RBA reforms to ban surcharges & cap fees reshape payments

The Reserve Bank of Australia (RBA) has announced sweeping changes to the landscape of electronic payment systems, with significant ramifications for merchants and consumers alike. The central bank intends to eliminate surcharging on eftpos, Mastercard and Visa transactions while also capping interchange fees. These measures, expected to take effect by mid-2026, follow a lengthy review into the costs faced by merchants and the impact of surcharging on consumers.

Industry reactions have been swift, with particular focus on the opportunities and challenges brought forth by this regulatory overhaul. Ben Zyl, Country Lead Australia at fintech Banked, noted, "Australian merchants have an opportunity to rein in their costs but they need to be prepared to take a leap." He praised the RBA for a consumer-centric approach, stating, "The RBA has done the right thing for Australian consumers by applying the ban to debit and credit cards and avoiding complications around how these costs are separated."

Zyl emphasised that previous measures, such as Low Cost Routing to Eftpos, had limited benefits for merchants and consumers due to the continued prevalence of flat-rate fees, which often translated into expensive surcharges. "The focus will now fall on interchange fees to make sure they are regulated appropriately, ensuring that banks aren't just issuing platinum debit cards for the sake of it as a way to justify higher fees," he commented.

The RBA's intervention is also seen as a pivotal opportunity for the adoption of alternative payment methods. Zyl highlighted the potential for Account-to-Account (A2A) payments, powered by Australia's New Payments Platform (NPP), to play a larger role in mainstream commerce. "This change will also be a line-in-the-sand moment for Account-to-Account payments in Australia to enter the mainstream," he said. "Australia already has the world-leading New Payments Platform that facilitates the secure exchange of real-time cash payments between banks (Pay by Bank). It means consumers can access their cash directly from their bank without using a card - as it should be."

Major retailers are already moving to take advantage of this shift. According to Zyl, "Merchants such as Amazon Australia have already made the move to balance their cost of payments by introducing Pay by Bank (powered by PayTo)." He added that for merchants to fully realise the potential savings, they will need to embrace these alternative systems and invest in consumer education around the benefits of card-free payment options.

Echoing these sentiments, Chris Jewell, President and Co-founder of Australian fintech Zepto, welcomed the reforms for the transparency and fairness they bring to the payment ecosystem. "Simply put, removing surcharges will make it easier for both businesses and everyday Australians to understand exactly what they're paying for when they make a purchase. Zepto welcomes reforms aimed at achieving this," he said.

Jewell nevertheless emphasised the importance of balancing regulatory goals with innovation and competition. "It's essential that these reforms maintain healthy competition within the payment service provider (PSP) ecosystem; we hope to see continued innovation and choice for merchants as these changes take effect," he stated. He also cautioned that lower interchange caps should foster innovation at both large and small players, noting, "An ecosystem that nurtures innovation across all players is vital for a healthy payments landscape."

The anticipated removal of surcharging, coupled with the capping of interchange fees, is expected to make A2A payment platforms increasingly attractive for both merchants and consumers. "The removal of surcharging only strengthens the case for account-to-account (A2A) payment alternatives like PayTo. As merchants reassess their payment strategies in light of these changes, we see a growing role for real-time, bank-account-based payment solutions as the more cost-effective and transparent option," said Jewell.

With regulatory implementation expected in the coming year, the payments industry is on the cusp of significant transformation. Merchants are being encouraged to reconsider their reliance on traditional card payments and take proactive steps to educate consumers about emerging payment alternatives. Industry observers will be closely monitoring how banks, payment providers and retailers adapt to the new regulatory environment, and whether these changes deliver the promised benefits for both businesses and their customers.