Australia: Merchant Acquiring & Risk

Merchant Acquiring & Risk

The RBA's Conclusions Paper on its Review of Merchant Card Payment Costs and Surcharging confirms two high-impact changes to card-payment economics in Australia, both of which carry direct operational implications for acquirers, payment facilitators, and merchants.

The first and most immediate change is the removal of surcharging on eftpos, Mastercard, and Visa debit, prepaid, and credit transactions from 1 October 2026. This is a hard operational deadline: from that date, merchants may not impose a surcharge on any of these card types. The enforcement mechanism is notable. The surcharge ban is implemented via card-network merchant-agreement rules rather than through direct RBA or ACCC enforcement action. The ACCC continues enforcing the existing cost-recovery framework — under which merchants may only surcharge up to their reasonable cost of acceptance — until 1 October 2026. After that date, the prohibition is embedded in scheme rules, meaning that acquirers and payment facilitators bear the primary compliance responsibility through their merchant agreements. Merchants that continue to surcharge after 1 October 2026 will be in breach of their merchant agreements with their acquirer, not directly in breach of a regulatory instrument.

This implementation architecture has several analytical implications. First, it places the compliance burden on the acquirer-merchant relationship rather than on a direct regulatory enforcement channel, which means acquirers and payment facilitators must update their merchant agreements, terminal configurations, and merchant-facing communications ahead of the deadline. Second, it means that enforcement will initially be scheme-driven rather than regulator-driven, which may affect the speed and consistency of compliance across the merchant base. Third, it creates a potential gap between the formal prohibition date and the practical elimination of surcharging, particularly for merchants using legacy point-of-sale systems that require software updates.

The second change is the reduction of the domestic interchange fee cap from 0.8% to 0.3%, accompanied by a new foreign-card interchange cap of 1% — down from as high as 2.4% — and additional cost-transparency measures, all commencing 1 April 2027. The domestic cap reduction is a significant compression of the interchange economics that underpin card-issuer revenue and, indirectly, rewards programmes. The foreign-card cap is a new instrument targeting the premium interchange rates that international card schemes have historically charged for foreign-issued cards used in Australia; the reduction from up to 2.4% to 1% is a substantial cut that will affect the economics of inbound tourism and cross-border e-commerce transactions.

The RBA estimates that the combined package will deliver up to A$1.8 billion per year in total consumer and business savings, including approximately A$910 million in reduced merchant service fees. These are assessed estimates rather than confirmed outcomes, and the distribution of savings between consumers and businesses will depend on how merchants pass through the reduced acceptance costs.

The bank versus non-bank distinction is relevant here primarily at the acquirer level. Both bank-owned acquirers and non-bank payment institutions operating as acquirers or payment facilitators are subject to the scheme-rule changes. The interchange-cap changes affect card issuers — predominantly ADIs — more directly than acquirers.

Outlook

The 1 October 2026 surcharge-ban deadline is the immediate operational priority for acquirers and payment facilitators. The 1 April 2027 interchange and cost-transparency changes require a longer lead time for issuers to model the revenue impact and adjust product economics. The RBA's mid-2026 consultation on mobile wallets, three-party card networks, BNPL, and e-commerce platforms (W9) may extend the reform logic into adjacent acquiring and acceptance contexts.