The Reserve Bank of Australia (RBA) has announced a major reform of the payments system: starting October 1, merchants will be prohibited from charging surcharges on credit card, debit card, and prepaid card transactions, ending a system that has been in place for over two decades.
The RBA stated that, despite strong opposition from some industry groups during consultations, the current surcharge mechanism has lost its original purpose. With the widespread adoption of electronic payments, consumers are often unable to avoid using credit or debit cards, and surcharges no longer effectively guide payment choices, instead adding unnecessary costs. The new measures are expected to save consumers approximately AUD 1.6 billion per year, while businesses could also reduce related costs by around AUD 200 million annually.
In addition, the RBA will lower the cap on interchange fees paid by merchants, particularly benefiting small and medium-sized enterprises, potentially saving about AUD 910 million in transaction costs annually. The authorities also require payment systems to increase transparency in their charges, with Visa, Mastercard, and eftpos expected to disclose relevant fee structures to promote market competition.
However, the new rules will not apply to American Express, whose business model differs from other card networks. RBA Governor Michele Bullock stated that the reform will simplify payment processes and make it easier for businesses to assess their own costs.
Some analysts have noted that merchants will now bear card transaction costs themselves and may pass these costs onto the prices of goods and services, effectively causing consumers to shoulder the expenses in another form. With the implementation of the new system, market pricing trends and changes in consumer behavior are expected to attract close attention.