Reserve Bank of Australia Proposes Ban on Card Surcharges to Save Consumers

In a landmark decision, the Reserve Bank of Australia (RBA) announced its intention to eliminate surcharges on debit and credit card transactions, including those processed through eftpos, Mastercard, and Visa. This proposal, revealed on July 14, 2025, aims to take effect by July 2026, following a review that determined the existing surcharging system is outdated and ineffective in guiding consumers towards more efficient payment methods. The RBA estimates that this change could save consumers and businesses approximately $1.2 billion annually.

The RBA's review highlighted the necessity of reforming a system that no longer serves its original purpose, as cash usage declines and electronic payment transactions rise. "Our goal is a more competitive, efficient, and safe payments system for everyone," stated Michele Bullock, Governor of the RBA. The proposed ban on surcharges is seen as a crucial step towards promoting fairness and transparency in the payments landscape.

The decision comes amid increasing scrutiny of merchant fees and surcharges that have become commonplace across various retail sectors. Currently, many small businesses, including cafes and shops, have raised concerns that the removal of surcharges might lead to increased operational costs, forcing them to raise prices to compensate. However, the RBA has also proposed capping interchange fees, which are fees charged by payment service providers to merchants. This cap is expected to disproportionately benefit small businesses that typically pay fees closer to the existing limits.

According to Dr. Emily Carter, Senior Economist at the University of Sydney, the RBA's proposal represents a significant shift in the regulatory approach to payment systems. "By removing surcharges, the RBA is addressing a long-standing concern among consumers regarding the transparency and fairness of transaction costs," she explained.

The RBA's recent findings note that approximately 90% of small businesses could benefit from the proposed reduction in interchange fees, which would allow them to retain more of their profits. Furthermore, foreign interchange fees will also be capped to alleviate costs for businesses accepting international cards, thereby fostering a more inclusive economic environment.

The current landscape of card payments in Australia is complex, with about 8 million combination cards in circulation, requiring users to choose between debit and credit options at the point of sale. The RBA's proposal aims to simplify this process and enhance the overall consumer experience by eliminating confusion regarding surcharges.

In an effort to increase transparency, the RBA plans to require payment networks and service providers to publish their wholesale fees. This move aims to empower businesses by making it easier for them to identify and select the most advantageous payment processing options. Bullock emphasized the importance of this transparency in fostering competition within the payments industry, noting, "Transparency from these providers will help businesses find the best deals and encourage competition."

As the RBA prepares to consult with stakeholders over the next six weeks, the implications of these proposed changes are far-reaching. The final report is anticipated by the end of the year, and while the RBA holds the authority to implement these changes without legislative approval, the government has expressed interest in possibly extending the ban on surcharges in the future.

American Express, however, is not included under the RBA's jurisdiction due to its unique operational structure, leaving its surcharge policies unchanged for the time being. The RBA's proactive approach could set a precedent for regulatory bodies worldwide as they navigate the evolving landscape of digital payments.

In conclusion, the RBA's proposed ban on debit and credit card surcharges represents a progressive step towards a more equitable and efficient payments system in Australia. As stakeholders prepare for the upcoming consultation period, the effects of these changes will likely resonate across various sectors, potentially transforming how consumers and businesses interact within the financial ecosystem. The broader implications of this proposal underscore the importance of regulatory oversight in fostering a fair and transparent marketplace.