The Reserve Bank of Australia (RBA) is moving to eliminate debit and credit card surcharges, a change that could save Australians around $1.2 billion each year, approximately $60 per adult who uses a card.
Under the proposal, major card networks like EFTPOS, Visa, and Mastercard would be permitted to ban surcharges, a practice currently restricted by the RBA. The central bank found that the existing system no longer serves its original purpose of encouraging more efficient payment choices, especially as cash use continues to decline.
These reforms would not require new legislation. Instead, they fall under the RBA’s current regulatory powers. However, the federal government could choose to ban surcharges entirely in the future if the industry does not adapt.
As more consumers rely on tap and go payments, surcharge fees are being applied more often—even when paying with debit cards that draw directly from personal accounts. The RBA’s aim is to modernise the system in line with current payment behaviours and eliminate unnecessary costs for Australians.
The federal government is reviewing the RBA’s findings and will consider them alongside feedback from the broader payments industry. While the proposed changes are designed to benefit consumers, they have sparked concern among small business owners, who often rely on surcharges to recover the fees they are charged by payment providers.
Many operators in sectors like hospitality and retail say a blanket surcharge ban could force them to absorb extra costs or raise prices, especially in businesses with low profit margins. The RBA acknowledged these concerns but said other measures could help offset the impact.
To reduce pressure on merchants, the RBA has also proposed lowering the cap on interchange fees—the charges paid by businesses to the card-issuing bank each time a card transaction is made. These fees are typically collected by payment service providers such as banks, Square, or Tyro and then passed on to merchants. The proposed cap reduction would result in annual savings of around $1.2 billion for businesses, with approximately 90 percent expected to be better off.
Small businesses stand to benefit the most from this change, as they usually pay fees close to the current cap and lack the leverage to negotiate better rates. In contrast, larger retailers already use their scale to secure lower costs.
To further support merchants, the RBA plans to place a cap on foreign card interchange fees. This will reduce expenses for businesses that accept international cards, including those in tourism and hospitality.
Industry groups representing small and medium enterprises have argued that payment providers and banks should take greater responsibility for fees, rather than passing them on to businesses and consumers. They say debit cards were introduced as a cash alternative and should not attract additional charges.
While some payment companies have pointed to surcharge bans in the United Kingdom and Europe as examples of successful reform, they have not guaranteed lower fees for merchants in Australia if the new rules come into effect. Instead, they say they will continue to assess their pricing to ensure it remains competitive and compliant.
In an effort to increase transparency and encourage competition, the RBA also wants card networks and payment service providers to publish their wholesale fees. The review found that many businesses struggle to understand the full cost of accepting card payments due to a lack of clarity around fee structures. Payment providers will be expected to work with industry stakeholders to simplify these costs and make them easier for businesses to compare.
The proposed reforms come at a time when the cost of doing business is rising across multiple fronts, including wages, raw materials, and rent. Business owners who currently use surcharges to recoup card processing costs say they may be left with little choice but to increase prices across the board if a ban is enforced.
A six-week consultation period will follow the release of the RBA’s draft recommendations, with a final report expected by the end of the year. American Express, due to its different operating model, is not covered by the proposed changes, although it may choose to adopt similar policies voluntarily.
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