Card payment sucharges banned in Australia from 2026

[Ansett Nostalgic]

This RBA Governor should be fired.

 

[albyd]

It’s one thing to ban surcharging, it’s another matter to reduce interchange to where it can’t fund reward programs which is why they’re going away.

 

[CaptJCool]

If the interchange fees are indeed “funding” rewards programmes then that tells you they are overpriced.

That said, when I got sent my Platinum card, I didn’t realise at the time that meant the merchant fees charged by the provider were “doubled”

So it’s not always obvious who’s profit gouging out of the system. But it sure ain’t a case of covering the “cost of acceptance”. If we were to start that argument, then cash banknotes would need to incur a “cost of acceptance” as that’s not a “free” service to the banking system. Rather it’s a service where the fees are “covered by the provider”

 

[LondonAussie]

I don’t know what it is, but there must be something fundamentally different about Australia’s banking system compared to other countries. Which is odd because on the surface it seems like the same Visa and Mastercard issued cards that you get almost everywhere on earth.

I’ve travelled extensively and the surcharging epidemic hasn’t reached other countries. It’s got out of control in Australia while in most other places it’s still rare to see a surcharge, or was outright banned years ago.

The other thing I’ve noticed is outside of Australia, restaurants and cafes are more than happy to split bills and take payments across multiple cards, separately from everyone on the table. Ask to do that in Australia and you get treated like you asked for a kidney. I wonder if it’s something to do with keeping the number of card transactions to a minimum.

 

[albyd]

If the interchange fees are indeed “funding” rewards programmes then that tells you they are overpriced.

That said, when I got sent my Platinum card, I didn’t realise at the time that meant the merchant fees charged by the provider were “doubled”

I think the whole thing about giving us metal coloured cards is to make us feel ‘special’ as well as getting a higher merchant fee as suddenly that’s a ‘premium’ card.

If the banks are giving us rewards funded out of interchange, then their profit margin as well as costs like bad debts, etc also need to come out of that funding. I’m assuming that’s why they’re stomping (without much effect or sympathy from the RBA) their feet about about removing rewards and other benefits.

There’s not room for everything in the reduced funding envelope. We can feel as smug as we like about it but the banks aren’t charities and they’ll be fine. Cashless is ingrained in our culture so the rewards points were partially to encourage us to use them for everyday transactions. We might just switch our activity and behavior to eftpos. We’re now cashless. Mission accomplished!

 

[dajop]

If the banks are giving us rewards funded out of interchange, then their profit margin as well as costs like bad debts, etc also need to come out of that funding. I’m assuming that’s why they’re stomping (without much effect or sympathy from the RBA) their feet about about removing rewards and other benefits.

Don’t forget that bad debts are funded out of interest rate margins as well. When charging 20% interest and offering at most 4.5% for deposits (or charging 6% for mortgages), there’s a bit of wiggle room there.

 

[Zero]

Avocado on toast should cost the same on each and every day of the year.

Why?

A restaurant I visit often has a lunch menu and dinner menu. The dishes on offer are mostly the same, and the portion sizes are the same, but the prices on the dinner menu are about 30% higher. If you never visit at lunchtime you'd never know.

I don't go there on weekends so I wouldn't know if they have Sunday menus with higher prices too.

You can see the prices before you make a decision to go in.

My kids have an infrequent lemonade stall outside my house on hot Sundays. They use Square. Even that is 1.9% for Amex. If you’re charging 2.75%, you either can’t negotiate or taking the piss out of the public.

When you can pass the charges on like this, why would you bother to negotiate. Unless a sizeable portion of your customers tell you that if you don't accept Amex at the same price as Visa/MC they won't buy from you at all. And how often does that happen?

If the government mandates that you display the same price for cash/eftpos/Visa/MC/Amex, then you do have to negotiate with Amex or stop accepting it.

Which is exactly what happened in the UK - Amex merchant fees are now around 1.5-2% for those merchants who have threatened to stop taking Amex, or they have stopped taking Amex (because Amex prefers not to be accepted at those shops over reducing their fee). Some merchants are still paying 3-4% to Amex because they can't be bothered, or Amex spenders genuinely are spending more there to cover the fee (which was the rationale Amex gave to justify its high fee in the past).

I don’t know what it is, but there must be something fundamentally different about Australia’s banking system compared to other countries. Which is odd because on the surface it seems like the same Visa and Mastercard issued cards that you get almost everywhere on earth.

The other thing I’ve noticed is outside of Australia, restaurants and cafes are more than happy to split bills and take payments across multiple cards, separately from everyone on the table. Ask to do that in Australia and you get treated like you asked for a kidney. I wonder if it’s something to do with keeping the number of card transactions to a minimum.

For context, I spent my early childhood in Aus then lived abroad in many different places (majority of the time being in London), until a few years ago when I returned to Aus aged 35.

To be clear, I still think Aus is the best country for me to live in right now. But the longer I spend here as an adult, the more and more I feel like your first sentence applies to almost everything about this country and I really don't understand why Australians have a reputation overseas of being easy-going.

In the UK I believe many merchants are on a flat fee + % model for their card charges, which would mean they prefer to minimise the number of transactions, yet as you say it's rare to encounter resistance to splitting restaurant bills. In the UK I've done it with a table of 15 where everyone paid individually. The waiter got a bit annoyed when some of our party didn't want to pay for other people's expensive drinks, but I dealt with that by getting everyone to pay the restaurant the same amount and then making some people bank transfer/cash to others (fortunately I can calculate this stuff quickly and everyone was satisfied)

 

[oz_mark]

This RBA Governor should be fired.

For what?

 

[oz_mark]

I don’t know what it is, but there must be something fundamentally different about Australia’s banking system compared to other countries. Which is odd because on the surface it seems like the same Visa and Mastercard issued cards that you get almost everywhere on earth.

The ban on surcharging was typically within the scheme (Visa or Mastercard) rules. What the RBA did years ago was basically banned the schemes from having that restriction in their rules. In other countries, the schemes probably still have that restriction in their rules.

 

[burmans]

For what?

I was wondering this too, if it’s for introducing surcharges in the first place, wrong governor, that was at least two ago. If it’s for removing, most people want this to happen.

 

[CaptJCool]

The ban on surcharging was typically within the scheme (Visa or Mastercard) rules. What the RBA did years ago was basically banned the schemes from having that restriction in their rules. In other countries, the schemes probably still have that restriction in their rules.

My understanding was the surcharges got reinstated during the Howard Govt
Lil Johnny helpin’ small business

 

[oz_mark]

My understanding was the surcharges got reinstated during the Howard Govt
Lil Johnny helpin’ small business

It was during the Howard years, but was primarily driven by the RBA. Initially, it was only large businesses that added the surcharge. The current spread to small business came later.

 

[kpc]

The quicker the surcharges are banned the better as far as Im concerned. 1.6% to use a Visa? C'mon!

 

[Mr_Orange]

It was during the Howard years, but was primarily driven by the RBA. Initially, it was only large businesses that added the surcharge. The current spread to small business came later.

The more recent change was when the RBA limited surcharging to the actual cost. This woke up a whole load of businesses, including Vodafone and Linkt to name a couple of large businesses, to the fact that they could surcharge. As a result, surcharging became more widespread.

Why?

You have cherry picked one part of my post and missed the broader message, which wasn't that complicated. Thanks for playing!

 

[jbman]

Anything under $100 I started to use my HSBC to counter the fee with the 2% cashback

 

[dajop]

My favourite was a place that offered a 5pc discount for cash payments, yet still applied a 1.5pc surcharge for card payments. I’m OK with the former if that’s what they want to do, but still adding a surcharge for cards seems wrong.

 

[albyd]

It’s strange. Aside from tax avoidance for smaller businesses, I do r quite get why they’d think cash is a ‘free’ payment method. There’s no such thing. You’re not paying merchant fees but what if the costs in devoting a staff member’s time to go to the bank to do the banking and the security risks (aside from staff pretending to be robbed to take the day’s takings for themselves.

 

[burmans]

What do you mean ‘apart from tax avoidance’, isn’t that more than enough to explain this behaviour?

Card payment is clearly ‘easier’.

 

[Waddygib]

Qantas is the big loser from the reforms, hence why they are bleating loudly (now). The banks make very little from rewards cards but they are good loss leaders to keep other business (and meet KPIs around products per customer).

If the reforms go through, it will cost Qantas hundreds of millions a year.

 

[levelnine]

Qantas is the big loser from the reforms, hence why they are bleating loudly (now). The banks make very little from rewards cards but they are good loss leaders to keep other business (and meet KPIs around products per customer).

If the reforms go through, it will cost Qantas hundreds of millions a year.

I share this view.

While the banks of course profit from current arrangements, whether you pay by rewards credit card, no-rewards credit card or debit card, they clip the ticket no matter what. If they lose their interchange, they'll simply stop purchasing Qantas points.

Qantas is the biggest beneficiary of the current arrangements.

It's also worth noting that the banks are by far the dominant player in the relationship between them and Qantas. Credit card interchange is a rounding error for the big four. By contrast, Qantas Loyalty earns as much as revenue as Qantas' entire international flying division. It is mission critical to the airline.