Table of Contents
The Reserve Bank of Australia (RBA) has proposed a significant overhaul of payment surcharges, which, if implemented, could result in savings of approximately $1.2 billion annually for consumers. This proposal aims to eliminate surcharges on debit and credit card transactions, including those made via EFTPOS, Mastercard, and Visa, set to take effect in July 2026. Additionally, the RBA is looking to lower interchange fee caps that payment service providers impose on merchants.
Key Points of the Proposal
- Widespread Impact: The RBA’s estimates suggest that around 90% of Australian businesses would benefit from these changes, leading to substantial cost reductions.
- Transparency Requirements: The proposal includes mandates that card networks and larger acquirers disclose their fees publicly.
- Governor’s Statement: RBA Governor Michele Bullock stated, “The time has come to address some of these high costs and inefficiencies in the system,” indicating a drive for competitive and efficient payment systems.
Bullock acknowledged the need for consultation, stating that the RBA would engage with industry stakeholders for six weeks to gather feedback before finalising their proposal by year’s end. Historically, surcharging has served to guide consumers towards cheaper payment methods. However, the RBA notes that with declining cash use, businesses have begun to charge uniform surcharge rates across card types, undermining its original intent.
Industry Reactions
While some support the proposal, others express concern, particularly among small business owners. They fear that eliminating surcharges may lead to them absorbing additional costs or increasing prices for consumers. Representatives from the Independent Payments Forum highlighted potential adverse impacts on small businesses, arguing the changes primarily favour larger entities.
The Australian Restaurant and Café Association cautioned that the proposed changes could drive up menu prices, as businesses that previously incurred negligible costs related to merchant fees — particularly those that relied on surcharges — may now shoulder significant financial burdens.
Bank Responses and Broader Context
The Commonwealth Bank is currently the only major bank to advocate for a comprehensive ban on surcharging; in contrast, Mastercard supports extending the ban to all card types. Westpac has shown support for capping surcharges on debit cards instead of a complete ban, while NAB warns that an all-encompassing ban would unfairly burden retailers.
Notably, the RBA’s proposal extends beyond the initial discussions of the federal government, which contemplated restricting only debit card surcharges. Additionally, the ban would not encompass American Express transactions, as they fall outside of the RBA’s regulatory framework.
In summary, the RBA’s move to abolish card surcharges is framed as a strategy to foster a more efficient payment ecosystem, promising significant consumer savings. However, the transition raises crucial questions about the potential impacts on small businesses and the broader implications for the payments landscape in Australia. Stakeholders are encouraged to voice their opinions during the impending consultation period, shaping the future of payments in the nation.
