Just when we thought the surcharge story had its ending written — ban lands 1 October, surcharges disappear, roll credits — the banks have started a fight over the fees that will live on. And Westpac has just fired the opening shot: a flat 0.79% merchant rate.

What's happening?

PayDay News reports Westpac has cut its flat in-store merchant fee to 0.79%, undercutting CommBank, which told customers in September it was trimming its flat in-store rate from 1.1% to 0.99% from 1 October. No action needed, CBA promised — eligible customers get moved across automatically.

But read the fine print before you start celebrating. Westpac's 0.79% only applies to in-store transactions on standard terminals. American Express acceptance? Not invited. Neither is Westpac's EFTPOS Air mobile terminal product. As usual, the headline rate is a headline.

Why now? Because the maths just changed. From 1 October, merchants can no longer pass card costs on through surcharges. Those costs don't vanish — they land entirely on the business, or get quietly folded into prices. At the same time, the RBA has cut the consumer credit interchange cap from 0.80% to 0.30%, reshuffling who makes what on every tap. Banks are repositioning: cheaper headline rates to keep and win merchant accounts, with exclusions where the costs bite hardest. Amex tops that list.

Why it matters

For small business, a flat 0.79% genuinely helps — for most cafes and shops it beats the blended rates they were paying. But the exclusions are where the sting lives: if your customers tap Amex, or you run payments through a mobile terminal, your real rate is not the one in the ad.

For consumers, it's the same lesson we keep returning to: the surcharge line disappearing from your receipt doesn't mean the cost disappeared. The price of convenience is being renegotiated behind the counter. And the Amex-shaped hole in Westpac's headline number is exactly the fight we flagged last week — the ban left Amex out of the rules, and now the banks are pricing it out of the terminals too.

My take

For years the surcharge made card acceptance transparently annoying — you could see the cost of the tap sitting on your receipt. From 1 October that cost goes underground, and the battleground shifts to what banks quietly charge merchants. A price war on merchant fees is genuinely good news for small business — just remember the exclusions, read the fine print, and eight days to go. Happy dining! G