior financial planner Rebecca Pritchard also told ABC that changes to points earning rates were an existing trend. “Banks are not charities, they are commercial institutions,” she said, describing fees and rewards as areas where changes would continue.

Which surcharge changes apply, and what comes next?

The RBA’s FAQ says the changes cover charges added because someone pays by card. They do not themselves remove weekend or public-holiday surcharges, booking fees or service fees that apply regardless of payment method. Timing also varies: PayPal’s no-surcharge rule takes effect on 5 October.

Further transparency measures are scheduled. Designated networks and large acquirers must begin publishing specified fee information on 30 October. Large acquirers must begin publishing information about how interchange reductions have flowed through to merchant service fees on 30 January 2027. Those disclosures are still ahead; the ATO has not provided a measured impact of its announced withdrawal on hardship or payment compliance.