The Reserve Bank of Australia released a landmark proposal to remove consumer surcharges on EFTPOS, Mastercard and Visa transactions and to impose tighter caps on interchange fees paid by merchants. According to the RBA’s analysis, these measures would save both businesses and consumers a combined $1.2 billion every year.
In its Payments System Board discussion paper, the RBA noted that Australia’s surcharging rules—designed in the 1990s to encourage use of low‑cost payment methods—have become “outdated” as cash transactions decline.
Under the current regime, merchants may impose surcharges up to a network-set cap; the RBA’s proposal would instead allow card schemes to expressly ban surcharges, eliminating the per-transaction fees that can range from 10 cents for EFTPOS to over 1 per cent for credit cards.
“Our goal is a more competitive, efficient and safe payments system for everyone,” said RBA governor Michelle Bullock.
“Removing card surcharges will deliver direct cost relief to millions of Australians while simplifying payment choices at the checkout.”
Crucially, the RBA intends to implement these changes under its existing regulatory powers—meaning no new legislation will be required—although the central bank observed that the federal government could still intervene to prohibit surcharges outright if necessary
Merchant groups have long warned that a surcharge ban, if unaccompanied by lower interchange fees, could force small businesses to absorb higher costs or raise prices. To address these concerns, the RBA has simultaneously proposed reducing the maximum interchange fees that payment service providers (including major banks, Square, Tyro and others) may charge merchants.
- Domestic interchange caps: Cuts to existing caps would save Australian merchants $1.2 billion per year. Small businesses—who typically pay interchange fees closer to the current caps—stand to benefit the most.
- Foreign card caps: A new cap on interchange fees for international cards will reduce costs for businesses that accept overseas visitors’ payments.
“The proposed reductions to interchange caps would benefit small businesses the most, as they tend to pay fees closer to the existing caps,” the RBA said. Larger merchants already negotiate fees well below the caps.
In addition to price controls, the RBA wants to shine a light on wholesale payment fees. Card networks and payment providers would be required to publish their fee schedules, enabling merchants to compare providers and drive competition.
Industry submissions to the review highlighted the “increasing complexity” of payment fees, prompting the RBA to call for providers to simplify their pricing structures in consultation with merchants.
The RBA’s proposals will now undergo a six‑week public consultation period. After considering feedback, the board plans to release a final report by the end of 2025, with reforms scheduled to take effect in July 2026.
Late last year, the federal government floated banning surcharges on debit cards from January 2026, contingent on the RBA review. The central bank’s view—backed by industry respondents—is that removing surcharges across all payment cards (including the 8 million combination debit/credit cards in circulation) is simpler and avoids consumer confusion.
What won’t change, at least for now
American Express, which operates under a different regulatory framework, falls outside the RBA’s remit and would not be covered by these reforms. However, the RBA noted it could still encourage or require surcharge bans on that network should surcharges persist.
Bottom line: If adopted, the RBA’s dual approach—eliminating point-of-sale card surcharges while capping the fees merchants pay behind the scenes—promises to reduce costs, streamline fees, and boost competition in Australia’s payments landscape. After more than a year of rising living expenses, the timing could not be more critical for both consumers and small businesses.
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