Canberra: Debit and credit card surcharges in Australia will be abolished by October, following major reforms announced by the Reserve Bank of Australia (RBA), in a move aimed at easing cost-of-living pressures and improving pricing transparency.
Under the new rules, businesses will no longer be allowed to impose additional fees on payments made through major card networks such as Mastercard, Visa, and EFTPOS. The decision is expected to impact around 16 percent of businesses that currently apply surcharges to recover transaction costs.
The RBA estimates that consumers currently pay approximately $1.6 billion annually in such fees. The reforms will also include a reduction in the cap on interchange fees charged by banks to businesses, saving businesses an estimated $910 million each year.
Australia’s Treasurer Jim Chalmers said the changes would directly benefit households without requiring legislative action. Jim Chalmers noted that consumers have long been frustrated by hidden charges added at checkout.
Despite the move, the cost of payment systems will not disappear entirely. Businesses will still incur transaction fees from providers, which could lead to a modest one-off increase in retail prices, estimated by the RBA at around 0.1 percent.
Industry groups have raised concerns over the impact. The Australian Hotels Association criticised the decision, arguing it would not necessarily lower everyday costs for consumers. Chief Executive Stephen Ferguson questioned the effectiveness of the reform in reducing prices for items such as coffee or beer.
Consumer sentiment, however, appears to support the changes. Surveys conducted for the RBA found that most Australians prefer upfront pricing rather than being surprised by additional fees at the point of payment. Around three-quarters of respondents said surcharges were unnecessary and should be eliminated.
While the reforms are expected to benefit consumers, businesses, and payment networks, banks may face revenue losses from reduced fee income. Some financial institutions have warned they may respond by increasing credit card fees, raising interest rates, or scaling back rewards programmes.
The RBA acknowledged that such outcomes could occur, noting that debit card surcharges had effectively been subsidising credit card rewards systems. Meanwhile, smaller payment providers like Square and Tyro have welcomed the reforms, stating that improved transparency will help businesses make more informed choices when selecting service providers.
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