Australians stand to save an estimated $1.2 billion annually on shopping expenditures through a new recommendation from the Reserve Bank of Australia (RBA). This initiative could see the end of surcharges on Eftpos, Mastercard, and Visa transactions.
According to the RBA, consumers currently incur around $1.2 billion in surcharges each year. The bank highlighted that the original purpose of surcharging is no longer being fulfilled effectively. As cash usage declines, it becomes increasingly difficult for consumers to avoid surcharges, and businesses often implement similar rates across different payment types. Furthermore, there are significant challenges in enforcing current surcharging regulations.
The RBA proposes that abolishing surcharges will lead to simpler and more transparent card payments while fostering greater competition within the payments system. This proposal is part of a broader consultation paper stemming from the RBA’s review of merchant card payment costs and surcharges.
In addition to eliminating surcharges, the RBA has suggested that card networks and major acquirers should disclose the fees they impose. This move aims to improve transparency and competition, enabling businesses to better understand the fees they encounter and facilitating more effective comparisons between providers.
Moreover, the RBA is advocating for a cap on interchange fees paid by businesses, which could result in an additional $1.2 billion in savings. Current estimates suggest that about 90% of Australian businesses would benefit from these proposed changes, with small businesses likely to see the most significant advantages since they typically incur fees close to the existing caps. The introduction of caps on foreign interchange fees is anticipated to help lower costs for all businesses that accept international cards.
A feedback period regarding these proposals is currently open until August 26, with the RBA set to finalise the reforms following this consultation.