Card payment sucharges banned in Australia from 2026

[justinbrett]

The way that the RBA is able to get rid of the surcharges is by forcing the reduction of interchange fees, so that's where the reduction of rewards will come from.

It is a two pronged attack, they could have done one of these without the other. They were concerned banning surcharges would result in higher prices unless they also capped interchange fees.

Banks in other countries can offer rewards programs without card surcharges. Why is Australia different?

Because it's also capping interchange fees (something the US has threatened to do)

No but life will be more expensive for every australian due to price increases.

It shouldn't with the cap on interchange fees.

 

[CaptJCool]

It’s hard to cut staff and close branches when that’s already been done across Australia. Recall the whoo ha of Aussie Post being paid by the banks to provide cash services in remote areas…..

Annual reports of Aussie banks tell us how profitable they always are.

Banning surcharges at the retail point of sales “drives” the cost structure underground.

It being a % of sale is the actual problem as it’s an inflated profit commission where the “cost” reflects nothing like the actual cost to do so. A Flat fee of 5-20 cents as the system doesn’t care how many naughts are on the transaction price

So I’m in favour of it getting abolished

 

[MELso]

AMEX is exempt

The media release indicates that three-party card networks (which AMEX is) will start being reviewed in mid-2026 (reflecting that the RBA didn't get powers to regulate AMEX and other three-party card networks until late last year). Hopefully, we'll see action in 2027.

The RBA plans to start a public consultation in mid-2026 to assess the public interest case for regulating areas of the retail payments system that were not covered under this Review, including mobile wallets, three-party card networks, ‘buy-now, pay-later’ services and e-commerce platforms.

 

[Aeryn]

It shouldn't with the cap on interchange fees.

Its a cap not a removal - these still need to be funded.

Plus im sure just like health insurance there will be an annual review where banks can wpply to increase the cap year on year becuase of increased costs.

 

[AFF Editor]

FYI, we've just added a poll to this thread, asking:

Are you happy with the RBA's proposed changes to surcharging and interchange fees?

Feel free to cast your vote!

 

[albyd]

Sigh. We love to make things confusing and complicated in this country. Why can't we just ban it properly and fully like the rest of the world has. (excluding NZ, but their banks are all owned by AU banks anyway)

Amex has already started to reduce the value of rewards as they will have to compete with MC/Visa on merchant charges which is where rewards come from. We may see more from Amex after their first shot across the bow going from 2:1 to 3:1.

 

[Aeryn]

Capping surcharges at at flat fee would have been better i.e $0.50. It doesnt cost a payment provider more to process a $1 payment than a $10k payment via card.

People can then choose to use cash for low value purchases if they want, but would have less impact on prices.

 

[LondonAussie]

Amex has already started to reduce the value of rewards as they will have to compete with MC/Visa on merchant charges which is where rewards come from. We may see more from Amex after their first shot across the bow going from 2:1 to 3:1.

My British Airways Amex has given me so much more value than any Australian-issued Amex, and the UK fully banned all surcharges including on Amex.

So I’m not convinced the end of card surcharges is the end of rewards cards. It certainly hasn’t been elsewhere in the world.

 

[Aeryn]

Maybe this is one reason why Amex is jacking up foreign currency fees by 1%. RBA has no authority re payments made outside Aus.

By doing this before RBA can influence their surcharges, they have alredy locked in extra revuenue that RBA cant limit.

 

[justinbrett]

Its a cap not a removal - these still need to be funded.

Plus im sure just like health insurance there will be an annual review where banks can wpply to increase the cap year on year becuase of increased costs.

The interchange fees were already the main funder of reward schemes - the RBA has (correctly) identified most of the cost justification has been reward schemes and they won't consider them going forward.

Maybe this is one reason why Amex is jacking up foreign currency fees by 1%. RBA has no authority re payments made outside Aus.

By doing this before RBA can influence their surcharges, they have alredy locked in extra revuenue that RBA cant limit.

0.5%

My British Airways Amex has given me so much more value than any Australian-issued Amex, and the UK fully banned all surcharges including on Amex.

So I’m not convinced the end of card surcharges is the end of rewards cards. It certainly hasn’t been elsewhere in the world.

At the base rate, UK Amex is 1 point per pound, AU is 1.25 per AUD, but UK points can buy Avois 1:1, AU points can buy Avios 2:1; so at 1 AUD = 0.50 GBP, the AU card is slightly better (1 GBP would get 1.25 Avios on an AU card). Of course that's not considering the specific BA and QF cards which earn better for their respective programs and have other perks.

 

[Jacques Vert]

Was there any reference to international transaction fees in the RBA release?

 

[Aeryn]

Amex currently earns 1.25 - 2.25 QFF points per $1, plus referral bonuses, ability to double dip via QFF shopping and the travel credit being equal to card annual fee makes it free. The UK card has annual fee and only 1 Avio per GPB (which is only 1 point per AU$2) so lesser offer me thinks.

RBA will not be able to cap interchange fees at the new level idefinitely as costs increase over time. Our banks have huge barganing power, as some point in future they will have to allow inncreases or have no banks providing card service.

 

[Doctore1003]

Read somewhere that Business credit cards will retain the 0.8% interchange fee cap, so there should be points opportunities there.

 

[am0985]

Think they should have differentiated debit/EFTPOS and credit cards here.

Completely right to do it for debit cards as they're for everyday spending. That way people have the option of not paying charges and using debit instead of credit.

Credit cards are usually sold as specific products and part of a package. People get credit cards as a matter of choice rather than necessity.

 

[Rich]

I think if surcharges go, we will just see all prices increase as businesses will still have to pay terminal providers for service (and big retailers already pay heaps for the monopoly armoured vehicle cash supply/collection).

It may also see some businessess go cash only if they have to absorb costs and this will lead to more under reporting of revenues as much easier to under declare cash income to evade tax.

Not sure all consequences have been thought through. The less cash used the higher the compliance with tax as the banks report balances to ATO. Overall tax could be lower if we went cashless and killed cash drug deals, illegal cigarette sales etc.

The cost of handling cash is probably just as high or higher than the cost of credit card use, in fact you mentioned it yourself in terms of the cost of cash handling for big retailers. I am not sure prices need to increase with this change.
In terms of under reporting, that is going to happen either way. I only recently walked out of a restuarant because they told us it was cash only (only after waiting 10 minutes for some table service to make matters worse). Card usage is so common that businesses shoot themselves in the foot a bit here I think, nowadays.

 

[justinbrett]

They will not be able to cap interchange fees at the new level idefinitely as costs increase over time. Our banks have huge barganing power.

The cap is a percentage. Apparently it's going from 0.5% to 0.3%.

No need to index if it's a percentage.

 

[Aeryn]

Read somewhere that Business credit cards will retain the 0.8% interchange fee cap, so there should be points opportunities there.

And individuals miss out?

Individuals already pay higher taxes and higher flight prices than businesses and now RBA is interferring in the small rewards we get. Someone has to work at businesses we cant all be business owners.

 

[justinbrett]

Think they should have differentiated debit/EFTPOS and credit cards here.

Completely right to do it for debit cards as they're for everyday spending. That way people have the option of not paying charges and using debit instead of credit.

Credit cards are usually sold as specific products and part of a package. People get credit cards as a matter of choice rather than necessity.

They already have much lower interchange fees - 10c or 0.2%. Don't think they're changed by this announcement.

 

[Aeryn]

In terms of under reporting, that is going to happen either way.

Easy to almost eliminate in a cashless society. Cash funds crime (drugs, illegal cigarettes, illegal gambling, off book trades, un taxed staff), if your money has to go via a regulated financial institution then you cant hide income from tax. If everyone paid the tax they should, tax rates could be lower overall.

 

[levelnine]

Coming soon to an Australian bank near you: