Australia Proposes Nationwide Ban on Card Payment Surcharges
Synopsis
The Reserve Bank of Australia (RBA) has suggested a complete ban on card payment surcharges on all major payment networks, such as Visa, Mastercard, and EFTPOS. The action would simplify the cost burden on…
The Reserve Bank of Australia (RBA) has suggested a complete ban on card payment surcharges on all major payment networks, such as Visa, Mastercard, and EFTPOS. The action would simplify the cost burden on consumers and simplify the nation's payment systems.
The decision was announced in a consultation paper published Tuesday, wherein the RBA contended that the initial rationale for card surcharges promoting the use of low-cost payment options no longer holds. Usage of cash has declined dramatically over recent years, and merchants increasingly charge flat fees irrespective of card type.
Australians collectively pay about $1.2 billion annually on card surcharges, or about $60 per adult who uses a card, the RBA said. Governor Michele Bullock described the plan as one that would cut unnecessary expenses and increase competition in the payment space.
Plan Builds on the Federal Government's 2026 Debit Surcharge Prohibition
Earlier this year, Treasurer Jim Chalmers announced a narrower plan to scrap debit card surcharges from January 2026 to help lower everyday expenses. The RBA’s proposal goes a step further by including credit cards, effectively eliminating most card surcharges at checkout altogether.
If endorsed, customers will no longer notice extra fees for paying with cards, whether in person or online. The central bank views this as a move towards a more transparent and equitable payments system.
Proposal to Ban Card Payments Likely to Affect Small Businesses Most
Aside from the savings on the consumer side, the RBA has also suggested reducing the caps on interchange fees, the fees that businesses pay to banks when a customer pays using a card. This would save Australian businesses another $1.2 billion annually.
Small businesses are likely to benefit the most. Under the present system, they tend to pay the highest rates and would be $185 million better off if the proposed rules were adopted, says the RBA. The scheme also provides for new requirements on card networks and payment processors to release their fees every three months, so costs are more transparent.
Timeline and Industry Response
The consultation period among the public will close on August 26, 2025. If adopted, changes are scheduled to come into effect in July 2026.
The RBA is also suggesting removing its own limit that blocks card networks from imposing "no-surcharge" conditions so that networks can impose these conditions directly. In case voluntary agreements fail, the central bank has indicated that it would suggest legislation to make the ban on surcharges mandatory.
Although the shift would lower direct expenses for consumers, the RBA noted that some companies might alter their prices to recapture the lost surcharge revenue, pushing inflation by up to 0.1%.
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At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
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