Proposed Changes to Credit Card Fees Highlights Potential Savings
Protection Banks argue that eliminating extra credit card charges could save consumers approximately $1.2 billion annually. Starting in July 2026, additional fees for debit and credit card payments via EFTPOS, MasterCard, and Visa will be removed. Additionally, the new RBA proposal suggests that businesses utilizing card payment systems might also see fee reductions.
Bank governor Michele Bullock noted that the diminishing use of cash is complicating Australians’ ability to sidestep extra charges. “I think it’s time to tackle these high costs and inefficiencies in the system,” she mentioned.
On the other hand, Wes Lambert, CEO of the Australian Restaurants and Cafes Association, cautioned that this proposal could lead to higher menu prices within the hospitality sector. “Do you think the RBA will take on the cost of this absurd decision? It always hits the merchant first, then the customer,” Lambert remarked.
Credit card fees have grown increasingly unpopular with consumers, especially as they’re often charged regardless of whether one uses a debit or credit card. Although only about 10% of companies impose these extra fees, the RBA is one of the most notable offenders, especially affecting cafes, restaurants, and pubs.
By removing these additional charges, the proposal goes further than the Albanese government’s pre-election initiative from late 2024, which only proposed to eliminate extra fees for debit card transactions and increase scrutiny of companies charging high card fees.
Treasurer Jim Chalmers indicated in October that they are prepared to prohibit debit card surcharges to benefit both small businesses and consumers.
A recent RBA consultation paper has shown that payment service providers like Square, Stripe, and major banks believe it would be quicker and cheaper to eliminate extra fees for both types of cards. Square described the total exclusion as “the most practical and balanced outcome,” according to Marco Lamantia, the Australian executive director. He added that this change would help diminish the major banks’ power, level the competition, and enhance choices for consumers.
The Labour party had previously pledged to ban debit fees by January 2026. However, Tuesday’s proposal would expedite the reforms, aiming for completion by December 2025 and banning extra charges for both credit and debit cards by July 2026.
The RBA has stated that if payment providers persist with additional charges despite reforms, legislative action may be required to fully eliminate these fees. According to their paper, payment networks are currently compelled to impose fees for accepting diverse payment methods.
However, some small business owners oppose the proposed ban, fearing it may require them to mark up prices on goods and services to offset lost revenue from additional fees. The RBA paper suggests that nine out of ten businesses will likely have to reduce the interchange fees charged for credit card payments, with the bank advocating for lower caps on these fees.
Modeling indicates that small merchants processing card transactions under $10 million annually could save around $185 million each year, while larger companies and those in the payment industry could face over $1 billion in losses annually due to these changes.
Moreover, providers will need to disclose the fees charged to businesses that use their platforms. This requirement from the RBA’s consultation process could enhance transparency and allow businesses to identify more affordable card processing options.
