Australia to allow surcharge bans from October
- Sydney (31 March) Update: New quote from the Australian Retail Council
The Reserve Bank of Australia (RBA) will allow credit and debit card network operators to ban surcharges for transactions from 1 October, while lowering interchange fee caps to support businesses.
RBA’s new rules cap domestic interchange fees at 0.16% for debit cards and 0.3% for credit cards, down from 0.2% and 0.8% respectively, from 1 October, it said on 31 March. Interchange fees are inter-bank charges that are often passed on to businesses.
The bank will also recommend that the Australian Government ban surcharges if networks do not, it said. But card network operators are supportive of the RBA’s surcharge changes.
VISA, Mastercard, and Australian Payments Plus (APP) – which runs Australia’s Efpos network – all voiced support for the reforms in 2025, when the central bank consulted on them. APP also welcomed the RBA’s reforms today. Removing surcharges on card transactions will make payments simpler and more transparent, APP CEO Lynn Kraus said.
RBA’s reforms are expected to cut consumer surcharge and business transaction costs by A$1.6 billion and A$910 million per year, respectively, Australian Treasurer Jim Chalmers said.
But the central bank anticipates that the 16% of businesses currently using surcharges may still increase advertised prices to cover their costs, it said.
The Australian Retail Council has opposed the RBA’s reforms. While lower interchange fees are a positive step, the removal of surcharging strips businesses of a significant cost recovery mechanism, ARC CEO Chris Rodwell said.
Financial institutions could also pass on card costs to businesses and consumers through non-interchange fees, the Business Council of Australia warned in 2025.
Commonwealth Bank and ANZ both expressed support for the RBA’s surcharging changes but opposed its interchange fee changes in 2025. The central bank’s interchange reforms could result in a value shift away from Australian businesses and infrastructure providers to offshore entities, Commonwealth Bank said at the time.
By Avinash Govind