Major banks have warned that any attempt to regulate lower bills for retailers by targeting the fees banks earn from issuing credit and debit cards could backfire by breaching the Reserve Bank’s mandate to promote competition in payments.

The RBA is expected to back the Albanese government’s move to ban debit card surcharging, which would prevent merchant payment fees being passed on to consumers. A surcharge ban will also force the RBA to manage wholesale payment costs more strictly, to ensure small businesses aren’t saddled with excessive fees.