Surcharge fees on Australian card payments to be banned from October 1, following Reserve Bank decision

Australian consumers will no longer have to pay surcharges on tap-and-go card payments following a Reserve Bank ruling.

The RBA’s Payments Board System decision announced on Tuesday means surcharge fees will be illegal on debit, credit, EFTPOS, Mastercard and Visa payments.

For the past two decades, consumers have paid surcharge fees on top of what it costs to do the actual transaction.

But from October 1, 2026, Australia will ban surcharge fees like the European Union, with the Reserve Bank noting they were hard to avoid with cash now making up less than 13 per cent of all in-person transactions.

“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,” it said.

Prime Minister Anthony Albanese and Treasurer Jim Chalmers in October 2024 promised surcharging would be banned from January 1, 2026, pending an RBA review.

With the change coming into effect nine months later than promised, Dr Chalmers said Australian consumers would save $1.6 billion a year in surcharges while small businesses would save $910 million in wholesale costs.

“Australians hate paying these charges, let’s be blunt about it,” he told reporters in Canberra on Tuesday.

“These changes will help take some of the pressures off consumers and businesses and help with the cost of living.

“We’ve made it really clear for some time now that people shouldn’t be punished for using a credit or a debit card.”

Just 13 per cent of consumers are told about surcharges when they shop, the RBA said citing JWS Research.

The big banks had supported the RBA plan, announced last year, to scrap surcharge fees or what merchants charge customers on top of the actual cost of doing a transaction, which would bring Australia into line with the EU.

But they opposed to the Reserve Bank’s proposal to curb interchange fees, or what it actually costs the likes of Visa and Mastercard to process a transaction.

The RBA has also announced it will lower maximum interchange fees for debit and consumer credit card payments and cap interchange fees for foreign card payments.

“This should help to reduce card payment costs, especially for small businesses,” it said.

Dr Chalmers said capping interchange fees would make transactions simpler for consumers and boost competition among card providers.

“What these changes will do will give consumers more certainty and transparency about the total cost of goods and services when they pay by card and it will lower fees for businesses,” he said.

“We know the current rules are difficult to follow and so this will simplify the arrangements as well.”

The Commonwealth Bank and Westpac last year argued capping interchange fees would force consumers to pay more for everyday goods, give them less access to credit and cost them frequent-flyer-type rewards.

“No doubt, not every part of the economy will be happy about this,” Dr Chalmers said.

“There will be reactions about it. Often, when changes of this magnitude are proposed, there will be people who are supportive of it and people who oppose it - we expect that.”

Under the changes, EFTPOS, Mastercard, Visa and other card providers will also be required to publish the fees they charge to help businesses compare fees.

The changes are coming into effect without the need for Parliament to pass new legislation, given the RBA is in charge of Australia’s payments system.

The Australian Competition and Consumer Commission will join the RBA in monitoring the card payment changes.