Surcharge fees scrapped in $1.6b consumer victory
Surcharges for debit and credit card transactions will be eliminated despite strong opposition from businesses.
The Central Bank’s review into commercial card payment costs has recommended fees be scrapped on EFTPOS, Mastercard and Visa transactions because they do not help consumers make more efficient payment choices and cost shoppers around $1.6 billion a year.
Business groups reacted negatively to the proposal, saying it would only increase prices and reduce transparency.
But on Tuesday the central bank said extensive public consultation had not deterred authorities from making the move.
“It is estimated that consumers will pay $1.6 billion of the total $1.8 billion in card payment surcharges charged by certain card networks each year,” the RBA said.
“The surcharge framework introduced more than two decades ago is no longer achieving its goal of empowering consumers to make more effective payment choices.
“The increasing prevalence of businesses paying the same surcharge on all cards, difficulties in implementing the existing surcharge framework, and consumers using less cash have reduced the effectiveness of the surcharge regime.”
The Central Bank added that consumers would prefer to have payment costs included in advertised prices.
The central bank will also lower the cap on interchange fees paid by Australian businesses, saving consumers around $1.2 billion.
The fee is paid by the business to the customer’s card issuer when a transaction occurs.
Finance Minister Jim Chalmers has previously said the government was ready to ban fees on debt transactions, before the central bank recommended the measure be extended to credit.
He stated that the Central Bank can make all the marked changes within the framework of existing powers and there will be no need to enact a law.
It is anticipated that lowering the cap on business interchange fees would benefit small businesses the most, as they typically pay higher fees.
When publishing the recommendations in July 2025, the central bank found that small businesses would be $185 million better off from the changes, with 90 percent of them benefiting.
Better transparency, achieved by forcing card networks and major acquirers to publish the fees they charge, has also been proposed to encourage competition between networks.
The removal of the surcharge will begin on October 1.
