Practice owners: 5 agreement risks to check before the credit card surcharge ban starts
From 1 October 2026, bank card surcharging will change significantly for Australian businesses, including medical and allied health practices. Following its review of merchant card payment costs, the Reserve Bank of Australia (RBA) has removed restrictions that previously prevented designated card networks from imposing “no-surcharge” rules. EFTPOS, Mastercard and Visa have announced that card surcharges will no longer be permitted on their networks from that date, and American Express has announced the same position.
For healthcare practices, the immediate issue is not simply whether the practice can continue charging patients a card surcharge. The more difficult question is: who will bear the merchant and transaction fees that still arise when a patient pays by card?
Practice owners regularly come to us with practitioner agreements that are detailed about service fees and practitioner payments but say very little about merchant costs. In many cases, that is because the agreement was drafted when card processing costs could simply be passed on to patients.
The answer will not be the same for every clinic. It depends on the legal and operational structure of the practice, including whether the practitioner is an employee, Registrar or operates under an independent practitioner model, who receives the patient’s fees, who holds the merchant facility and what deductions the relevant agreement permits.
With the new card surcharge arrangements approaching, practices should not simply assume how merchant fees will be treated. The agreed position should be properly documented in the agreement and reflect the practice’s operational and payment structure for the individual practitioner.
1. Your practitioner agreement does not say who bears merchant fees
One of the most common issues we see is an agreement that explains the practice service fee in detail but does not address payment processing costs.
The agreement may provide for an agreed percentage-based or fixed service fee and specify how that fee is calculated, invoiced, deducted or otherwise paid under the parties’ payment arrangement. It may also deal with refunds, cancellations, bad debts and other specific expenses. However, merchant fees are often missing altogether.
That creates uncertainty once the practice can no longer pass a card surcharge directly to the patient.
A practice should not assume that a merchant fee automatically forms part of the practitioner’s expenses simply because the payment relates to that practitioner’s patient. Equally, a practitioner should not necessarily assume that the fee must be absorbed by the practice. The position depends on the agreement and the structure it is intended to implement.
Warning signs include:
- the agreement contains no reference to merchant or transaction fees;
- deductions are limited to a defined service fee and the definition does not address merchant fees;
- the agreement refers to patient surcharges that will no longer be transferrable to the patient;
- administrative staff have been left to decide how merchant fees are allocated;
- current payment practices do not match the written agreement.
Where the agreement is unclear or silent, the better approach is to review it before introducing a new deduction or changing the way practitioner receipts are calculated.
Not sure who bears merchant fees under your agreement?
Daniela Cecere-Palazzo, Senior Lawyer at You Legal, can review your practitioner agreements and payment structure before the surcharge changes take effect.
Book a call with Daniela2. The payment flow does not clearly reflect your practitioner model
For practices using an independent practitioner model, merchant fees cannot be considered in isolation from the broader payment structure.
A well-structured arrangement should clearly identify whether the patient fee is payable to the practitioner or the practice, whether the practice collects that fee on the practitioner’s behalf and how the practice’s service fee and other agreed costs are paid or deducted.
For example,if an independent practitioner arrangement documents that the practice collects patient fees on behalf of the practitioner before deducting an agreed service fee, if the practice’s merchant facility is used to process those payments, the agreement should make clear how the associated processing cost is treated.
Practice owners and managers should look closely at the operational reality, including whether:
- patient fees are received into an account controlled by the practice;
- the practice’s merchant account processes all practitioner payments;
- practitioners receive a net amount after deductions;
- patient receipts and communications clearly identify the relevant provider;
- the agreement explains the practice’s role in collecting and administering patient fees.
The fact that a merchant facility is held in the practice’s name does not, by itself, determine who must ultimately bear the processing cost. It does, however, make it important that the agreement clearly documents how money moves through the practice.
For independent practitioner models in particular, the financial arrangements should reflect the intended legal structure in practice, not just on paper.
3. Your deductions clause may not permit the practice to pass the cost on
A clause allowing the practice to deduct certain amounts from practitioner receipts does not necessarily permit every operating cost to be deducted.
Some agreements contain tightly defined deductions. Others use broad language referring to administration costs or expenses. Whether merchant fees fall within that wording requires the agreement to be read as a whole.
This becomes particularly important if a practice proposes to introduce a new merchant fee deduction from 1 October 2026.
Rather than treating the change as an accounting adjustment, practice owners should identify the contractual basis for the deduction. If the agreement requires amendment, that should be dealt with transparently with practitioners rather than implemented informally through the practice’s payment system.
Different considerations apply where the practitioner is an employee. Under the Fair Work Act employers can only deduct money from an employee’s pay in limited circumstances.
This is one reason practices should avoid applying a single merchant fee policy across employees, Registrars and independent practitioners without first considering the legal basis for each arrangement.
Check what your deductions clause actually permits
Book a call with Daniela Cecere-Palazzo, Senior Lawyer at You Legal, to review your practitioner agreements and payment structure before 1 October 2026.
Book a call with Daniela4. Your agreement was drafted on the assumption that patients would pay the surcharge
Many practices are still relying on agreements drafted before this change was announced.
Those agreements may have been commercially workable because the practice’s payment processing cost could be recovered directly from the patient through a card surcharge. From 1 October 2026, that assumption changes for payments made through the affected card networks.
The RBA has made clear that businesses will continue to incur costs for accepting card payments after surcharging ends. Its reforms also include reductions to certain interchange fee caps and increased fee transparency, which are intended to place downward pressure on merchant costs.
For a medical practice, however, a reduced merchant cost is still a cost that needs to sit somewhere within the commercial structure.
A review should therefore consider who is intended to bear payment processing costs, whether those costs are included in the practice’s service fee, whether they are included in or excluded from the practitioner’s Gross Receipts, whether a separate agreed cost can be charged under the practitioner arrangement, and whether the accounting processes reflects the agreement.
The aim is not to rewrite the entire practitioner arrangement. It is to identify whether a change in the payments structure has exposed a gap in the existing documentation.
5. A quick commercial fix creates inconsistency elsewhere in the arrangement
The most tempting solution may be to simply add the merchant percentage to the deductions already taken from practitioner receipts.
That can create problems if the change does not align with the rest of the agreement or what actually happens in practice.
Practitioner agreements are not simply payment schedules. They help document the relationship between the practice and practitioner, including control over patient fees, administration services, use of facilities, practitioner independence and the financial responsibilities of each party.
For practices operating an independent practitioner model, changes to financial flows should therefore be considered as part of the overall structure. No single merchant fee clause determines the legal characterisation of a practitioner relationship, but payment arrangements form part of the broader operational picture.
That broader structure matters when considering issues such as payroll tax exposure, superannuation obligations and whether the practical arrangement reflects the independent practitioner model described in the agreement.
A small change to payment processing should not inadvertently create inconsistency between the agreement, the practice’s accounting system and what actually happens day to day.
Why periodic agreement reviews matter
Practitioner agreements shape much more than the percentage retained by a medical practice. They help establish how the practice operates, how patient revenue moves through the business, what services the practice provides and which party is responsible for particular costs.
Changes such as the card surcharge reforms are a useful trigger to test whether those agreements still reflect operational reality. An agreement drafted when payment methods, commercial expectations and regulatory settings were different may no longer provide the certainty the practice needs.
Periodic reviews also allow practice owners to identify inconsistencies before they become disputes. That may include unclear deduction rights, outdated payment clauses, inconsistent arrangements between practitioners or operational processes that have gradually changed without corresponding updates to the documentation.
For healthcare practices, the objective should be consistency between the written agreement, the intended practitioner model and what actually happens in practice.
If your practice is reviewing how merchant and transaction fees will be handled from 1 October 2026, Daniela Cecere-Palazzo, Senior Lawyer at You Legal, can review your practitioner agreements and payment structure to help ensure the allocation of costs is clearly documented and consistent with the way your practice operates.
Want to talk it through with a lawyer?
Book a time with Daniela to review your practitioner agreements and payment structure.
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This article is general information only and is not legal advice. Every practice is different and the law can differ across Australian jurisdictions. Please seek advice tailored to your circumstances before acting.