The Reserve Bank of Australia (RBA) has proposed scrapping card surcharges, a move that could save Australian consumers up to $1.2 billion annually.

Under the RBA’s proposal, merchants would no longer be able to add card surcharges at the checkout. Instead, all prices would need to be inclusive, regardless of payment method. To ease the impact on businesses, the reforms also include:

• Reducing interchange fees (the charges merchants pay to card networks like Visa and Mastercard)
• Capping fees for international card transactions
• Requiring clearer fee disclosures from payment service providers.

These changes aim to reduce the backend costs for merchants, limiting the need to raise prices as surcharges are phased out.

Impacts for small and large businesses

While some businesses would need to adjust, the majority of small businesses – around 90% – already don’t apply surcharges. These businesses often build card costs into their pricing and are expected to benefit from lower interchange fees and improved fee transparency, with net gains estimated at $185 million.

Large businesses, particularly those in e-commerce and tourism that deal with foreign cards, are set to benefit from new international fee caps.

The 10% of small and 12% of large merchants who currently apply surcharges would face more immediate adjustments. For them, the transition may involve system changes, pricing reviews, and staff training, though most of these will be one-off costs.

What about prices?

The Reserve Bank estimates the overall impact on consumer prices to be small – around 0.1 percentage points.

This modest estimate is based on several factors:

• Most businesses already include card costs in their prices
• Competitive pressure discourages unjustified price increases
• New transparency rules would allow merchants to shop around for better deals from payment service providers.

While some sectors such as hospitality and transport may need to reconsider how they price their services, broad price hikes across the economy appear unlikely.

Where the cost shifts

Card-issuing banks could lose up to $900 million annually in interchange revenue. To offset this, they may adjust credit card fees or reduce rewards, particularly for high-end cards.

Payment service providers will also need to invest in system upgrades and clearer reporting, with one-off compliance costs estimated at around $25 million.

Still some gaps in regulation

While the reforms are broad, they don’t currently cover emerging payment tools like mobile wallets (e.g. Apple Pay) and Buy Now, Pay Later (BNPL) services. These platforms often fall outside traditional regulations, despite their growing use and higher associated merchant fees. As these services continue to influence consumer behaviour, the RBA may need to bring them into the regulatory fold to ensure fairness and consistency across the payments system.

What’s next?

The RBA is seeking industry and public feedback until 26 August 2025, with a final decision expected by the end of the year. If adopted, the new rules will be rolled out gradually, giving businesses time to prepare.

The proposed changes represent a significant shift in Australia’s payment system. For consumers, it could mean more predictable prices and fewer checkout surprises. For businesses, the focus will shift to finding competitive service providers and adapting to a surcharge-free environment.