RBA Will Remove Credit, Debit Card Surcharges Beginning October 1

The Reserve Bank of Australia (RBA) has announced that surcharges for debit, credit, and prepaid will be scrapped beginning October 1.

This will likewise apply to card networks, including eftpos, Mastercard and Visa.

RBA to Remove Surcharges

According to a report by Sky News, RBA believes that the surcharge framework is "no longer achieving its intended purpose of steering consumers towards making more efficient payment choices."

RBA Governor Michele Bullock doubled down on this, saying that "Consumers and businesses find the rules complex and confusing, surcharges are often not well disclosed, and most consumers want surcharging to stop."

This may sound like good news to consumers, but ABC News' report notes that businesses will have to make up for losses.

The report notes that once the removal of surcharges takes place, prices of goods and services will likely increase.

"[Businesses] will most likely put it in the total price of the food," Dr Fei Gao from the University of Sydney's Business School told ABC News.

"The business, they need to survive as well," she pointed out. "They can't absorb the fees by themselves, so they will certainly pass it down to the customers."

Other Reforms Introduced by RBA

Aside from the removal of surcharges beginning October, RBA introduced other reforms. This includes lowering the caps on interchange fees that are paid by Australian businesses.

This reform is said to focus on small businesses as they pay the highest fees, according to ABC News.

From 0.8 per cent, interchange fees will be lowered to 0.3 per cent for consumer credit cards. For debit cards, it will be lowered to 0.16 per cent from 0.2 per cent.

As for foreign-issued cards, there will a 1 per cent fee cap. The cap on commercial credit cards will remain unchanged at 0.8 per cent.