RBA removes credit card surcharges: Here’s what this means for you
Australians are set to save $1.6 billion a year in card surcharges. But rewards and frequent flyer credit card fees might increase.
The Reserve Bank of Australia (RBA) has announced several changes to debit and credit card payments, including removing surcharges on eftpos, Visa and Mastercard networks.
Reforms to the system should make card payments cheaper and more transparent for Australian consumers.
The changes are:
- Removing card surcharges. This covers both debit and credit cards, and affects eftpos, Mastercard and Visa networks.
- Lowering interchange fees for Australian businesses. The RBA will also lower the caps on interchange fees that businesses pay when accepting card payments. This should lower costs for small businesses in particular and will have a flow-on effect for consumers.
- Increasing fee transparency for card networks and payment providers. The RBA also wants more transparency on card network fees. To this end it will require networks to publish quarterly data on fees.
The RBA estimates this will save Australians $1.6 billion each year in surcharges.
Card surcharges are gone from 1 October 2026. The interchange fee cap and transparency measures take effect from 1 April 2027.
The RBA's payment changes don't affect buy now pay later services, card networks like American Express, or mobile wallets. The RBA plans to examine those elements of the payment system from mid-2026.
Why is the RBA removing card surcharges?
Card surcharges and payment fees have been on the RBA's radar for quite a while. It's clear the RBA thinks consumers and businesses are paying too much for fees, and the whole system lacks transparency.
The RBA's website on the changes says:
"Surcharging is no longer achieving its intended purpose. Previously, surcharging encouraged consumers to use cheaper payment methods. However, it has become harder for consumers to avoid surcharges."
Many small businesses have card surcharges that don't conform to the rules, and it is hard for consumers to understand these fees and how to avoid them.
What does this mean for reward and frequent flyer credit cards?
The RBA believes that the rest of the debit and credit card market is paying higher surcharges to subsidise the rewards card market.
In the consultation paper the RBA says "credit interchange [fees] is being used to fund cardholder rewards programs by multiple issuers."
In other words, all consumers pay higher interchange fees partly to offset the costs of more expensive credit cards that come with points or other rewards.
"If issuers wish to attract customers by offering them frequent flyer or other rewards points, it would be more efficient for those issuers to bear the cost rather than those rewards programs being funded by merchants through higher interchange fees."
By removing surcharges, it seems likely that card providers will increase fees on rewards and frequent flyer credit cards. Either that or the banks and card providers simply cover the cost themselves.
This seems unlikely.
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