By Karl Hoerr -
Australians currently fork out $1.2 billion in card surcharges every year, many without even knowing it. The Reserve Bank of Australia says removing surcharges for Eftpos, Visa, and Mastercard users, would create a simpler, more transparent card payments system, with increased competition. But some voices are pushing back, warning there could be unintended consequences.
The RBA’s announcement is part of a consultation paper from its Review of Merchant Card Payment Costs and Surcharging. The key measures announced are the removal of surcharges, lowering the cap on interchange fees paid by businesses and requiring card networks and large acquirers (who provide card acceptance services) to publish details of their fees.
According to the RBA, avoiding surcharges has become more difficult, with the reduction in the use of cash. Debit and credit card users are facing similar surcharge rates and it’s been difficult to enforce the rules.
“The (current) framework was intended to promote the efficiency of the payments system by encouraging consumers to use lower-cost payment methods at a time of high growth in the higher-cost credit card market, and to increase the competitive pressure on card networks,” says the RBA’s consultation paper.
As cash use has declined, cash payments may now have become more expensive for merchants than those by card and the framework has become less effective. Many small businesses are on plans with a single surcharge rate for all card types, even though different cards attract a range of underlying costs.
The RBA says the removal of surcharging would give businesses a reason to shop around for their payment provider. “Merchants would be incentivised to seek lower-cost payment providers or plans, particularly if they could no longer bundle additional services into a payment surcharge and pass on the cost to consumers.”
While welcoming some of the measures, the Council of Small Business Organisations Australia (COSBOA) is resisting one of the key changes. “Removing surcharges doesn’t remove all the cost, it simply hides it,” says COSBOA Chair Matthew Addison. “For small businesses already managing tight margins, this means those costs would have to be absorbed into base prices, making it harder for businesses to be transparent and for consumers to make informed choices.”
COSBOA says it supports the plan to lower interchange fees and improve transparency. But the group maintains that the right to surcharge is essential to the viability of small businesses. “A blanket ban ignores the real issue: high and complex payment costs driven by opaque pricing and a lack of competition,” says Addison.
The RBA has invited feedback on the plan and will release its conclusions by the end of the year. The changes are then expected to take effect from July 2026.
