Big changes could be coming to the way Aussie small businesses handle card payments, with the Reserve Bank of Australia (RBA) floating a proposal to ban surcharges on EFTPOS, Mastercard and Visa transactions.

If the changes go ahead, small business owners may no longer be able to pass on payment processing costs to customers.  The RBA’s goals is to make payments fairer, simpler and more transparent. However, small business advocates aren’t convinced it’s the right move.

What’s the RBA suggesting?

The RBA has released a Consultation Paper as part of its review into card payment costs and surcharging. Its preliminary view is that surcharges on card payments are no longer working as intended.

The paper suggests: “Surcharging is no longer achieving its intended purpose of steering consumers to make more efficient payment choices. Avoiding surcharges has become harder as cash usage has declined, businesses are increasingly charging the same surcharge rate across debit and credit, and there are significant challenges with enforcing the current surcharging rules.”

The RBA estimates consumers pay around $1.2 billion in surcharges every year. By removing surcharges and lowering interchange fee caps, the RBA says the system will be simpler and more competitive. This could save businesses another $1.2 billion a year in fees.

It’s also proposing that banks and card networks be required to publicly disclose the fees they charge, which would help businesses understand where their money is going and shop around for better deals.

COSBOA calls surcharge ban ‘a mirage’

The Council of Small Business Organisations Australia (COSBOA) isn’t sold on the changes. While the advocacy group welcomes the promise of lower interchange caps and greater transparency, they warn that banning surcharges doesn’t remove costs; it buries them.

“Removing surcharges doesn’t remove all the cost, it simply hides it,” said COSBOA Chair Matthew Addison.

“For small businesses already managing tight margins, this means those costs would have to be absorbed into base prices, making it harder for businesses to be transparent and for consumers to make informed choices.”

He also questioned the RBA’s headline figure of $1.2 billion in consumer savings:

“The RBA’s claim of $1.2 billion in consumer savings is a mirage. The reduced interchange fee is welcome; however, merchant fees include many other charges. The reality is that these fees will still be paid, just not disclosed.”

What small businesses could lose

Surcharging has long been a cost-recovery tool for small business owners, especially those dealing with tight margins. COSBOA argues that removing that option could force businesses to raise prices across the board, which would hurt both business owners and their customers.

“Surcharging is not about penalising consumers, it’s about ensuring fairness and transparency,” said Addison.

“A blanket ban ignores the real issue: high and complex payment costs driven by opaque pricing and a lack of competition.”

COSBOA also flagged concerns about enforcement and the risk that some small businesses might revert to cash-only models, which can be a hassle for customers and create new risks around security and accounting.

What small businesses could gain

The RBA’s move to cap interchange fees could put real money back into business owners’ pockets, especially for small and micro business owners who are often hit hardest by these costs

Dr Angel Zhong, Associate Professor of Finance at RMIT, says:

“Small businesses stand to gain significantly from both the surcharge ban and interchange fee caps. With lower processing costs and simplified pricing, they can focus on serving customers rather than navigating complex payment fees.”

She added that the reforms could also be a win for customers:

Consumers have been hit with unpredictable surcharges for years. The $1.2 billion in estimated savings is real money back in pockets.”

However, Dr Zhong warns that the real test will come with how the reforms are rolled out.

“If the RBA doesn’t ensure compliance, we could see merchants subtly raising prices or pushing ‘cash discounts’ that undermine the spirit of reform. This is a net positive, but the transition needs careful monitoring.”

What happens next?

The RBA is calling for feedback on its proposals until 26 August 2025. A final decision and implementation plan are expected to be announced by the end of the year, with changes potentially coming into effect from July 2026.

COSBOA says it’s not against reform, but that the focus needs to be on real business needs.

“If the RBA and government are serious about helping small business, the focus should be on increasing competition, enforcing least-cost routing, and regulating payment providers—not restricting merchant rights,” said Addison.

So, what should you do now?

Whether the RBA’s proposal turns out to be a win for small businesses will depend on how it’s enforced. In the meantime, there are a few things you should do to stay informed about the discussion.

• Review your current surcharging setup: Understand how much of your costs are passed on via surcharges, and how this change might affect your pricing model.
• Compare payment providers: With more fee transparency likely coming, start looking at whether you’re getting the best deal for your transaction volume.
• Have your say: The RBA is open to feedback from businesses until 26 August 2025.

Want to read the RBA consultation in full? Visit rba.gov.au.

For COSBOA’s full response, head to cosboa.org.au.

Let us know. Should card surcharges be scrapped or saved?

Want more? Get our newsletter delivered straight to your inbox!  Follow Business Builders on Facebook , X , Instagram , and LinkedIn