RBA bans card surcharges and cuts fees in major overhaul

The Reserve Bank of Australia will ban card surcharging on a wide range of payments and lower interchange fee caps on major card schemes.

From October, the reforms will apply to debit, prepaid and credit cards on the designated eftpos, Mastercard and Visa networks as part of a broader overhaul of card payment regulation.

The decision removes merchants' ability to add surcharges to those card transactions, shifting attention to how costs are shared between banks, payment providers and businesses at a time of pressure on margins and consumer spending.

Industry groups and fintech executives said the changes will reset the relationship between merchants, consumers and card providers, but warned the new rules could redistribute costs in ways that are not yet clear.

Impact on businesses

GoCardless ANZ general manager Ian Boyd said the reforms mark a structural shift for retailers and service providers that rely on card payments as their main channel. He pointed to the benefit of clearer pricing at checkout, but also the potential strain on smaller firms' finances.

"This decision creates a fairer system for Australian businesses, and the upside is transparency. The price customers see will be the price they pay. That means no more surprises at checkout.

The real question now is who absorbs the cost, because it doesn't just disappear. SMBs are already in a cashflow crisis, and late payments alone cost them an average of $1,328 per month. That means businesses are left with the unenviable dilemma of either moving that transaction burden from the checkout to the price tag, or worsening their own cashflow crisis, potentially pushing them towards closure.

Banks have also warned they'll cut rewards programs if interchange is reduced. On the surface, that seems like a partial admission that the current model depends on extracting value from merchants to fund cardholder perks.

This should accelerate the case for modernising Australia's payment infrastructure. Bank payments, real-time account-to-account transfers, and other alternatives already exist. What's missing is system-wide support to bring Australian payments in line with global best practice," Boyd said.

The RBA's move to lower the interchange cap is central to those concerns. Interchange fees flow from merchants' banks to card issuers and are a key source of revenue supporting rewards programs and other cardholder benefits.

Banks and card issuers have signalled that lower interchange income could lead to cuts in loyalty schemes. That raises questions about how much of the cost of the card system will shift back to consumers and merchants through other channels, such as higher account fees or retail prices.

Fintech sector response

FinTech Australia backed the consumer benefits of the RBA's decision while flagging competition risks, especially for smaller card issuers. The industry body also pointed to unresolved concerns about fee transparency and the structure of scheme fees.

"This is a win for consumers, who will benefit from clearer, more transparent pricing at the checkout during a cost-of-living crisis," said FinTech Australia chief executive Rehan D'Almeida.

It also warned that some parts of the reform package may weigh more heavily on smaller issuers.

"We remain concerned that the RBA has not adopted a small issuer exemption, which risks impacting competition and innovation across the payments ecosystem.

"However, we are pleased to see that commercial credit card interchange caps are remaining unchanged, which will provide some support for innovative business card providers.

"We also welcome the new interchange fee cap on foreign cards of 1%, which addresses a key cost pressure for Australian merchants," D'Almeida said.

Transparency and fees

The reforms also put a spotlight on the fees that acquirers and international card schemes charge across the payments stack. FinTech Australia welcomed the RBA's focus on transparency, but urged regulators and industry to avoid unintended impacts on competition.

"FinTech Australia acknowledges that improving transparency in acquirer fees is important, but we caution that this must be implemented carefully to ensure merchants can make like-for-like comparisons and that competition is not inadvertently distorted," D'Almeida said.

The industry group raised similar concerns about scheme fees, which merchants and acquirers often struggle to predict on a per-transaction basis.

"We welcome the RBA's focus on improving transparency in scheme fees, but remain cautious about how these expectations will be implemented in practice.

"Currently acquirers operate within an opaque system involving a large number of scheme fees, often without clear visibility over the cost of individual transactions ahead of time.

"FinTech Australia will continue to engage closely with the RBA and industry to ensure these reforms deliver genuine improvements in competition, transparency and outcomes for consumers and businesses," D'Almeida said.

Boyd said the combination of lower interchange and a ban on surcharging strengthens the case for alternatives such as direct account-to-account payments and real-time transfers. He said these options could help reduce merchants' costs and speed up access to funds.

Payment providers and industry groups now face a period of adjustment as they rework pricing models, product strategies and technology roadmaps. Merchants will be watching closely to see whether lower interchange and greater transparency translate into lower costs, or whether the burden resurfaces elsewhere in the payment chain.