Australians could soon see the end of those annoying card surcharges added at the checkout, with the Reserve Bank of Australia (RBA) proposing a sweeping ban on extra fees for EFTPOS, Mastercard, and Visa payments.
The move comes as part of the RBA’s latest review of merchant card payment costs and surcharging, following months of consultation with businesses, consumer groups, banks, and payment providers. The RBA’s Payments System Board says the current surcharging framework, first introduced over two decades ago, no longer serves its intended purpose and is due for an overhaul.
What are card surcharges, and why do businesses use them?
Card surcharges are extra fees tacked on by businesses when customers pay by card instead of cash. Originally, surcharging was meant to encourage consumers to use cheaper payment methods and help businesses cover the costs of accepting card payments. At the time, card networks like Mastercard and Visa had “no-surcharge” rules, but these were removed to allow businesses to recover their costs.
Over time, the payments landscape has shifted. Fewer Australians use cash — just 13 per cent of transactions in 2022 — while more businesses have moved to single-rate plans, charging the same surcharge on all card types. This makes it difficult for consumers to avoid the fees, and as the RBA notes, the costs of handling cash for businesses have risen, sometimes making cash more expensive than cards.
The cost of surcharges to Australians
According to the RBA, Australians are paying around $1.2 billion every year in card surcharges. That’s money added to the cost of everything from takeaway coffees to utility bills. The economic impact is felt by nearly every card-using Australian, with the average adult paying around $60.00 in surcharges annually.
What is the RBA proposing?
The RBA’s headline proposal is to lift its ban on “no-surcharge” rules for designated card networks, effectively paving the way for a full ban on surcharging across EFTPOS, Mastercard, and Visa payments. This would likely see card networks reintroduce rules that prevent businesses from passing on surcharges to customers. If needed, the RBA could also recommend that the federal government legislate to ban the practice entirely.
At the same time, the RBA plans to lower the cap on interchange fees — these are the fees paid by businesses to banks every time a card is used — saving Australian merchants about $1.2 billion annually. The changes are expected to benefit around 90 per cent of small businesses, who typically pay the highest fees under the current system.
To improve transparency, the RBA would also require card networks and large payment providers to publish their wholesale fees, making it easier for businesses to compare costs and shop around for better deals.
