The Reserve Bank of Australia has announced an official end to surcharges on debit and credit cards, slashing those pesky fees after much deliberation with banks and businesses.
The surcharge ban has been in the works for some time, with Reserve Bank governor Michele Bullock saying the move will “make card payments simpler for consumers and help businesses get better value from their payment services”.
As it stands, Australian businesses pay a percentage of each transaction in fees each time they accept a card payment, and offset those fees by passing them directly to customers — but all that is set to change later this year
So what does it all mean? And how does it impact you? Read on for all the rundown on the RBA’s surcharge ban.
What is the RBA surcharge ban?
Aimed at preventing excess fees, the RBA ban will effectively remove the surcharges associated with using your credit or debit card for purchases. The ban prevents businesses from charging you that pesky card fee at the checkout, and in this case will apply to card networks including eftpos, Mastercard and Visa.
Surcharge fees, which generally range from 0.5 per cent to 1.5 per cent of the transaction, are typically in place to allow businesses to recover from processing digital payments, which comes with a lot more financial baggage than cash payments.
Basically, the surcharge ban will get rid of hidden fees and increase price transparency around your purchases, ensuring what you pay is exactly what’s listed on the tag, with no sneaky extra charges when you tap or swipe.
When will surcharge fees end?
The RBA confirmed that the surcharge fee ban will take effect from October of this year. From that point on, businesses will no longer add a card fee onto whatever you’re purchasing.
The upcoming ban finalises months of consultations after the RBA first floated the idea in mid-2025. The central bank hosted discussions with key stakeholders before initiating the plan. It copped fierce opposition from small business owners, whose smaller profit margins means they rely on card surcharges to limit payment processing costs.
Despite the debate (more on that later), the RBA is moving ahead with the surcharge fee ban beginning in about six months time. It’s part of the RBA’s broader surcharge reform package, so more complex changes — including foreign interchange caps, and requiring card networks to publish their fees — are slated for April of next year.
Does the surcharge fee ban mean you’ll pay less?
In theory, yes! The ban will remove those sneaky card surcharges at the checkout, so you will basically be paying anywhere between 0.5 per cent to 1.5 per cent less for any given purchase.
All up, the RBA reckons this will equate to consumers Australia-wide saving $1.6 billion a year in fees, which is around $60 for an individual card-user per year. It’s not nothing!
The broader reforms will also (in theory) save businesses money, because part of the RBA’s plan involves lowering interchange fees, which are basically the wholesale costs that banks charge businesses to process digital payments.
By lowering these costs, from 0.8 to 0.3 per cent, businesses will effectively pay less for all the rigmarole around digital payments, with the RBA estimating it’ll shake out to $910 million in annual saving for Australian businesses.
There are flow-on effects of the ban that are also good for business — including the removal of administrative headaches around managing and tracking surcharges and increasing sales to customers no longer dissuaded by hidden costs — but there’s also a catch.
Surcharge fees will disappear, but the costs of processing digital payments remains. That means businesses, particularly smaller ones, no longer have the safety net of absorbing those costs through the fees, which some say might mean the fees will simply be baked into the cost of a purchase.
Basically, instead of a surcharge added to your receipt for a sweater, the sweater itself could cost a bit more to offset processing costs through the item itself. This concern of increased prices was raised during the RBA’s consultation last year, but the RBA said its lowered interchange fees should minimise how much businesses are paying to process payments.
“Of the 16 per cent of Australian businesses that surcharge, it will be up to them to choose whether to include payment costs in their sticker prices when surcharging ends, just as they do with other costs,” the RBA explained in its statement.
Why the surcharge fee ban?
It’s all in an effort to remove a surcharge regime that the RBA says is no longer working for businesses and consumers. Nixing high fees, eliminating confusion at the checkout and simplifying payments have all been touted as motives behind the move.
Federal Treasurer Jim Chalmers also said the ban will ease cost-of-living pressures. “People shouldn’t be punished for using a credit or debit card,” Chalmers said. “Ending credit and debit card surcharges and reducing interchange fees will ensure consumers aren’t hit with surprise costs and save consumers and businesses money.”
So, what next?
The RBA said it will consult with stakeholders concerned about the surcharge ban, but in the meantime, it’s full steam ahead with removing them from your purchases this October. We’ll have to wait and see how it all shakes out when it officially comes into effect — but who knows? Maybe we’ll all be on a bartering or crypto system by then. Or revert back to cash. Remember that?
Lead images: Getty and Confessions of a Shopaholic
The post The Reserve Bank Just Banned Credit & Debit Card Surcharge Fees, Here’s How It’ll Impact You appeared first on PEDESTRIAN.TV .
