AUSTRALIA | The announcement that surcharges will be banned in Australia has been met with widespread industry support from customers and operators.
The Reserve Bank of Australia has announced that it will ban surcharges, following extensive public consultation.
The Reserve Bank outlined that the surcharging framework, introduced more than two decades ago, is no longer achieving its intended purpose of steering consumers towards making more efficient payment choices. The increased prevalence of businesses surcharging all cards at the same rate, challenges with enforcing the current surcharging framework, and consumers using less cash have reduced the effectiveness of the surcharging regime. Removing surcharging would make card payments simpler and more transparent, and would increase competition among payment service providers. Removing surcharging also aligns with the preference of most consumers for payment costs to be incorporated into advertised prices.
These changes are expected to lower businesses’ costs when they accept domestic or overseas card payments. Small businesses should benefit the most because they tend to pay fees closer to the existing caps.
Improving transparency will enhance competition between players within the payments chain, put downward pressure on card payment costs and make it easier for businesses to shop around for a better deal.
Most of these changes will come into effect on 1 October 2026, including the removal of surcharging and reductions in the interchange caps for domestic card transactions. The introduction of an interchange cap on foreign cards and some changes to payment cost transparency will come into effect later, on 1 April 2027, to ensure the payments industry has sufficient time to implement these more complex changes.
The Customer Owned Banking Association welcomed the move. CEO Michael Lawrence said it supported a competitive, efficient payments system that delivers genuine value for customers.
“The RBA’s approach provides a degree of recognition that while customer-owned banks face unique structural disadvantages, they play a vital role in providing essential competition, innovation, and choice for consumers,” said Lawrence.
“COBA has advocated for a fairer approach to interchange fees to ensure our sector can continue to offer competitive payment solutions for its members. We will continue to do so.”
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