Businesses in Australia are facing significant changes with the Government's push to ban surcharges on debit cards and, now, possibly the Reserve Bank's call to remove many other card surcharges, such as EFTPOS and credit cards, from mid-2026. This shift won't wipe out payment costs; it'll just force someone to absorb them, as it will hit business margins.

We have now been actively involved in this discussion, having submitted to the RBA on the matter. Other submissions can be see here.

If surcharges vanish, that feed eats straight into the slim profit they give now for products like Lotto. Many such low margin items raise a major problem. Here for example the ticket price is set by the lottery operator, not the shop. If we are banned from putting a debit surcharge on those transactions, but still pay fees on every tap, the only place left to recover the cost is the rest of the shop. That could mean having to nudge up prices on other prices to make up for the margin lost on fixed‑price lines such as Lotto. Whether that is what regulators and product suppliers intend to allow remains unclear. We are already now starting to look into this problem for our POS System users.

If you want to know where you stand now use your POS system reports to help you track the current situation.

Premium Debit Cards

This matter is not being discussed, but should be, as not all debit cards play fair. Premium ones, for example, those with Qantas points or cashback, run on Visa or Mastercard schemes rather than on cheap domestic EFTPOS. These "rewards debit" cards have higher fees to subsidise the value of flyers' points. It's unfair that merchants are paying for bank customers to get extra benefits. If a blanket surcharge ban treats all these debit cards the same with no surcharge, you will be subsidising flyers' points without recourse.

If all "debit cards" are made surcharge-free, that most likely means these high‑cost reward debit cards will also have to be accepted with no surcharge, even though they cost a lot more to process than a plain EFTPOS debit card. That creates a fundamental unfairness for small retailers: customers are encouraged to chase rewards, while the shop silently absorbs the extra cost. From the retailer's point of view, a "tap‑and‑go" debit card on the credit card route can be expensive, like some credit cards. It will be great for the banks and payment providers as the public will rapidly switch to these debit cards.

There is also a practical problem that no one has really answered yet: how is a merchant supposed to know that a card is such a "debit card" before processing it? Most terminals only reveal the transaction type **after** authorisation. If the rules say "you may not surcharge debit, that leaves us guessing at the point of sale, even if surcharges are allowed. Banks and payment providers should be required to give merchants a clear, simple way to see that this tap is not a standard debit card but a premium card **before** acceptance. If they did this, our software could adjust the surcharge.

Conclusion

For now, we are waiting to see where the final rules land, but our message in the review has been simple. Suppose governments want to make debit card payments surcharge-free. In that case, they also need to make sure that (1) high‑cost "reward" debit cards do not quietly dump even more cost on small retailers, and (2) the systems give merchants clear information at the point of sale so we can actually follow the rules in the real world.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

Dear Valued Customer,

We have received several inquiries about renewing EFTPOS plans, and we are writing to provide strategic advice in light of the Reserve Bank of Australia's (RBA) proposed surcharging reforms. We recommend proceeding with caution before committing to any new or existing supplier.

The RBA is moving to ban surcharges on EFTPOS, Visa, and Mastercard payments, with the changes likely to be effective from July 2026.

Looking at these blended-rate surcharging plans currently being promoted by EFTPOS providers, we have big doubts about some of their claims. While these plans are often presented with attractive incentives, they may expose your business to higher-than-necessary fees once you can no longer pass on those costs to customers.

Our priority is your business's long-term profitability.

You can give us a call to discuss your options if you want.

Best regards,

Bernard Zimmermann

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

The Australian Labor Party made an election promise to eliminate debit card surcharges; this policy was supported to some degree by all major Australian Parties, so as day follows night, we can expect changes here. In response, the Reserve Bank of Australia (RBA), after looking into it, decided to float the idea of banning all surcharges on Australian Debit and Credit cards —but, strangely, not on overseas cards. Now, many of my clients have heard about the Reserve Bank of Australia's (RBA) proposed changes to merchant card payments, but most aren't clear about what's actually being discussed. There's a lot of noise out there, and too few people understand what the proposals mean for their day-to-day business operations. I was pretty stunned to find that many of the industrial bodies that represent them had not asked for their thoughts and then told them what they submitted on their behalf. 

To cut through the confusion, I reviewed every official submission to the RBA's consultation—covering banks, card networks, business associations, consumer groups, and technology providers. I pulled out each central position, concern, and argument to show what's really being debated. It took some time, but the goal is to help business owners like you clearly see who supports what, who's opposed, and what that might mean in real-world terms. So below is a summary table outlining each key issue, why it matters, and where the main stakeholders stand. It’s designed to make a complex discussion easier for you to follow.

In summary, Many of the proposed changes from the RBA have mixed effects. They could help consumers and some businesses, but may also push new costs onto retailers with limited ability to absorb them. For small, local shops—especially those operating on agency models or with very tight margins- it's essential to understand these effects and engage in the debate.

I hope this helps you follow the current debate.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

The Reserve Bank of Australia (RBA) delayed its final decision on card payment reforms until March 2026. It is to allow more time to review submissions from businesses and the public. This extension means SMBs, including retailers, will keep using the current system longer, with surcharges helping to offset processing fees, which still frustrate many customers.

I've seen firsthand how card fees affect low-margin operations like corner stores and newsagents. Our company submitted detailed feedback to the RBA, emphasising that surcharges are strictly for cost recovery under the Australian Competition and Consumer Commission (ACCC) guidelines, and that removing them could shift the burden onto merchants rather than payment providers as claimed.

Reform Timeline and Key Impacts

The Labor Party's 2022 election pledge aims to eliminate debit card surcharges, reducing costs for consumers and small businesses.

October 2024: RBA review begins with a paper proposing bans on surcharges on domestic debit cards and some low-cost credit transactions, caps on interchange fees, and greater transparency.

15 July 2025: A consultation paper shows these fees, totalling $4.3 billion annually, are borne mainly by SMB retailers handling many low-value card payments as cash declines.

26 August 2025: The consultation closed, receiving many submissions, which delayed further analysis.

These reforms could reshape payment processing. It may require adjustments to the POS Systems setups.

Why This Matters for Your Business

• Cash is going, and cards now dominate
• The $4.3 billion in annual fees underscores the need for transparent, cost-effective payments.
• This delay extends uncertainty. Stay informed.

Let's see how it plays out.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

The government is set to deliver on its promise to ban merchant surcharges on EFTPOS transactions. What else happens here is unclear, but given the widespread parliamentary support for this move, it is almost sure to pass into law. While this may seem like a win for consumers, it places a significant operational burden squarely on retailers.

The Merchant fees typically range from 0.5% to over 1.5%, and are a real cost of doing business. Surcharging has been the mechanism to pass this cost directly to customers who opt for card payments. If the government bans this practice, these costs don't simply vanish. Instead, the financial responsibility shifts entirely back to the retailer. To maintain their profit margins, they will have no choice but to incorporate these fees into their product prices.

The Repricing Nightmare

It leads directly to the core of the problem if surcharges are banned, every single item in the shop will need to be repriced. 

For even a small retail shop with thousands of individual items, this is not a simple task of simply updating its POS System. It means physically going through the entire inventory, calculating new prices for each product, printing new labels, and replacing every price sticker on your shelves. It would be about three intense working days for a typical small business.

Strategic Timing is Everything

The most practical and least disruptive time for a retailer to undertake such a massive task is during the annual stocktaking.

Stocktake Synergy

Most retailers conduct a full stocktake at the end of the financial year for accounting and tax purposes. This process already involves physically handling and accounting for every item in the store. You could re-sticker a new price at the same time. By combining this repricing project with your annual stocktake, you can achieve an efficiency gain. 

Maximising Efficiency

Carrying this out at any other time of the year would require a second, out-of-cycle stocktake. It would, as such, double the workload. While this combined approach doesn't eliminate the extra work, it could reduce the overall time needed. A standard three-day stocktake might stretch to five days to cover the repricing and relabelling, saving you a day of work.

Conclusion

If this ban goes through, the implementation date is set for the start of the financial year. Allowing these price adjustments to be made while a stocktake is already underway is the least destructive and most logical approach for retailers.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

The Reserve Bank of Australia (RBA) on Thursday, 11 September 2025, published POS Solutions’ latest submission to its review of merchant card payment costs and surcharging, now in its second round of consultation.

We were asked, in view of the importance to news agencies of the proposed ban on surcharging, to submit our views.

Here is the press release of our submission to the Reserve Bank.

**FOR IMMEDIATE RELEASE**

POS Solutions Challenges RBA Surcharge Ban, Proposes Real-Time Fee Competition to Genuinely Lower Merchant Costs

POS Solutions, a leading Australian provider of POS systems, has made a formal submission to the Reserve Bank of Australia's (RBA) review of merchant card payment costs. The submission warns that the proposed ban on card payment surcharging fails to address the root cause of high fees and will unfairly penalise small businesses by forcing them to absorb costs they cannot control.

The submission argues that banning transparent surcharges does not eliminate the cost of acceptance; it merely hides it. This forces retailers to subsidise the expensive rewards programs associated with premium credit cards, an anti-competitive practice that disadvantages small merchants who lack the negotiating power of larger corporations. Furthermore, POS Solutions challenges the RBA's assumption that card payments are universally cheaper than cash, a claim that overlooks the reality for many small businesses where time and labour are not accounted for in the same way as in large organisations.

"A surcharge ban is a band-aid on a bullet wound," said Bernard Zimmermann, a retail expert at POS Solutions. "It doesn't solve the core problem the fees create and the hidden costs passed on to merchants. Our concern is that this move will create new, hidden fees that ultimately harm the very businesses the RBA aims to protect."

As an alternative, POS Solutions has proposed a forward-thinking approach that would require many payment acquirers to provide per-transaction fee quotes in advance for each transaction. It would allow a merchant's **Point of Sale (POS) system** to choose the most cost-effective processing method for each transaction and also inform the merchant of the cost beforehand. It would create genuine competition among providers and give businesses better control over their expenses. It would be a notable improvement over the current structure.

"Our proposal for real-time fee competition would empower merchants with the transparency they currently need," Zimmermann added. "This practical solution could be implemented within months and would deliver real savings by letting technology find the lowest cost for every transaction."

About POS Solutions:
POS Solutions is a leading provider of **Point of Sale (POS) system** technology for Australian businesses. With extensive expertise in the challenges faced by small to medium-sized enterprises, the company delivers innovative and dependable POS systems.

**Media Contact:**

Details below

POS Solutions submission

To read POS Solutions' submission in full, please visit the RBA's Website for submissions on the Review of Merchant Card Payment Costs and Surcharging here.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

Determining your cash and EFTPOS payment breakup involves reviewing the mix of payment methods your customers use, such as cash, debit cards, and credit cards. We are going to do it directly from your point-of-sale (POS) system. 

This matters now so much as in the current climate, with RBA discussions focusing on making payments fairer for consumers while claiming to protect merchants, knowing your payment mix will help you forecast potential impacts. In my view, their proposals will encourage customers to drop lower-fee methods like cash and debit, and push the consumer to premium credit cards with high fees. 

Go to the main menu and select "End of day."

Click where it has a green arrow.

Now, in your Options menu, marked in a green square, tick everything. You will not be sorry if you get too much.

The part of the report you are looking for is the Sales Payment Breakup below.

Pick an appropriate period, generally the last year. Running it a few times with slightly different dates as you may get a better value with different dates. One caveat here is that cash receipts are going up slightly now.

Also while you are there, I suggest checking some of the other great information there such as hourly breakups, to understand peak times for specific payment methods. If your mornings see more cash sales from quick coffee runs, while evenings lean towards cards for larger purchases, you can tailor promotions accordingly. In my experience, retailers who dive into these details often uncover trends that lead to smarter decisions, like staffing adjustments or targeted discounts. 

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

Rising debit and credit merchant fees are escalating costs for Australian businesses and consumers, with RBA data revealing steady increases since the COVID-19 pandemic.

As I've stated before, the current system is anti-competitive, inefficient, and unfair. This proposal will exacerbate it. Now I support debit as a default payment method, which is Labor policy, but this extends far beyond.

The RBA's figures paint a tough picture of the surcharge ban. Click here for their latest statistics. They assume competition and fee reductions will help SMBs absorb costs. But my analysis shows the RBA's figures show they are rising instead.

Fairness in Payment Defaults.

A key issue is fairness: Cash as the default equalises acquirer fees for all businesses, regardless of size. Switching to debit disadvantages smaller ones, as large organisations negotiate lower rates.

Card Type Fee Breakdown

Let's start with the facts. The RBA expanded its merchant fee reporting in December 2024, giving us a clearer view of payment costs. By June 2025, check the table  C3 Average Merchant Fees. It highlights increases in fees across the board. These are major blips, and part of a broader trend that's been going on since the COVID pandemic. Now I have gone over these figures, and this is what I can see.

Eftpos

These fees rose 10% in just six months, hitting 0.44% of transaction value. That's mainly due to merchant service fees climbing from 0.37% to 0.41%, while other charges like terminal fees stayed flat at 0.03% to 0.04%. Historically, Eftpos fees have fluctuated, but since December 2022, they've jumped from 0.26% to 0.44%, a 69% increase overall, which looks pretty high.

MasterCard and VISA

Debit fees went from 0.57% to 0.59%, and credit fees from 0.95% to 0.97%. Visa fees are a little better, but still up their debit fees now are 0.54%, and interestingly, their credit rate is held at 0.87%.

Other cards

It's no wonder that so many people do not accept American Express, as its credit fees are 1.35%, and Diners Club is even worse at 1.70%.

International transactions

Now these would hurt as Visa credit international fees are 12.6% from 2.47% in December 2023 to 2.78% by June 2025. If your store attracts tourists, these hikes will hurt.

This challenges the assumptions behind the proposed surcharge ban; interchange fees are only one of several fees, and these fees are going up. This is a big disconnect between policy and reality.

Given these rising fees and the RBA's disconnect from reality, here are practical steps to optimise your operations.

Practical Tips to Optimise Your Operations

Your POS collects transaction details, letting you analyse fee patterns. Compare them to RBA benchmarks. Review the figures, and if they are higher, take them to your providers. There is nothing wrong with you asking them, "My fees are above the 0.41% Eftpos average, why can't we adjust?" I've helped retailers save thousands this way.

Review your international cards. Many have, after doing this, either introduced a bigger surcharge or refused to accept them.

Support cash.

If you are in online sales, check your fees.

(This article draws from the latest RBA data as of June 2025)

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

The Reserve Bank of Australia (RBA) proposed eliminating merchant surcharges on EFTPOS and credit cards as part of its 2025 review of merchant card payment costs. The RBA claims this move would simplify payments, increase transparency, and save consumers an estimated $1.2 billion annually. Businesses would also benefit from their proposed lower interchange fees. They then asked the public to comment on their proposal here. They received approximately 85 responses, and as expected, the reactions are mixed, mainly concerning costs and the likely business impact. What I have done here is review many of the responses and provide a summary of their views. The first point to note before I go into the details is that every one of them thinks the existing system is wrong and they want change. 

To understand the divide, let's start with consumer views, which primarily support the change.

Consumer Perspectives

Consumer advocates, such as Choice, broadly welcome the proposal. They view surcharges as unpredictable fees that add to everyday expenses in our cashless society. These fees feel like hidden costs. Advocates note that 85% of Australians prefer prices to include everything, rather than having to pay additional fees at checkout. Overall, they believe the public will save money.

Personal Insight

It annoys me too. Furthermore, despite our efforts, many clients don't activate Least Cost Routing (LCR) to cut merchant costs. Often, it's ignored, and many merchants assume that, since customers will cover the fees via surcharges, they do not need to worry about it. I disagree that your higher fees are costing you. Activate LCR now!

SMB Business Views

These express caution, fearing that the ban could force them to absorb the costs. They do not see the fee reduction as adequate. Those in low-margin sectors, such as retail, highlight risks to viability. For instance, if a business operates on a 4% margin and costs rise by 1% due to lost surcharges, that's a quarter of their profit erased. Some are predicting inflationary pressure. They tend to see the EFTPOS and credit card fees as high.

I consider this fear to be justified. Many merchants have no control over the prices. Without surcharges, many in the public will switch to premium cards with even higher fees that the merchant will have to pay. Consider this analogy: the cost of delivery does not disappear, even if someone claims a merchant cannot charge for it. The merchant will pay the price of the goods, or the price will go up. It will undoubtedly be inflationary.

Payment service operators (banks) tend to support some surcharge as they are concerned about squeezed margins. They now view debit and credit card fees as low. I liked the NAB response, which is worth a read.

Fin tech providers tend to prefer a surcharge-free electronic payment method, but they also accept that surcharges are necessary in today's market. Some see opportunities for alternatives, such as account-to-account payments, which some chemists are currently testing, as well as bitcoin.

Visa endorses the ban, as it will reduce consumer confusion, but doubts that the RBA's interchange fees are viable without cuts in services, such as fraud protection.

Industry Group Reactions

Retail and payment industry groups are emphasising potential unintended consequences. For example, the Australian Retailers Association argues that while surcharge removal simplifies operations, it will also obscure payment costs, making competition more challenging in margin-tight environments.

Groups like the Independent Payments Forum stress that the fees are the cause of the surcharges; the result will just be hiding these costs. They also dislike that larger organisations are charged significantly less in bank fees. Please review the graph provided below, which illustrates this point.

For many of our readers the ALNA submission will be relevant and well worth a read too.

Expert and Analyst Opinions

These are generally positive, e.g. Professor Steve Worthington describes himself as "delighted," noting it ensures "the price you see is the price you pay,". They point to the UK's experience with a surcharge ban, which led to a slight increase in inflation but improved transparency.

However, some caution that without robust enforcement, costs could shift to unregulated areas, such as Buy Now Pay Later services. I have my doubts about that. BNPL generally now has no customer surcharges but very high merchant fees.

Impacts of RBA Surcharge Removal

We have divided opinions here.

On a personal note, I would like to see the RBA examine the existing fees in detail to determine whether they are high or low.

What do you think of the RBA proposal?

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

The Reserve Bank of Australia's (RBA) ban on surcharges for debit and credit card payments, proposed to take effect on 1 July 2026, will, if accepted, significantly reshape the payment methods used in your store. This reform targets surcharging fees that retailers add to transactions paid for using Visa and Mastercard.

I am building on my article from yesterday, which sparked lively discussions. Let's explore the key issues you should consider.

Firstly, this proposal does not address the cause of why people charge these surcharges; the symptom of the surcharge is not the cause. Nor does it address the fact that SMB businesses pay significantly higher fees than larger organisations, often 350% more. The only point mentioned here that is relevant is the greater transparency in the costs. However, it's become quite transparent now. When I reviewed my EFTPOS and credit charges last time, I got, among other documents, a charge table showing the rates the bank would charge depending on my turnover and average transaction value.

If the proposal is accepted, likely fallouts include reduced cash transactions, increased credit card usage, continuing fee disparities between SMBs and large organisations, and some inflationary pressures.

Exploring the Key Fallouts if the Proposal Proceeds

Why Cash Might Fade Faster

13% of payments were made using cash in 2022, which is down from 70% in 2007, and that number is projected to fall to just 4% by 2030, according to Australian Banking Association.

Cash has long been popular for small, everyday purchases, such as a quick coffee or a newspaper at your local shop. Its appeal lies in the simplicity and lack of fees for both you and the customer. However, with surcharges banned, the cost barrier between cash and cards vanishes for consumers. Why would they dig for coins when tapping a card costs the same? This shift would further diminish the role of money, accelerating a trend already evident in Australia, which is what the Australian government aims to achieve.

Beyond diminishing cash use, we can expect to see a greater use of credit cards, as this ban would also equalise charges, leading to another key shift: many will ask, Why use debit when they can get credit for free?

Debating the Consumer Savings and Business Losses

The RBA estimates that Australian consumers could save nearly $1.2 billion annually if the proposal is implemented, equating to approximately $60 per card-using adult. This figure is debatable. Much of this money will shift elsewhere in the system, rather than disappear. That $1.2 billion represents a substantial loss to Australian businesses, particularly the large issuers of debit and credit cards, who stand to take significant revenue hits if the reforms proceed in their current form without changes.

Fee Hikes

Major banks will seek to recover losses from lowered interchange fees.

Running payment networks for Visa, Mastercard, and EFTPOS is enormously expensive. The cost of infrastructure, security, and global operations costs won't disappear under this plan.

Banks will need to pass these costs on somewhere. They might increase cardholder fees, such as annual charges or interest rates. But hiking merchant fees through administration charges is more likely.

Uncertainties Around Overseas Cards and Surcharging

It's unclear whether the plan will allow surcharges on overseas cards, such as American Express or a Visa issued in Singapore. I suspect that some form of surcharging will still be permitted for international transactions. It creates a pain point, as we will need to distinguish between domestic and foreign cards at checkout, which is long overdue. If this is done, we can adapt our POS systems to automatically detect card types, allowing us to handle surcharges without slowing down service.

Potential Inflationary Effects and Price Adjustments

Many businesses that currently apply surcharges are already considering price increases to compensate for the lost revenue. If you are among them, this approach makes sense to protect your margins, but it will contribute to slight inflationary pressures across the economy. If you are affected here, this will require careful handling to avoid alienating price-sensitive customers.

Turning Challenges into Opportunities with Practical Strategies

It's not all downside, as I stated yesterday, these changes will eliminate surcharge-related disputes, thereby fostering a better shopping experience. The reality is that customers hate surcharges.

With the timeline in 2026, you have time to prepare.

One idea worth considering is offering cash discounts after the ban is lifted. It remains an allowable option and can encourage customers to choose cash, thereby reducing your fee exposure. For example, one of my clients offers a free can of drink if the transaction is over $30 and is paid in cash. It worked well.

You need to consider how to adapt your payment strategy.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

If you own or manage a retail business in Australia, it's time to consider the Reserve Bank of Australia's (RBA) proposed changes to card payments, which aim to eliminate surcharges on debit and credit cards. While the RBA surcharge ban offers some benefits, it also brings challenges for SMB retailers.

The Labor Party entered the last election committed to eliminating debit card surcharges, which were part of their election promises. Now the RBA has expanded this significantly, proposing a broader ban that includes both debit and credit cards. If it goes through, it will directly impact many SMB retailers as it means you will no longer be able to impose a surcharge to offset the costs of accepting credit, debit, or prepaid cards from major networks such as Mastercard, Visa, or EFTPOS. This forces you to absorb these expenses.

After yesterday's consultation, although we were hoping for something better, we concluded that it's not all negative, as the RBA is also requesting that interchange fees be lowered. For instance, debit card interchange fees are to be decreased from 10 cents to 6 cents per transaction, while credit card fees go to 0.3%. The plan also caps fees for foreign cards, but it's unclear how this works. For example, if a French bank charges 50 cents, what does the RBA propose? Reading the document, it's unclear how these lower fees are to be passed on to the SMB retailer. My immediate concern is whether the banks will be able to charge additional or higher administration fees to offset these reductions.

The RBA plan will require payment processors to disclose their fees in a clear and comparable manner, segmented by merchant size and card type. Although some saw this as a positive, I view it as insignificant, as reputable payment processors have been doing this for some time.

These changes are scheduled to commence on 1 July 2026. At least this gives us all a reasonable timeframe for adaptation.

Before I review some of the positives and negatives, let me note that today, the debit card is the dominant form of payment in retail, and it should, as such, be the default payment method for pricing.

Positives for SMB Businesses

The reforms could reduce card acceptance costs through new, lower caps on interchange fees. Since most SMBs already absorb these costs into pricing, they stand to save money. The RBA estimates that 90% of businesses that do not surcharge will benefit (our data shows 70% do not surcharge), meaning the majority could still gain.

Eliminating the surcharge will prevent many customer disputes, complaints, and confusion, and reduce friction with customers.

The push for greater fee transparency is another benefit, as it eliminates the need for you to request it directly. Potentially leading to cost savings.

It does not stop you from offering discounts for cash transactions. This approach rewards customers who opt for the lower-cost option of cash without violating the new surcharge ban.

Implementation costs, while present, are relatively modest. In our POS System and most others, it's just a minor change to the settings. The price of many goods in the shop will need to be changed to include the costs of the surcharges.

Challenges and Considerations, the negatives.

While the reforms offer substantial upsides, they also present problems for SMB businesses operating today with tight margins. Payment providers will still be charging fees, which SMBs must now absorb. For retailers in low-margin sectors, such as those with regulated or capped prices, like Lotto, I doubt they will see an increase in merchant margins to compensate for the loss of the surcharge. Lotto has made it quite clear that they do not like these surcharges.

Unfortunately, the plan favours larger retailers, who now have better rates, over smaller ones, and the RBA seems unconcerned with that.

The ban on surcharges encourages customers to use higher-cost cards. Many will switch from debit to credit cards. What happens if an American Express card is used?

Reliance on payment providers to pass through savings from lower interchange fees introduces uncertainty. I have spoken to them several times about this issue, and they claim that they are making little of it. If so, where do they make up the difference? Therefore, although the RBA anticipates that these reductions will benefit merchants, there is no guarantee that they will occur. Will there be higher administrative charges?

Additionally, merchants will lose some negotiating leverage with banks, as the current surcharges have been a concern for the banks.

The Outlook for SMB Retailers

With the current strong political backing, the RBA's plan is likely to proceed as outlined in their July 2025 consultation paper. SMB retailers should prepare now for the July 1, 2026, rollout.

So get ready to adapt? Once we are aware of the exact changes, we will provide a free guide to our users to help them make the necessary adjustments.

This information is based on the RBA's consultation papers from July 2025, which can be found here.

Written by:

Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.