RBA Backs Ban On Card Surcharges, COULD Save Aussies $ 1 Billion Annually

RBA has pushed for a ban on credit and debit card surcharges.

The Reserve Bank of Australia (RBA) has proposed a sweeping ban on surcharges for debit and potentially credit card payments, aiming to reduce consumer costs and simplify Australia’s increasingly complex payments landscape.

The recommendation, released in a major review of merchant card payment costs and surcharging, has sparked immediate debate among retailers, banks, and consumer advocates as the country grapples with rising living expenses.

Treasurer Jim Chalmers said that the Labor government is preparing "to permanently ban all surcharges on debit cards from 2026, subject to the RBA’s Surcharging Review and safeguards to ensure both small businesses and consumers can benefit from lower costs."

"The practical benefit to Australians is that they will save money because they won’t be charged a fee simply to use their debit card," Chalmers said in 2024.

$ 1 Billion In Savings

The RBA’s review, which coincides with a government push to relieve cost-of-living pressures, suggests that banning debit card surcharges could save Australians up to $500 million annually.

Extending the ban to credit cards could double the savings to $1 billion per year, with the average cardholder potentially pocketing an extra $140.

Australia’s current system allows merchants to pass on the costs of accepting card payments directly to consumers, a practice that has become more prevalent as card usage has surged to account for three-quarters of all consumer payments.

If implemented, the ban would align Australia with the European Union, the United Kingdom, and several US states, where surcharges on debit (and in many cases credit) card transactions are already prohibited. The RBA has argued that the move would create a surcharge-free method of non-cash payment, making costs more transparent and easier for consumers to understand.

What Do Banks Say

Reactions to the RBA’s proposal have been swift and divided. The Commonwealth Bank of Australia (CBA) has called for a total ban on surcharges for both debit and credit cards. CBA warned that a partial ban could push merchants to recoup costs from credit card users, potentially penalising less affluent consumers who rely on credit for budgeting.

Mastercard and Visa have echoed this position, arguing that a ban limited to debit cards would create inequities and fail to address the root issues of fee transparency and enforcement.

Westpac says it supports a ban on debit card surcharges but has stopped short of endorsing a similar move for credit cards. The bank has instead called for a review of “blended” pricing schemes, which charge retailers a flat fee regardless of the card type, and criticised the complexity and opacity of scheme fees imposed by payment service providers like Visa and Mastercard.

Cash Is King?

Consumer groups, including National Seniors Australia, have welcomed the review and highlighted the growing backlash against surcharges.

The group has started a Keep Cash campaign to highlight the demand to retain cash as a mode of payment to ensure "seniors are not digitally excluded".

The Australian Competition and Consumer Commission (ACCC) has also endorsed the government’s commitment to a debit surcharge ban, highlighting the need for reforms that reduce complexity and costs for consumers while minimising unintended consequences for small businesses.

Small Business Express Price Rise Concerns

Despite the potential savings for consumers, the RBA and industry stakeholders have warned of possible downsides.

Merchants, especially small businesses, may be forced to absorb the costs previously covered by surcharges, potentially leading to higher prices for goods and services.

The RBA cautioned that a blanket ban could “unwind the benefits of the existing framework” by dulling the price signals that encourage consumers to choose lower-cost payment methods.

What Happens Next?

The RBA is seeking public submissions on its proposals, with a final decision expected later this year.

If adopted, the government’s plan would see a ban on debit card surcharges take effect from 1 January 2026. The debate over whether to extend the ban to credit cards—and how to balance consumer benefit with business viability—looks set to intensify in the months ahead.