Australia’s central bank wants surcharge fees on debit and credit cards ditched, in a move it expects would save consumers more than $1 billion.
The Reserve Bank of Australia’s review of merchant card payment costs recommends the fees be scrapped on EFTPOS, Mastercard and Visa transactions as they don’t help consumers make more efficient payment choices.
Lowering the cap on interchange fees paid by businesses – another recommendation of the paper – as well would save Australian $1.2 billion.
Businesses pay interchange fees to the issuers of customers’ cards whenever there is a transaction.
The RBA proposals go further than what the federal government has previously suggested.
Treasurer Jim Chalmers has said the government is prepared to ban fees on debit card transactions from the start of 2026, but the Reserve wants credit cards included.
Consumers are estimated to pay $1.2 billion in surcharges on payments each year, the equivalent of $60 for every card-using adult.
Scrapping surcharges would also mean consumers didn’t need to switch between payment methods to try to avoid a fee, the report said.
RBA governor Michele Bullock said consumers and businesses would benefit from the proposal as fewer Australians made cash payments.
Customers would avoid paying surcharges, while businesses would no longer be forced to face high costs of accepting card payments.
“We think the time has come to address some of these high costs and inefficiencies in the system,” she said.
“The payments landscape is always evolving, and it’s critically important that we keep pace to ensure it remains safe, competitive and efficient.”
The RBA proposes removing its own prohibition on “no-surcharge” rules to achieve scrapping the fees.
It expects the card networks will then follow by implementing “no-surcharge” rules based on historical experience and arrangements in other jurisdictions.
If that does not happen, the central bank will recommend the federal government legislate to ban surcharge fees.
Lowering the cap on interchange fees paid by businesses is predicted to especially benefit small businesses, because they often pay higher fees.
The central bank found small businesses would be $185 million better off under the changes, with 90 per cent benefiting.
Better transparency achieved by forcing card networks and large acquirers to publish their fees has also been recommended, to try to force competition between the networks.
Bullock predicted the proposals would spark discussion, particularly among businesses that use surcharges, prompting a six-week consultation period on the plan.
Any changes won’t kick in until July 2026.
-AAP
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