RBA to ban Visa, eftpos, MasterCard surcharges across Australia
The central bank is looking to ban payment card surcharges, which will save Australians around $1.2bn annually, as part of a system-wide shake-up of how the economy transacts.
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Australians are one step closer to a total card surcharge ban after the Albanese government backed the Reserve Bank’s proposal to dump $1.2bn of credit and debit payment surcharges incurred annually.
The RBA concluded the fees “no longer achieve their intended purpose”, in a consultation paper released on Tuesday.
RBA governor Michele Bullock said it was now becoming increasingly difficult to avoid card surcharges as fewer Australians use cash to pay for everyday expenses.
“We think the time has come to address some of these high costs and inefficiencies in the system,” she said.
The central bank aims to lighten the load on businesses, too, under its proposed changes, promising to evaluate lowering the cap on the almost $1.2bn of interchange fees paid every year.
About 90 per cent of businesses would be “better off” under the reduction.
Payments companies will also be required to publish their fees, which would hopefully prompt businesses to find better deals and encourage competition.
Ms Bullock said the RBA was still a supporter of cash, and the central bank was “committed to supporting the Australian government’s objective to ensure it remains a viable means of payment for those who need or want to use it”.
“We know these proposals will spark discussion, especially among businesses that currently surcharge, which is why we are consulting on these proposals for six weeks,” she said.
“Our goal is a more competitive, efficient and safe payments system for everyone.”
Treasurer Jim Chalmers said the Albanese government would review the RBA model, with submissions due by August 26.
Dr Chalmers noted the RBA’s review was “an important step to reduce costs for consumers while managing the impact on small businesses and the broader economy”.
“The RBA’s preliminary view is that surcharging should be removed on debit, prepaid and credit cards, but this should be complemented with measures that reduce costs for the vast majority of small businesses,” he said.
“We take the RBA’s views seriously and will consider their recommendations along with broader industry feedback.”
The Albanese government announced plans in October last year to crack down on card surcharges, with a view to banning them on debit transactions by January 2026.
Canstar research director Sally Tindall said the RBA’s proposed changes were positive for consumers.
“There’s a lot of people who use cash to avoid things like surcharges,” she said.
Ms Tindall said the changes would also remove the current uncertainties about the many surcharges already being passed through to consumers.
Under current rules, businesses are banned from surcharging for card payments if they do not accept cash payments.
But Ms Tindall said there was “no enforcement” on the issue.
However, the Council of Small Business Organisations Australia said the RBA’s changes were a “mixed bag”, noting some were welcome and others risked “serious unintended consequences”.
COSBOA chair Matthew Addison said removing surcharges would not remove card costs that merchants have to wear.
“It simply hides it,” he said.
“The RBA’s claim of $1.2bn in consumer savings is a mirage. The reduced interchange fee is welcomed; however, merchant fees include many other charges. The reality is that these fees will still be paid, just not disclosed.
“That cost will be baked into the price of coffee, groceries and services across the country.”
Mr Addison said forcing businesses to absorb the cost risked it simply being passed through.
“A blanket ban ignores the real issue: high and complex payment costs driven by opaque pricing and a lack of competition,” he said.
Silicon Valley payments provider Square welcomed the reform, with its Australia and Japan executive director, Marco Lamantia, expecting it would “drive fairness, simplicity and competition in Australia’s payments market”.
“A surcharge ban is the most practical on balance,” he said.
“It does ensure a level playing field.”
Square’s offer to merchants allows businesses to bundle cheaper debit transactions and more costly credit transactions into one fee.
Mr Lamantia said Square was looking at its options in the wake of the proposal, which could still see fees charged to users of other card types such as Amex.
The RBA is also considering the introduction of caps on foreign interchange fees in a bid to get more businesses to accept international cards.
Mr Lamantia pointed to similar payments system reforms in the United Kingdom and European Union, which had a “positive impact” and created fee pressure.
The proposal triggered a sell-off in ASX-listed payments player Tyro, which fell 7.6 per cent to 85c.
The Australian Banking Association said Australia’s surcharging rules had to keep pace with changes in how payments were handled.
A spokesman said it “makes sense that consumers know the final price before they get to the checkout”.
“Banks will work with the Government to provide Australians with more certainty and transparency on the costs of digital payments,” the ABA spokesman said.
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Originally published as RBA to ban Visa, eftpos, MasterCard surcharges across Australia
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