Australian banks support card surcharging ban, urge alternative on interchange fees

Australian banks strongly support the RBA’s proposed ban on debit and credit card surcharges, while overwhelmingly calling for an alternative pathway forward on interchange fees. 

The ABA has made the following calls in a submission to the RBA’s current consultation on the Review of Merchant Card Payment Costs and Surcharging: 

• proceed with a comprehensive surcharging ban
• make no changes to the overall level of debit and credit interchange settings
• consider measured, highly targeted policy levers to reduce variance in costs between large and small businesses, for example, a small business interchange rate
• commit to a holistic, whole-of-system review that also encompasses the role of multinational technology companies.  

ABA CEO Simon Birmingham said Australians should have price certainty at the checkout and that banning card surcharging made sense and was long overdue.  

“Australia’s surcharging framework is broken, it has become burdensome and confusing,” Mr Birmingham said.

“Banks therefore fully support the government and the RBA’s intent to ban card surcharging and the certainty it will provide to consumers.”  

Mr Birmingham said the ABA was concerned about other potential changes to already low interchange fees paid by businesses and the impact they will have on competition and cardholders. 

“Although banning surcharges will be welcomed by Australian consumers, the consequences of other RBA proposals that increase card costs and reduce card benefits will likely far outweigh this,” Mr Birmingham said.  

“Around 90 per cent of businesses do not currently apply surcharges, yet the RBA’s changes that go beyond the supported surcharging ban may negatively impact all credit cardholders.

“The proposed changes to interchange would disproportionately advantage multinational payments and technology companies while shifting costs onto Australian consumers and businesses. 

“The RBA’s own data shows interchange fees in Australia are already among the lowest in the world. There is a risk that driving them down further would put further pressure on household budgets through higher card fees, shorter interest-free periods and diminished rewards. “We agree with the RBA’s concerns about fairness for small businesses, but there are better, more targeted ways to address this without destabilising the broader payments system – such as a small business interchange rate.”  

PaymentsRegulation & Policy