The Reserve Bank of Australia (RBA) has proposed sweeping changes to Australia’s card payment system, including a potential ban on card surcharges and a reduction in interchange fees, in a move aimed at lowering costs for businesses and simplifying payments for consumers.
The recommendations, outlined in a new Consultation Paper released today, follow months of public consultation and represent the next phase of the RBA’s Review of Merchant Card Payment Costs and Surcharging.
In its preliminary view, the RBA Payments System Board said removing surcharges on eftpos, Mastercard, and Visa cards would be “in the public interest,” arguing that the practice is no longer effective in encouraging consumers to choose more efficient payment methods.
“Surcharging is no longer achieving its intended purpose of steering consumers to make more efficient payment choices: avoiding surcharges has become harder as cash usage has declined, businesses are increasingly charging the same surcharge rate across debit and credit and there are significant challenges with enforcing the current surcharging rules,” said the RBA.
“Removing surcharging would make card payments simpler, more transparent and help to increase competition in the card payments system.”
The RBA also proposed lowering the cap on interchange fees paid by businesses, which could reduce costs by around $1.2 billion annually.
According to the central bank, 90 per cent of Australian businesses would benefit from the changes, with small businesses likely to see the greatest gains due to their proximity to the current caps.
Additional recommendations include requiring card networks and major acquirers to publish the fees they charge, to improve transparency and allow businesses to better compare and negotiate merchant services.
Visa welcomes surcharge ban but flags interchange concerns
Visa Oceania welcomed the proposed surcharge ban, citing public sentiment and consumer confusion around existing rules.
“A recent study by Visa showed 95 per cent of Australians wanted more action taken on surcharging. To this end, the RBA’s recommendation to ban surcharging on designated networks is a great outcome,” said Alan Machet, Group Country Manager for Visa Oceania.
However, Machet warned that the proposed interchange fee cuts, up to 88 per cent in some cases, could have unintended consequences.
“This is a dramatic shift that would have ripple effects far beyond payments. It risks reducing local investment in fraud protection and innovation that safeguard consumers and strengthen Australia’s digital payments ecosystem,” he said.
A Visa-commissioned survey conducted by Lonergan Research found significant public confusion around surcharging rules.
Although 56 per cent of Australians claimed to understand the rules, only 25 per cent correctly identified when surcharges are allowed.
The research also showed that 85 per cent of respondents preferred surcharges to be built into the upfront price of goods and services, and 97 per cent agreed that fraud prevention and security were important to them.
Zepto: A2A payments poised to benefit from changes
Chris Jewell, president and co-founder of real-time payments platform Zepto, said the RBA’s proposal has “significant implications for merchants, payment providers, and consumers.”
“Simply put, removing surcharges will make it easier for both businesses and everyday Australians to understand exactly what they’re paying for when they make a purchase. Zepto welcomes reforms aimed at achieving this,” he said.
Jewell outlined three key considerations for the transition: maintaining healthy competition among payment service providers (PSPs), supporting innovation across both large and small players, and accelerating the role of account-to-account (A2A) payments like PayTo.
“While lower interchange caps will benefit most merchants, it’s important regulators strike a balance that supports both large PSPs and smaller fintechs. An ecosystem that nurtures innovation across all players is vital for a healthy payments landscape,” he said.
“The removal of surcharging only strengthens the case for account-to-account (A2A) payment alternatives like PayTo… With an expected implementation date of 1 July 2026, there’s a clear runway for businesses to review and adjust their payment strategies, and we look forward to supporting them with their transition.”
AACS slams proposal, warns small businesses will be hurt
The Australian Association of Convenience Stores (AACS) voiced strong opposition to the RBA’s recommendations, particularly the plan to eliminate surcharging.
“The RBA has entirely missed the mark here and they’re happy to just sit back and have small businesses absorb the cost of digital transactions on their bottom line, rather than going after the big banks that are allowed to legally run this rip off,” said Theo Foukkare, AACS CEO.
“Banning surcharging without significant reform to the current scheme fees being charged by the major banks, Eftpos, Visa and Mastercard, will simply drive up consumer prices, as businesses can’t afford to not pass them on.”
“Our members don’t profit from these surcharges – they’re set by the banks. It’s a cash cow for greedy financial institutions that the government allows to burden small businesses with this issue. Small retailers are simply stuck in the middle. The only winners as a result of the RBA’s proposed policy are the big banks and big businesses.”
Foukkare also criticised the RBA for not mandating ‘dynamic least-cost routing’, which would automatically direct payments through the cheapest network available, a measure he says would have had a far greater impact.
“Even after these latest proposed changes by the RBA, small businesses will be paying 600 per cent more in fees than big companies like Coles and Woolworths,” said Foukkare.
“For every $100 transaction, Coles & Woolworths will only pay a few cents however that same transaction will cost a small business anywhere between $1.00 to $1.50.”
Foukkare noted that the only part of the proposal AACS supports is the requirement for greater transparency in pricing.
The RBA has invited feedback on its proposals and draft standards by August 26, 2025, with plans to finalise reforms and publish an implementation timeline by the end of the year.