The Reserve Bank of Australia (RBA) has proposed a ban on debit and credit card surcharges in a move aimed at reducing consumer costs by an estimated $1.2 billion annually. If implemented, these changes would take effect in July 2026 and would apply to EFTPOS, Mastercard, and Visa transactions. Furthermore, the proposal includes lowering the cap on interchange fees charged to businesses by payment service providers.
The RBA estimates that nearly 90% of Australian businesses would benefit from these changes, which would also mandate that card networks and larger acquirers publicly disclose their fees. RBA Governor Michele Bullock emphasized the need for reform, stating, “The time has come to address some of these high costs and inefficiencies in the system.”
Bullock acknowledged that these proposals are likely to provoke discussion, particularly among businesses that currently implement surcharges. To allow for stakeholder feedback, the RBA will hold consultations for six weeks, after which a final proposal is expected by the end of the year.
The rationale behind the RBA’s recommended ban stems from its findings that surcharging no longer effectively guides consumers towards cheaper payment options. With a decline in cash usage, many businesses are applying identical surcharges across debit and credit cards.
The proposed regulation represents a more extensive measure than previously suggested by the federal government, which had indicated a desire to prohibit surcharging solely on debit transactions. Australian Payments Plus Chief Payments Officer Adrian Lovney has welcomed the RBA’s consultation, asserting that the upcoming changes would enhance the customer payment experience and promote consistency in the industry. However, he also cautioned that merchants would need to find efficient payment processing solutions as they would be compelled to absorb the additional costs associated with these fees.
Concerns have been raised about the burden this would place on small businesses, with claims that they may need to either absorb extra costs or raise prices for their customers. The Independent Payments Forum, which advocates for convenience stores and smaller enterprises, has criticized the proposals as favouring large businesses while neglecting smaller operators. Co-founder Bradford Kelly remarked that the proposed regulatory changes would ultimately benefit large corporations and banks rather than support small businesses and local communities.
Wes Lambert, CEO of the Australian Restaurant and Café Association, echoed these sentiments, warning that the proposal could lead to increased menu prices. “Businesses who previously paid $0 in net merchant fees could now be forced to shoulder these costs,” he stated.
Regarding support for the proposed ban, Commonwealth Bank stands as the only major bank fully backing the removal of surcharges on both credit and debit cards. Mastercard has shown its support for the ban as well. In contrast, Westpac has expressed approval for banning surcharges on debit cards but has called for credit card surcharge limits. NAB has cautioned that a complete ban would be onerous for businesses, as it forces them to accept the costs of payment processing.
In Australia, about eight million combination cards—those functioning as both debit and credit cards—are active. Notably, the proposed ban would not extend to American Express, as they fall outside the RBA’s regulatory scope.
The RBA is currently considering input from the payments industry and stakeholders, paving the way for a significant shift in how payment surcharges are handled in the country. As this proposal unfolds, businesses and consumers alike will be keenly observing the developments and potential implications for the broader economy.
For feedback regarding the impact of this proposed ban on your business, you can share your story by contacting tamika.seeto@yahooinc.com.
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