Card payment sucharges banned in Australia from 2026

[SCM]

Found the thing going on in the US

Protect Your Points - The Points Guy

Proposed legislation in the U.S. House and Senate could devastate the future of credit card points including cash back and travel rewards, while putting your financial security at risk.

thepointsguy.com

I suspect that will be us before too long as well.

 

[levelnine]

The irony of the Durbin Act in the US is that it has made debit cards more lucrative because they carved out so many exceptions lol.

Also, Mastercard and Visa are not going to let this pass without a fight. They've threatened to remove fraud protections for customers: Mastercard, Visa make pre-emptive attack on RBA card fee restrictions

 

[SeaWolf]

The RBA has released a consultation paper for the Merchant Card Payment Costs and Surcharging review. This paper outlines proposed changes and provides an opportunity for stakeholders to responds to the proposal.
Key changes proposed are:

• Surcharging on eftpos, Mastercard and Visa cards should be removed.
• The interchange fees paid by businesses to card providers should be reduced.
• Card networks and large acquirers should publish the fees they charge.

The first proposal is the one that will really impact customers, the others are aimed at businesses and back-end services.

 

[lovestotravel]

Domestic issuers are expected to experience a reduction in interchange revenue of around $900 million under the preferred package and $800 million under the alternate option. However, the proposed interchange settings are still above issuers’ costs. Some issuers may choose to increase cardholder fees or reduce benefits such as rewards points, particularly on credit cards, to boost their profitability in response to reductions in interchange settings. Issuer revenue may also increase if more consumers choose to use credit cards or substitute away from cash use as a result of surcharges being removed

 

[moa999]

eftpos, Mastercard and Visa cards

Is that meant to mean debit cards for the last two? Or also extends to credit cards?

 

[SeaWolf]

Is that meant to mean debit cards for the last two? Or also extends to credit cards?

It would be for both (page 8),

removing surcharging on all designated debit, prepaid and credit card systems - Mastercard, Visa, Visa Debit, eftpos, Debit Mastercard, eftpos prepaid, Mastercard prepaid and Visa prepaid.

 

[Doctore1003]

ABC has a story : RBA wants to end card surcharges and save users $1.2b a year

Maybe a moderator could update the threat title?

 

[levelnine]

If you think the state of the credit card rewards market has gotten bad in Australia, it's about to get a whole lot worse.

 

[Doctore1003]

“Under the central bank's proposal, the eftpos, Visa and Mastercard networks would be allowed to ban surcharges — something the RBA currently prohibits.”

The RBA can’t enforce a ban, so is relying on the networks to do it. The government could also legislate a ban:

“However, the RBA noted the government could ban surcharges in the future if they managed to linger.”

“American Express does not fall under the RBA's remit due to its structure so will not be covered by the proposed changes, but the RBA says it could choose to ban surcharging also.”

Interchange fees will also be reduced, and transparency increased to drive down fees even further.

Even though Amex isn’t included, it seems logical it would face pressure to reduce its fees and potentially also implement a surcharging ban (and again, the govt could also step in).

This will have a big impact on reward schemes.

 

[opusman]

Customers would no longer have to pay any extra charges for using their debit or credit cards, saving $1.2bn each year, under a Reserve Bank proposal to reform card payments.

Surcharges on EFTPOS, Mastercard and Visa card payments would be eliminated from July 2026, while fees for businesses using card payments systems could also be lowered, according to an RBA paper released on Tuesday.

Incredible idea from the RBA here. Apparently no one remembers who it was who made card surcharges possible in the first place.

 

[lovestotravel]

If you think the state of the credit card rewards market has gotten bad in Australia, it's about to get a whole lot worse.

Indeed - While Amex is not directly impacted, they will trim as much as they can with little competition from VI/MC

 

[DJTravels]

“Under the central bank's proposal, the eftpos, Visa and Mastercard networks would be allowed to ban surcharges — something the RBA currently prohibits.”

The RBA can’t enforce a ban, so is relying on the networks to do it. The government could also legislate a ban:

“However, the RBA noted the government could ban surcharges in the future if they managed to linger.”

“American Express does not fall under the RBA's remit due to its structure so will not be covered by the proposed changes, but the RBA says it could choose to ban surcharging also.”

Even though Amex isn’t included, it seems logical it would face pressure to reduce its fees and potentially also implement a ban (and again, the govt could also step in).

This will have a big impact on reward schemes.

1. Visa/MC will almost certainly start banning surcharges again as soon as legally allowed. No incentive for them to keep the surcharges anyway, and much to gain.
2. Previously, AMEX has played ball with whatever was imposed on Visa/MC through undertakings anyways. I imagine they would do something similar here to avoid further scrutiny. Better to self-regulate I guess?
3. Surcharges or lack there of is neutral for rewards, but proposed lower caps on interchange will be significant. Expect less rewards, as less money is earned per transaction.

Interesting to see the turnaround on how to promote competition on payments. Originally, they thought surcharges would differentiate those willing and those unwilling to pay for card convenience. But now I guess transparency is the go?

 

[am0985]

Australia still has relatively good CC rewards to be honest, worse than USA but this will take it down to European levels. 30k bonuses for CC sign ups maybe?

Wonder what the knock on effect on QFF will be?

 

[oz_mark]

The RBA has released a consultation paper for the Merchant Card Payment Costs and Surcharging review. This paper outlines proposed changes and provides an opportunity for stakeholders to responds to the proposal.
Key changes proposed are:

• Surcharging on eftpos, Mastercard and Visa cards should be removed.
• The interchange fees paid by businesses to card providers should be reduced.
• Card networks and large acquirers should publish the fees they charge.

The first proposal is the one that will really impact customers, the others are aimed at businesses and back-end services.

The second point will flow through as a reduction in reward points associated with cards, as interchange fees partly fund those points.

 

[Doctore1003]

Yes, RBA expects the networks to ban surcharges themselves:

"Accordingly, the RBA proposes to revoke its prohibition on ‘no-surcharge’ rules for each of the designated card systems. Based on historical experience and arrangements in other jurisdictions, the RBA considers that this would likely be followed by the designated card networks reimposing ‘no-surcharge’ rules."

Only 10% of businesses impose surcharges currently. Feels higher.

As for credit card interchange fees, here's what the RBA proposes:
"Reduce the cap on domestic credit card transactions to 0.3 per cent of transaction value and remove the weighted-average benchmark of 0.5 per cent. "

That's down from the current 0.8% cap - a big change.

 

[am0985]

Do we know how likely these proposals are to get fully adopted?

 

[Doctore1003]

Do we know how likely these proposals are to get fully adopted?

Extremely likely. There’s a final round of consultation happening now but it’s largely a formality, given stakeholders have already made their positions clear on the important issues. Any changes to the RBA’s proposals are likely to be minor.

 

[oz_mark]

Incredible idea from the RBA here. Apparently no one remembers who it was who made card surcharges possible in the first place.

That's true, although when the made that move in 2003, cash was the main form of payment. That has change in the last 20 years, to the extent that many people don't even carry cash now (and thus can't avoid a surcharge).
While I don't agree with what they did, it seems reasonable to reconsider the situation given the way in which most payments are now made by card.

 

[AviationNZ]

ABC has a story : RBA wants to end card surcharges and save users $1.2b a year

It always astounds me how stupid some of these statements from government departments are. There is no way $1.2b is going to miraculously go from the payment ecosystem into the back pockets of everyday consumers. In what world does the RBA live in?!?

In all likelihood, banks will find a way to plug the gap (which could be devaluing reward points and there by increasing the costs of those consumers that use/benefit from them) and for retailers/merchants that currently surcharge but won't be able to, they'll just increase their prices.

Do they think that businesses (including banks) just willingly give up profits for the fun of it?!?

 

[am0985]

It always astounds me how stupid some of these statements from government departments are. There is no way $1.2b is going to miraculously go from the payment ecosystem into the back pockets of everyday consumers. In what world does the RBA live in?!?

In all likelihood, banks will find a way to plug the gap (which could be devaluing reward points and there by increasing the costs of those consumers that use/benefit from them) and for retailers/merchants that currently surcharge but won't be able to, they'll just increase their prices.

Do they think that businesses (including banks) just willingly give up profits for the fun of it?!?

They don't care about devaluing reward points though.

I am disappointed about this development. However to be honest these charges being converted into reward points essentially functions as a de facto consumption tax on all credit card users to the disproportionate benefit of a relatively small number of people (which happens to include most of this forum)