Big banks adjust fee structures ahead of RBA credit card surcharge ban

The Reserve Bank of Australia's (RBA) impending ban on credit card surcharges has spurred the nation's largest banks to overhaul their fee structures. The ban, announced earlier this year and set to take effect in October, prohibits merchants from passing on excessive payment processing costs to customers. In response, banks are revising their merchant service fees and consumer transaction charges to comply with the new regulations.

Details of the fee changes remain limited at this stage, but sources indicate that the adjustments will primarily affect how merchants are charged for processing credit card transactions. Currently, businesses often add a surcharge—typically around 1-2%—to cover interchange and scheme fees. Under the new rules, customers can only be charged the actual cost of processing, a move the RBA says could save Australian consumers up to $900 million annually.

The Big Four banks—Commonwealth Bank, Westpac, NAB, and ANZ—are expected to announce further specifics in the coming weeks. Industry observers note that the changes may lead to a reduction in the use of premium rewards cards, which incur higher processing costs, and could encourage greater adoption of cheaper payment methods like debit cards and digital wallets.

Consumer groups have broadly welcomed the ban, arguing that surcharges have historically been opaque and disproportionate. However, some small business associations have expressed concern that banks may compensate for lost revenue by raising other fees, such as monthly account keeping charges or interchange fees. The RBA has stated it will monitor the market closely to ensure compliance and prevent indirect cost shifting.

As the October deadline approaches, both merchants and consumers are advised to review their payment options and prepare for the transition.

Why This Matters

The surcharge ban is expected to reduce costs for consumers who pay with credit cards, potentially saving households up to $150 per year.
Small businesses that previously set surcharges above the actual cost of processing will need to adjust their point-of-sale systems, which may involve upfront costs.
The outcome will test the RBA's regulatory influence over payment system practices and could set a precedent for future efforts to cap other transaction fees.

Background

Credit card surcharging has been permitted in Australia since 2003, allowing merchants to recoup the fees charged by card schemes and banks. Over time, surcharges became a common practice, particularly in industries like hospitality, travel, and retail. However, consumer advocates and the Australian Competition and Consumer Commission (ACCC) raised concerns about excessive surcharging—some merchants charged flat percentages as high as 3-4%, well above the actual cost of processing (typically 0.5-1.5%).

In response, the RBA launched a consultation in 2023, proposing a ban on excessive surcharges. After industry feedback and a parliamentary inquiry, the RBA formally announced the ban in early 2026, with an October implementation date. The move aligns with similar reforms in the European Union and the United Kingdom.

Key Perspectives

Major banks: Support the ban as a regulatory compliance necessity but are restructuring fee models to preserve revenue. They argue that interchange fees are necessary to fund rewards programs and fraud prevention. Consumer groups: Welcome the ban as a win for transparency and fairness. They urge the ACCC to actively enforce the cap and investigate any hidden fee increases. Small business groups: Cautiously support the ban but warn that banks may raise merchant service fees or introduce new charges, effectively shifting costs back to businesses. They call for regulatory oversight of bank fee adjustments.

What to Watch

Specific fee schedule announcements from Commonwealth Bank, Westpac, NAB, and ANZ over the next month.
ACCC enforcement actions against merchants that fail to adjust surcharges after October.
Potential changes to rewards credit card sign-up incentives and annual fees as banks recalibrate cost structures.

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