Will credit card surcharges be banned in Australia?

Credit card surcharges are a familiar frustration for Australian consumers, but could they soon be a thing of the past? In countries like the United Kingdom and much of Europe, consumer credit and debit card surcharges are already banned (with a few exceptions). Now Australia is looking to follow suit, but is it as simple as just scrapping the fees?​

The Reserve Bank of Australia (RBA) launched a review of Merchant Card Payment Costs and Surcharging in October 2024. The review aims to assess whether the current rules are still relevant given the rapid pace of technological change and complexity. It also explores whether more transparency is needed around surcharges, transaction fees, and payment regulations.​

The ultimate goal? Reducing costs for both sellers and consumers.​

If surcharges are banned or restricted, businesses currently passing on these costs to customers will face a decision. Either absorb the fees or increase prices. For many, the issue isn’t just about charging a fee, it's about managing the cost of accepting card and digital wallet payments.​

Interestingly, smaller businesses are hit the hardest, paying nearly three times more in transaction fees than larger merchants who can negotiate better rates. Even within the small business sector, fees can vary from less than 1% to over 2% of a transaction's value.​

Surcharges allow businesses to recover the costs associated with card payments, including merchant fees, terminal costs, and fraud prevention expenses. The RBA permits businesses to add a surcharge, but it must reflect the "reasonable cost" of processing the payment type. Excessive surcharging is prohibited on eftpos, Mastercard and Visa debit/credit cards, and businesses must be able to justify how they calculate their fees.​

The RBA estimates that on average, card fees are as follows:​

There are compelling arguments on both sides:​

For the ban: Consumers dislike surcharges and some argue that bundled fees (like those covering point-of-sale systems or business incentives) are unfair. Major credit card providers and financial institutions (like the Australian Banking Association) are also backing the push for reform.​

Against the ban: The RBA are generally in favour of surcharges as it provides valuable price signals, helping consumers choose more cost-effective payment methods. However, this argument holds more weight for big-ticket purchases rather than everyday expenses like coffee.​

If a ban on surcharges is implemented, businesses will need to rethink how they handle payment costs. Here are some considerations:​