((Automated translation by Reuters using machine learning and generative AI, please refer to the following disclaimer: https://bit.ly/rtrsauto))
(Complete rework, added responses from banks and restaurants)
Australian consumers will no longer have to pay extra fees on card payments after the country’s central bank announced it would ban the widely frowned upon practice as inefficient and opaque.
Following a months-long public review process, the Reserve Bank of Australia (RBA) announced on Tuesday that it would, from October 1 this year, remove surcharges on cards from the designated eftpos networks, Mastercard MA.N and Visa VN.
The RBA estimated the change would save consumers A$1.6 billion a year, although some banks and businesses warned they would have to recoup the lost money in other ways.
“The increased prevalence of firms surcharge all cards at the same rate, the challenges of enforcing the current surcharge framework and consumers using less cash have reduced the effectiveness of the surcharge regime,” the RBA said in a statement.
The RBA also intends to cap interchange fees for credit cards charged by banks at 0.3% of the transaction value, up from the current 0.8%. The measure is expected to reduce costs for businesses by around A$900 million a year, but could also hit banks’ revenues.
American Express AXP.N has entered into a separate agreement with the RBA, but it will be part of a new review which will begin in mid-2026. This review will cover regulations relating to mobile wallets, tri-party card networks, buy now, pay later services and e-commerce platforms.
In an RBA survey of 3,000 Australian consumers, around three-quarters considered the extra charges unnecessary and said they should be stopped.
However, the Australian Banking Association has argued that consumers could now face higher card fees, higher interest rates and shorter interest-free periods.
“International experience shows that this reduction in interchange will not lower costs for businesses, but will simply shift more of the fees they pay into the pockets of multinational payments and technology companies,” Simon Birmingham, chief executive of the ABA, said in a statement.
Reacting to the announcement, the Australian Restaurant & Cafe Association said the changes would force businesses to increase menu prices to cover merchants’ costs.
