Businesses would be banned from applying surcharges to all credit and debit card transactions from July next year under a Reserve Bank proposal estimated to save Australian consumers $1.2bn each year.
On Tuesday, the RBA released its review into card surcharges, proposing a suite of reforms aimed at lowering fees for both consumers and merchants, with a lever to also apply pressure on credit card companies and financial players higher up the chain by forcing them to publish details of the fees they charge.
The proposal could save Australian consumers upwards of $1 billion a year.Credit: Getty Images/iStockphoto
The RBA’s proposal to stop fees on credit and debit card transactions, which will now be subject to an industry consultation window, goes further than reforms the Albanese government had previously discussed banning surcharges only on debit cards.
For years, businesses have been able to apply surcharges to credit and debit card payments, but the amount is not supposed to exceed what it costs a business to process the payment.
While average surcharges have been about 0.7 per cent of the transaction, they have ranged from 0.1 per cent to 10 per cent.
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In its preliminary view, the RBA has proposed banning all surcharges for consumers using Eftpos, Visa and Mastercard – applying its rules to American Express would rely on separate reforms to the payments act currently on the horizon – noting “surcharging is no longer achieving its intended purpose of steering consumers to make more efficient payment choices”.
“Avoiding surcharges has become harder as cash usage has declined, businesses are increasingly charging the same surcharge rate across debit and credit card and there are significant challenges,” the RBA said.
The RBA arrived at its decision to include credit cards in the surcharge ban after feedback from its initial issues paper released in October, where payment service providers estimated the cost of banning surcharges for just debit cards would be more costly, time-consuming and confusing to implement than a uniform ban.
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