The Reserve Bank of Australia (RBA) recently published a review of its payment policy, recommending a complete ban on merchants charging surcharges on debit and credit card payments. The reforms are expected to take effect as early as July 2026. If implemented, the proposal is expected to impact a wide range of merchants, from supermarkets and restaurants to online retailers, and consumers are also expected to benefit directly.
Current system: There is no uniform standard for surcharge rates
Under current Australian regulations, merchants can charge a "surcharge" to customers who use credit and debit cards to subsidize the processing fees charged by payment service providers (such as Eftpos, Visa, and Mastercard). According to RBA data:
- Debit card payment surcharges typically range from:0.5% to 1%
- Credit card payment surcharges usually range from:1% to 2%
- High-end or business card surcharges can be as high as:3% or above
In recent years, many restaurants, coffee shops and even supermarkets have passed on the relevant costs to customers through "card payment surcharges".
Reform proposal: Completely abolish card payment surcharges
In its policy review published last week, the RBA pointed out that as payment technology matures, related costs have been significantly reduced, and there is no need to continue allowing merchants to charge surcharges. According to the bank's estimates, if the reform is implemented, Australian consumers may save more thanA$2 billion.
The main contents of the reform include:
- Prohibit merchants fromEftpos, Visa, MastercardTransaction surcharge
- CoveredDebit and credit cardsTwo payment methods
- FastestJuly 2026Full implementation
But it is worth noting that American Express and other high-risk payment methods may not be included in the recommended scope.
Impact after the reform: Merchants may adjust their prices
Market participants pointed out that if the surcharge ban is officially implemented, merchants may instead incorporate transaction fees into product pricing. The RBA believes that this move will help increase market transparency and prevent consumers from having to pay extra for payment methods.
Take a coffee shop as an example:
| project | Before the reform | After reform (expected) |
|---|---|---|
| Coffee Pricing | A$5.00 + 1.5% surcharge | Direct price A$5.10 |
| Display amount when paying | A$5.08 (including surcharge) | A$5.10 (cost included) |
Some supermarket chains such as Woolworths and Coles may also adjust their checkout processes, but the specific arrangements are yet to be announced.
Large merchants support small merchants and worry about cost transfer
The Australian Retailers Association initially expressed support for the RBA's reforms, believing they would help simplify the customer experience. However, some small businesses and hospitality industry representatives expressed concerns that they would not be able to absorb the associated payment costs themselves and would ultimately have to raise retail prices.
One coffee shop owner admitted in an interview with reporters, "If we don't charge a surcharge, our profits will be reduced. But we understand that customers have concerns about the surcharge, and it's a good thing the government is clarifying the rules."
Market trend: In line with the popularization trend of electronic payment
In fact, the use of electronic payments in Australia has increased dramatically since the COVID-19 pandemic. According to RBA data, by 2024, credit and debit cards will account for more than80%, the proportion of cash use has dropped to less than20%.
The RBA believes that the Australian payment market will become further digitised in the coming years and that removing surcharges will help promote a fair competitive environment.
The RBA is currently working on the proposalsPublic consultationThe consultation period ends in October 2025. If the recommendations are implemented, it will mark Australia's official transition from a "pay-as-you-go" model to an "all-inclusive price" model, bringing it in line with countries like the UK.
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