RBA Releases Conclusions Of Its Review Of Merchant Card Payment Costs And Surcharging

Published: 2026-04-14 04:08:07 ET MA

Published on 04/14/2026 at 04:08 am EDT

Key takeaways

Australia's payment system has been the subject of a multi-pronged review with proposals for reform at various stages and across various aspects of Australia's payments ecosystem. At the end of March 2026, the Reserve Bank of Australia (RBA) issued its Conclusions Paper following its Review of Merchant Card Payment Costs and Surcharging (Conclusions Paper).

The RBA made the following key conclusions:

No changes were proposed to the current ‘expectations' approach to least-cost routing.

Who is impacted?

The Conclusions Paper represents a multi-pronged approach to re-evaluating the RBA's requirements in connection with card payments. The announcements are made for the overarching purpose of enhancing competition and efficient in the card payments system.

In a typical four party scheme transactions, the RBA Conclusions Paper will have the following impact:

While the Conclusions Paper has focussed on payments through eftpos, Visa and Mastercard (the existing designated schemes), the RBA is clear that it will expand its focus in 2026 to consider three party schemes (such as American Express), Buy Now Pay Later providers, mobile wallets and e-commerce platforms. The Conclusions Paper should therefore not be seen as the conclusion of the RBA's review.

Lifting the “no surcharging” rule

What is the no surcharging rule?

The RBA's Standard No. 3 of 2016: Scheme Rules Relating to Merchant Pricing for Credit, Debit and Prepaid Card Transactions, currently provides that the Rules of eftpos, Visa and Mastercard cannot prohibit or deter a merchant from recovering certain amounts.

In essence, the RBA Standard means that Visa, Mastercard and eftpos cannot prohibit merchants from surcharging transactions paid for by customers using a credit, debit or prepaid card of those schemes. This means that, if a merchant wishes to charge an extra amount for paying by card, rather than cash for example, the schemes cannot prevent the merchant from doing this.

This does not mean that merchants are currently free to add whatever surcharges they like to card transactions. Under the Competition and Consumer Act 2010 (Cth) merchants must not add a surcharge that is excessive. An ‘excessive' surcharge is one which is not a permitted surcharge (in essence, the cost of the merchant accepting payment by card). The RBA Standard No. 3 referred to above sets out the framework for charging a permitted surcharge.

In essence, the RBA was asking whether eftpos, Visa and Mastercard should be able to provide that, if a merchant is accepting a payment through a card, that merchant is not allowed to add an amount to the cost of that transaction on the basis that the payment is made by card.

How is the "no surcharging" rule being changed?

The RBA has announced that the RBA Standard will be updated so that eftpos, Visa and Mastercard will no longer be required to not prohibit or deter surcharging. That is, eftpos, Visa and Mastercard will be able to apply their existing “no surcharge” rules to Australia which will have the effect of requiring that merchants do not surcharge transactions using the schemes' cards.

As part of the Consultation process there was consideration of whether this change should affect only surcharging on debit and prepaid cards. The RBA conclusion was that the ‘no surcharging' rule would be lifted for all designated card networks, noting feedback that introducing a distinction would create more cost and logistical challenges to implement.

What will be the impact of the removal of the “no surcharging” rule?

The change to the RBA Standard does not of itself change any surcharging requirements. Eftpos, Visa and Mastercard would be free to remove the existing carve out for Australia from their existing ‘no surcharging' rules such that the Rules prohibit surcharging.

There is an acknowledgement in the RBA Conclusions Paper that this implementation question would be left to the schemes. If, however, surcharging did continue after the prohibition is lifted, the RBA notes that it could recommend that the Government introduce legislation to ban surcharging of cards of the designated card networks but this is not expected to be required.

What is the timing?

The RBA has stated that the “no surcharging” prohibition will be removed from 1 October 2026.

Changes to interchange fees

How are interchange fees currently regulated?

Interchange fees are the fees that a merchant's acquirer pays to the issuer of a card. This means that when a customer makes a payment to a merchant the merchant's acquirer (the scheme participant that processes and settles the transaction that allows the merchant to accept the payment by card), will pay a fee to the financial institution that issued the customer's card. This fee is, in essence, so that the costs of the card issuing programme are shared between the card issuer and the merchant acquirer (and not solely born by the card issuer) given that both benefit from card payments.

Interchange fees are currently subject to caps and benchmarks set under RBA Standard No. 1 of 2016: The Setting of Interchange Fees in the Designated Credit Card Schemes and Net Payments to Issuers and No. 2 of 2016: The Setting of Interchange Fees in the Designated Debit and Prepaid Card Schemes and Net Payments to Issuers. These RBA Standards place caps on individual interchange fees on domestic issued card transactions as well as benchmarks for weighted-average interchange fees.

How are interchange fees being changed?

0.8 per cent0.3 per cent

10 8 cents (fixed fee) or 0.2 0.16 per cent (ad-valorem fee)

0.8 per cent

10 8 cents (fixed fee) or 0.2 0.16 per cent (ad-valorem fee)

1.0 per cent

0.5 per cent

8 cents (all debit cards); 8 cents (single-network debit cards)

What is the impact of changing interchange fee caps?

While recognising that merchants benefit from payments using efficient and reliable payment processing services, the RBA Conclusions Paper suggests that interchange levels are materially above efficient levels. Areas that the RBA Conclusions Paper examines as part of its conclusions include:

Net compensation – closing the gap

As part of the above changes to the Standards, the RBA has also concluded that it will extent current requirements in relation to paying net compensation to all Australian card issuers, regardless of whether the card issuer sponsor is domiciled in Australia or not. Currently, the RBA Standards No. 1 and No. 2 above prescribe what payments can be made by schemes by way of compensation to issuers and what amounts should be deducted from those payments. The rules on the payment of net compensation are to ensure that the interchange fees discussed above are not supplemented or circumvented by the payment of other amounts. These rules currently apply to Australian issuing members of the schemes (and the card issuers that they sponsor). However, some Australian issuers are sponsored by offshore scheme members and it is unclear whether the standards technically apply. The RBA will extend the Standards to also apply to that activity and also to apply to transactions acquired overseas (not just in Australia).

Timing of changes affecting interchange fees

Changes to the regulation of domestic interchange fee will commence from 1 October 2026. The caps on international interchange fees will commence from 1 April 2027.

The RBA has also noted that it will continue to monitor developments in the card payments system, including the share of domestic- and foreign-issued card transactions acquired in Australia for networks that are not currently designated, along with the interchange rates of those networks.

Card payment fee transparency requirements

Review of transparency connected to scheme fees

Part of the RBA's review was on improving the transparency associated with the fees paid by card acquirers and issuers to card networks. The RBA has identified a lack of transparency as inhibiting competition as the framework does not currently allow merchants and payment service providers to accurately understand and compare pricing.

Scheme Fee Roadmaps

As a result of the review, designated card networks will need to engage with the industry and publish a ‘Scheme Fee Roadmap' detailing how they will meet the objectives of making price-setting practices more transparent and better supporting scheme fee reconciliation processes for participants. The RBA Conclusions Paper sets out four Principles to improve card networks' scheme fee management and transparency with supporting plans.

In summary, the Principles are:

The Roadmaps (which must also include the relevant steps to support these Principles) must be available to the RBA and on the card network websites by 1 April 2027.

Other transparency measures

The Conclusions Paper also provides for other transparency measures relating to fee transparency and for competition. This includes requiring:

Further RBA payments review coming mid-2026

The Conclusions Paper does not address all areas that the RBA intends to examine as part of its review of Australia's payment system. The Conclusions Paper specifically notes that it the RBA was not able to address all areas in time due to delays in the passage of the amendments to the Payment Systems (Regulation) Act 1998 (Cth).

The RBA has stated that in mid-2026 it will start a new public consultation. This will cover areas including:

Any service provider operating in these areas should be ready to engage in this next round of consultation.

Alice Molan Herbert Smith Freehills Kramer LLP Herbert Smith Freehills Kramer LLP Exchange House Primrose Street London EC2A 2EG UNITED KINGDOM Tel: 212 715 9100 Fax: 212 715 8000 E-mail: [email protected] URL: www.hsfkramer.com