Card payment surcharges should be eliminated for debit and credit payments, the Reserve Bank has said, saving customers an estimated $1.2bn each year.
Surcharges on Eftpos, Mastercard and Visa card payments would be eliminated from July 2026, while fees for businesses using card payments systems could also be lowered, under a new RBA proposal.
The bank’s governor, Michele Bullock, said the declining use of cash had made it harder for Australians to avoid surcharges.
“We think the time has come to address some of these high costs and inefficiencies in the system,” she said.
But the Australian Restaurant and Cafe Association’s chief executive, Wes Lambert, said the proposal would drive up menu prices across the hospitality industry.
“Who the hell does the RBA think will bear the cost of this ridiculous decision? First, merchants, and then customers,” Lambert said.
Card charges have become increasingly unpopular among consumers in recent years, given people now regularly pay fees regardless of whether they are using a debit or credit card.
Only one in 10 businesses impose surcharges but the RBA found cafes, restaurants and pubs are some of the most prolific users.
Eradicating surcharges would go further than the Albanese government’s pre-election cost-of-living proposals in late 2024 to ban surcharges on debit cards only and strengthen investigations of businesses charging excessive card fees.
“We’re prepared to ban debit card surcharges, subject to … safeguards to ensure small businesses and consumers can both benefit from lower costs,” the treasurer, Jim Chalmers, said in October.
Payment service providers such as Square, Stripe and major banks had indicated it would be faster and less expensive to remove surcharges on both card types than just debit, according to the RBA consultation paper released on Tuesday.
Square welcomed the proposed across-the-board elimination, which its Australian executive director, Marco Lamantia, described as the “most practical and balanced outcome”.
“It avoids entrenching the power of the big banks, helps level the playing field for all providers, and ensures competition and choice for businesses,” Lamantia said.
Labor had committed to a January 2026 ban on debit fees but Tuesday’s proposal would see reforms finalised by December 2025 and permit payment services to prohibit credit and debit surcharging by July 2026.
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If payment providers continued to let businesses surcharge in the face of the reform, new government legislation would be required to ban the fees outright, the RBA said.
Payment networks are forced to let businesses charge fees to cover the cost of accepting different payment methods, which can be as high as 2% per transaction but average 0.4% for debit and 0.8% for credit, according to the paper.
Some small businesses were opposed to a ban as it would have forced them to make up the lost surcharge revenue by marking up the cost of goods and services.
The RBA paper said nine in 10 businesses would be better off under a reform package which would also force providers to cut the interchange fees they charge businesses to take card payments, with the central bank proposing to lower the cap on those fees.
Small merchants who process less than $10m in card transactions each year would save about $185m annually, according to the modelling. Larger businesses which enjoy lower fees and the payments industry would collectively be more than $1bn worse off annually.
Providers would also be required to report the fees they charge businesses to use their platforms, which the RBA’s consultation paper indicated would improve transparency and help businesses find cheaper card processing plans.