Reserve Bank Proposes Ban on Card Payment Surcharges by 2026

The Reserve Bank of Australia (RBA) has proposed a ban on surcharges for debit and credit card payments, aiming to eliminate these additional fees by July 2026. This significant policy change, which could save Australian consumers an estimated $1.2 billion annually, was announced by RBA Governor Michele Bullock. As cash usage declines, the RBA asserts that the current surcharging practices have become increasingly burdensome for consumers.

According to the RBA's consultation paper released on July 15, 2025, the proposal targets surcharges on Eftpos, Mastercard, and Visa transactions. Bullock emphasized the need to address "high costs and inefficiencies in the system" as the reliance on cash diminishes. The RBA indicated that a comprehensive overhaul of card payment surcharges is necessary to promote fairness and transparency in the payment system.

The hospitality industry, represented by the Australian Restaurant and Cafe Association (ARCA), expressed concerns regarding the RBA's proposal. Wes Lambert, ARCA's Chief Executive Officer, argued that eliminating surcharges could lead to increased menu prices, stating, "Who the hell does the RBA think will bear the cost of this ridiculous decision? First, merchants, and then customers." Despite these concerns, the RBA's findings reveal that only one in ten businesses currently impose surcharges, with cafes and restaurants being among the most frequent users.

Labor's previous commitment to ban surcharges on debit cards alone sparked discussions about broader measures. Treasurer Jim Chalmers noted in October 2024 that the government was prepared to ban debit card surcharges, contingent upon safeguards benefiting both consumers and small businesses. The RBA’s new proposal, however, seeks to surpass this commitment by addressing surcharges for both debit and credit cards.

Payment service providers, including Square and Stripe, have indicated support for the RBA's comprehensive ban. Marco Lamantia, Square's Australian Executive Director, described the proposal as the "most practical and balanced outcome," suggesting that it would foster competition amongst payment providers and mitigate the influence of major banks.

The RBA's recommendation also includes a reduction in interchange fees, which can reach as high as 2% per transaction but average 0.4% for debit and 0.8% for credit card payments. The RBA estimates that small merchants processing less than $10 million in card transactions annually could save approximately $185 million under the proposed reforms.

However, larger businesses that benefit from lower fees may face a combined loss exceeding $1 billion annually. The proposed legislation would also require payment providers to disclose the fees associated with their services, enhancing transparency in an industry often criticized for its lack of clarity regarding charges.

In summary, the RBA's proposal to ban card payment surcharges represents a significant shift in Australia's payment landscape. As the consultation process unfolds, stakeholders across various sectors will be closely monitoring the potential implications for consumers, businesses, and the wider economy. The RBA aims to finalize reforms by December 2025, allowing for the prohibition of surcharging to take effect by July 2026. This initiative reflects broader trends in payment processing and consumer protection, highlighting the ongoing evolution of payment systems in Australia.