SYDNEY, Australia – Australia’s central bank is proposing to eliminate surcharges on most debit and credit card payments for consumers while lowering interchange fees paid by businesses, moves it is estimating will save the two groups around A$2.4 billion ($1.57 billion) a year.

Merchants and restaurant owners, however, have raised some concerns.

In a consultation paper on the proposals, the Reserve Bank of Australia said surcharges and fees were no longer in the public interest and it is inviting feedback from interested parties on the proposal by August 26.

The RBA said it found surcharges on debit and credit cards, including Mastercard  and Visa no longer achieve the intended purpose of steering consumers to make more efficient payment choices.

Harder to Avoid

“The RBA said avoiding surcharges had become harder as cash usage declined and there were challenges with enforcing the current rules,” Reuters reported.

According to the RBA’s most recent triennial consumer payments survey, the share of consumer payments made in cash had fallen from around 70% by number in 2007 to 13% in 2022.

“Removing surcharging would make card payments simpler, more transparent and help to increase competition in the card payments system,” the RBA said, adding that capping and lowering interchange fees would benefit around 90% of Australian businesses.

Concerns Over Funds for Investment

Alan Machet, group country manager for Visa Oceania, told Reuters he welcomed action on consumer surcharges, but also said interchange fees were needed to fund investment in innovation and fraud protection.

The RBA also proposed to require card networks to publish the interchange fees they charge, making it easier for businesses to shop around for a better deal.