No credit card surcharges by October 31, 2026: What you need to know

By Chantel du Plessis, Senior Client Manager, Holmans Accountants

Recently, credit card fees, particularly on short-term accommodation bookings, have often been passed directly to guests as a surcharge.

That model, however, is changing. By October 31, 2026, businesses operating in Australia will need to be prepared for a significant shift in how card payment costs are managed, with reforms aimed at restricting or effectively removing many credit card surcharges as a separate charge to consumers.

For management rights operators, this is more than just a compliance issue, it is a commercial challenge that may impact profitability, pricing strategies and owner relations.

This article was first published in the June edition of Resort News – read it HERE

Why are these changes happening?

The push to remove or limit card surcharges comes from increasing public and regulatory concern over “hidden fees” at checkout.

Consumers have become frustrated by advertised prices that rise at the point of payment due to additional charges. Regulators and policymakers have argued that payment by card is now the norm, not an optional luxury, and therefore should be treated as part of the cost of doing business.

The reforms are designed to improve pricing transparency, reduce unexpected costs for consumers, encourage fair competition and simplify purchasing decisions.

In practical terms, the expectation is that businesses should incorporate payment acceptance costs into their overall pricing structure, rather than presenting them as an add-on at the end of the transaction.

Why this matters to MLR operators

Management rights businesses sit in a unique position.

Operators often manage both short-term accommodation income, including letting pools, online bookings and direct reservations, as well as agency-style relationships with lot owners involving commissions, administration fees and reimbursements.

These two streams are treated differently from a commercial and legal perspective.

For guest-facing accommodation transactions, surcharge restrictions will likely apply in full. This means operators may no longer be able to add a separate credit card fee to booking invoices in the same way they historically have.

For owner-facing charges, however, the position can be materially different. Where fees are charged under an agency agreement, i.e. your Form 6 and Addendum, those charges are governed by contract and agreement and not bound by the same restrictions applied directly to guests. Provided the agreement allows for reimbursement of transaction costs or is amended to do so, and more importantly agreed by the owner in writing, there may be scope to recover these expenses from owners rather than guests.

The commercial impact

For many operators, merchant fees are significant. Between online travel agents, direct website bookings, EFTPOS terminals and virtual card processing, payment acceptance costs are a substantial business expense, and removing the ability to recover the cost from guests will negatively impact business profitability and business value. This is particularly the case in high-volume corporate and holiday complexes.

If these costs can no longer be separately charged to guests, operators may face reduced net profits and increased pressure on commission structures.

This is especially relevant in competitive tourism markets where raising advertised room rates may not always be commercially feasible.

The sales perspective: Why this matters to business value

There is also an important sales consideration that management rights operators should not overlook. When a business is being prepared for sale, accountants and valuers will often review the adjusted profit and loss statement to determine the maintainable earnings of the business. These earnings form the basis of valuation and ultimately influence the sale price.

If your business is currently charging guests a separate credit card surcharge, that income may appear in your Adjusted Profit & Loss as an identifiable revenue stream. However, once surcharge restrictions take effect, that income may no longer be considered sustainable to a purchaser.

As a result, when preparing the adjusted profit and loss for sale, this surcharge income is likely to be excluded from the maintainable earnings calculation.

That exclusion can directly reduce the net profit of the business and, because management rights businesses are typically valued on a multiplier of earnings, even a modest reduction in profit can have a significant impact on sale price. For example, if surcharge income contributes $20,000 annually and the business sells on a multiplier of 4.5x, the loss of that income could reduce business value by $90,000. This is why implementing a replacement strategy is critical.

If operators can transition those costs into another sustainable and contractually supported revenue source before sale, that income becomes more defensible as part of the ongoing earnings of the business. From a buyer’s perspective, the question is not whether the business was once able to generate surcharge income, but whether the earnings are repeatable under future operating conditions. Without a clear strategy, surcharge revenue may be viewed as obsolete income and stripped out of valuation calculations.

In short, failing to adapt does not just affect day-to-day profitability, it can materially reduce the capital value of your business when it comes time to sell.

Options to negate the financial impact

While the reforms may remove one revenue recovery mechanism, they do not eliminate all strategic options.

1. Build costs into room rates

The most straightforward response is to incorporate merchant fees into advertised accommodation pricing. This spreads the cost across all guests rather than isolating it as a separate charge. While this may slightly increase accommodation tariffs, it ensures compliance and may preserve margins without impacting the owners.

The downside is that it may reduce competitiveness in room pricing if neighbouring operators absorb the cost differently.

If you increase room rates as part of this strategy, it is important to advise owners of the change and the reasoning behind it.

As accommodation income belongs to the owner, if an operator absorbs part of the accommodation tariff as a “merchant cost”, this directly impacts the owner from an Office of Fair Trading perspective, and the owners should be properly notified of this strategy. From an Office of Fair Trading perspective, transparency is essential.

Keeping owners informed helps demonstrate that the strategy is a compliant business response to regulatory change, rather than an undisclosed reduction in owner returns. Clear communication also reduces the risk of future disputes and supports the operator’s position as acting in good faith as agent.

2. Renegotiate Merchant Agreements

Many businesses accept their merchant fees as fixed, but providers often have flexibility, particularly where transaction volumes are high. Operators should review interchange rates, gateway fees, international card charges and OTA virtual card costs. Reducing processing costs at the source may offset much of the impact without changing pricing.

3. Recover costs through owner charges

This is where management rights businesses may have a unique advantage. Because the operator acts as agent for lot owners, and the relationship is governed by contract rather than consumer-facing payment law, transaction-related costs may be recoverable from owners, provided the documentation supports it and the owners have signed and agreed to the charges.

Potential approaches include introducing an administration or processing fee percentage to owners or adjusting commission structures to reflect payment handling costs. This approach shifts the burden away from guests and the operator, and onto the parties who ultimately benefit from the bookings.

Importantly, this must be carefully documented, disclosed and agreed to avoid disputes.

4. Encourage lower-cost payment methods

Operators can reduce card reliance by promoting direct bank transfers, debit card payments over credit cards, BPAY or account-to-account payment systems, alternative booking platforms with lower merchant costs, or even reverting to a bank merchant facility. Even modest changes in payment mix can materially reduce processing expenses over time.

5. Bundling

If you are currently charging owners for credit card charges and processing, there may be a risk from a commercial perspective where owners may argue that credit card recovery charges should be treated the same way as guest-facing surcharges under consumer payment reforms.

To reduce this risk, another practical strategy may be to bundle existing charges into a single percentage-based fee. For example, operators may consider incorporating credit card processing costs together with advertising commission, PABX charges and other fixed charges into a single bundled percentage fee structure.

Bundling remains a significant opportunity for managers to streamline fees while fostering greater transparency for unit owners. Partial bundling, adopted by over 40 percent of operators, offers flexibility while simplifying accounting processes. From my perspective, bundling not only makes billing easier but also ensures alignment between the operator’s revenue growth and the property owner’s success.

If you are considering bundling, ensure you speak with your industry specialist accountant to ensure the structure is carefully considered and commercially appropriate. If not implemented correctly, bundling may result in certain charges not being properly recovered, owners potentially being overcharged, which may impact owner returns and create disputes, or alternatively the bundled percentage being set too low and unintentionally reducing the manager’s income and overall business profitability.

What to do now

With the October deadline approaching, operators should act early. This includes reviewing all guest-facing surcharge practices, reviewing and assessing merchant fee costs, obtaining advice from a management rights specialist lawyer or accountant on owner agreement wording, updating Addendums and Schedules of Charges with owners if required, and modelling the financial impact of alternative recovery strategies.

The businesses that adapt early will be in the strongest position to maintain profitability without breaching evolving payment regulations.

Final thoughts

For management rights operators, if you are not already recovering these costs from owners, the key is to review your current structure and identify how these additional costs will be managed post-October 2026. In practice, this will usually mean either on-charging appropriate costs to owners or adjusting pricing and operations where that is not possible.

The important part is to make informed decisions, communicate any changes clearly to owners, and ensure any recovery of costs is done within regulatory requirements and existing contractual arrangements.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions, or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

Read the latest edition of AccomNews HERE