The Reserve Bank of Australia (RBA) announced its plans Tuesday (March 31), along with its intention to lower the cap on credit card interchange fees merchants pay to banks.
“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 RBA announcement said.
“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.”
According to the RBA, doing away with surcharges will simplify card payments and 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,” the bank added.
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Most changes go into effect Oct. 1, while an interchange cap on foreign cards and some “changes to payment cost transparency” won’t take place until April 1 of next year.
A report on the ban by Bloomberg News notes that the RBA’s decision comes after heated debate in Australia and a several-month process of examining transaction fees. The RBA contends that consumers could save roughly $822 million per year, while banks have questioned the plan’s benefits, the report added.
Writing about surcharges last month, PYMNTS characterized the fees as a “double-edged sword” for merchants.
“They see surcharges as a justified hedge against interchange fees, potential increased costs from tariffs and the higher cost of goods,” that report said. “On the other side, they risk alienating consumers with what they see as annoying and unnecessary fees. Is it worth losing a customer over a 4% surcharge?”
The report also cites the 2026 U.S. Merchant Services Satisfaction Study from J.D. Power, which showed that 35% of small businesses surcharge credit card transactions. Of that group, 32% said customers cancel a purchase when the fee appears at least some of the time.
“That’s a blunt warning. A surcharge can recoup margin on completed sales while simultaneously reducing the number of sales that happen at all,” PYMNTS wrote.
Research from PYMNTS Intelligence lines up with those findings, showing that 56% of consumers were “very” or “extremely” likely to switch merchants due to surcharge fees. Another PYMNTS Intelligence report, “How Consumers Perceive Surcharge Prompts,” found that 68% of consumers check most or all receipts because they’re uneasy about hidden surcharges.
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