RBA Proposes Ban on Card Payment Surcharges

0

This reform effort stems from findings that the surcharge model is no longer steering consumers toward more cost-efficient payment methods, as it initially intended. With digital transactions increasingly overshadowing cash payments, surcharges have become harder to avoid, upping the burden on consumers. Moreover, the RBA points out that the universal application of surcharge rates across both debit and credit card payments compounds this issue, with small businesses often facing the most significant challenges given their higher costs.

The central bank's call for action is not without basis in the current payment landscape; Australian retailers reportedly fork out over $6.4 billion annually in card processing fees. By aligning Australia's payment regulations more closely with global practices and incorporating credit cards into the fee-ban—beyond the federal government's initial focus on debit transactions—the RBA aims to simplify operations and foster competition.

RBA Governor Michele Bullock emphasized the pressing need to adapt the payment system, which she claims would streamline the process and potentially save consumers billions annually. However, the RBA acknowledges the potential side effects of its proposals; businesses might pass the expense to customers through raised prices, potentially nudging inflation by 0.1%.

The ban on surcharges could profoundly affect consumers and small businesses alike. By removing additional fees, the RBA seeks to enhance transparency and make electronic transactions more affordable for Australians, thus increasing market competition. This policy shift could benefit approximately 90% of Australian businesses, particularly aiding small enterprises struggling with the current fee structures.

As the RBA opens public consultations until August 26, feedback will inform the next steps, with a timeline for implementation anticipated by the end of the year. Supposing these measures move forward, the envisaged regulatory changes could come into force by July 1 next year. This period could also see banks and card networks compelled to disclose their fee structures, empowering businesses to seek more competitive options.

The RBA also aims to cut interchange fees—the charges a merchant’s bank pays to a cardholder’s bank, set by networks like Visa and Mastercard. This reduction could notably alleviate costs for smaller businesses. The central bank intends to scrap its no-surcharge restrictions, banking on card networks to self-regulate by eliminating surcharge fees altogether. If required, these changes might prompt legislative action to ensure comprehensive implementation.

Published:Tuesday, 15th Jul 2025
Source: Paige Estritori

Share this news item:

Finance News

Clear

RBA Proposes Ban on Card Payment Surcharges 15 Jul 2025: Paige Estritori The Reserve Bank of Australia (RBA) has proposed eliminating surcharges on debit and credit card transactions, a move that impacts all major card providers such as Mastercard, Visa, and eftpos. As revealed in a newly released consultation paper, the RBA cites the $1.2 billion annual cost to consumers, highlighting inefficiencies and advocating for a unified approach to card payments. - read more

Future2 Foundation Seeks Nominations for Financial Wellbeing Grants 15 Jul 2025: Paige Estritori The Future2 Foundation has opened nominations for its annual Make the Difference Grants, providing financial support to initiatives that enhance financial wellbeing across Australia. Financial services professionals have until August 21 to nominate local projects aimed at improving financial literacy, assisting those in poverty, supporting disadvantaged women, and benefiting regional and remote communities. - read more

Increasing Number of Qualified Financial Advisers Opt Out of Practice 11 Jul 2025: Paige Estritori Recent analysis from WealthData indicates a growing trend among financial advisers in Australia, where a significant portion of those who have successfully passed the financial adviser exam are opting not to practice. As of now, 5,096 individuals, representing 33.31% of active advisers, have chosen not to proceed into practice after passing the exam—up from 28.36% a year prior. - read more

Melbourne's Housing Market: A Prime Opportunity For Buyers 11 Jul 2025: Paige Estritori The Reserve Bank of Australia (RBA) recently surprised many by maintaining the interest rate at 3.85%, against expectations of a cut. This decision is seen as a measure to continue moderating inflation, but it simultaneously delays potential spikes in the housing market, providing a favorable window for prospective homebuyers. In particular, Melbourne's current market presents significant value, offering a promising opportunity for those looking to enter the property market. - read more

Improving EOFY Planning: The Call for ATO Portal Access for Advisers 09 Jul 2025: Paige Estritori In a recent discussion, James O'Reilly, Director and Financial Planner at Northeast Wealth, underscored the benefits that could come from granting financial advisers access to the Australian Taxation Office (ATO) portal. Speaking on The ifa Show, O'Reilly proposed that this access would significantly simplify the services financial advisers provide to clients, particularly at tax time and the end of the financial year (EOFY). - read more

RBA Holds Rates Steady, Shocking Markets and Shifting Economic Expectations 09 Jul 2025: Paige Estritori The Reserve Bank of Australia (RBA) has decided to keep the official cash rate steady at 3.85%, taking many by surprise after expectations of a 25-basis-point cut had built up in financial circles. This unexpected move comes amid recent data indicating easing inflation and weaker than anticipated economic growth, conflicting with prior predictions of a cut. - read more

RBA to Continue Interest Rate Cuts Amid High Unemployment 08 Jul 2025: Paige Estritori The Reserve Bank of Australia (RBA) is anticipated to maintain its trajectory of incremental interest rate reductions, according to insights from leading financial analysts at ANZ. Recent data from the ANZ-Indeed Australian Job Ads series revealed a rise from 114.8 in May to 116.9 in June, suggesting a potential rebound in job advertisements after previous declines. Despite a stable unemployment rate and hours-based underutilisation rate since mid-2024, the Australian labour market remains strained. - read more