What the RBA’s 2025 Discussion Paper Could Mean for Members
The Preamble
Australia is in the midst of a quiet but consequential payments reform. The latest in a series of consultations is the July 2025 discussion paper by the Reserve Bank of Australia (RBA) on the “Review of Merchant Card Payment Costs and Surcharging”. At the heart of this topic is a pertinent question - what does it cost to get paid?
This issue is not new. Even before the October 2024 Issues Paper on the subject, there were growing concerns in Australia (and in other parts of the world too) around the burdens of card acceptance costs, particularly for small and medium sized merchants, as well as the lack of transparency on pricing. In this blog, we dive into the concerns that the RBA has flagged in the July 2025 paper, and what aspects the merchant community should track closely. EDIT THIS PARAGRAPH: Explain why the topic matters or provide historical context. Delete if not needed.
The Premise
The RBA, through this paper, is examining two interrelated issues - (1) the costs merchants incur when accepting card payments, and (2) the rules around surcharging. While in regard to the former, the paper primarily raises questions around interchange fees, scheme fees and Payment Service Provider (PSP) margins, on the latter, the paper reconsiders the permissibility of merchants charging their customers extra when they use certain payment methods.
The Promise and Fine Print
The RBA’s proposals outline a substantive series of reforms. If implemented well, this could mean transparency and reduced cost burdens for merchants.
Over the past decade or so, the RBA has been nudging the industry towards transparency and efficiency. With the overall evolution of the payments landscape (read digital wallets, app-based checkouts etc.), the RBA believes that surcharging rules feel outdated, especially since PSPs have moved towards a default blended/ flat-rate pricing as opposed to custom pricing plans. Within the context of the opacity in fee structures and the rising card acceptance costs, the proposed dismantling of surcharging practices may feel concerning. The RBA appears to acknowledge this in that it has indicated that the removal of the prohibition on no-surcharge rules must be implemented in consort with a reduction in card acceptance costs for merchants.
The RBA proposes the tightening of interchange caps, across domestic, international, credit, debit, prepaid and commercial cards, to enable lower card acceptance costs. This could mean a reduction in the domestic credit interchange cap to 0.3% of the transaction value, and the removal of the weighted average benchmark. For domestic debit and prepaid cards, the RBA proposes a reduction in the interchange weighted-average benchmark and cap to 6 cents per transaction. It also suggests lowering the ad valorem cap to 0.12% of transaction value. With respect to transactions on foreign-issued cards, the RBA recommends introducing caps on interchange fees - of 0.2% (debit and prepaid cards) and 0.4% (credit cards) of transaction value for card-present transactions, and 1.15% of transaction value (debit and prepaid cards) and 1.5% (credit cards) for card-not-present transactions.
It goes on to propose mandatory fee transparency via public disclosures of fee structures, and adding regulatory bounds around scheme fees. The RBA is proposing that card networks be required to publish their aggregate interchange and scheme fees on a quarterly basis, with a detailed breakdown by card type and other details. It is also setting the expectation that card networks will work closely with PSPs to simplify scheme fees, and that card networks will justify any scheme fee increases by explaining clearly the additional services/ value they are providing. The RBA also proposes improving the transparency of merchant service fees by requiring acquirers processing over AUD 10 billion card payments annually to publish their merchants’ average costs of acceptance on a quarterly basis.
The RBA also presents an implementation timeline proposal in the paper, where it indicates that most changes with respect to the surcharging rules and interchange regulations will likely be effective on 01 July 2026. Disclosures will likely need to be published by 30 July 2026 (the first data reporting period to be 01 July - 30 September 2025). Scheme fees related expectations will need to be actioned immediately upon publication of the Conclusions Paper in Q4 2025, while acquirers’ disclosure of merchants’ cost of acceptance will need to be published by 01 July 2026. Post completion of this consultation process, the RBA is expected to publish the Conclusions Paper with the final decisions by the end of 2025.
The Parting Word
The regulatory will in Australia is focused on driving competition, efficiency, transparency and fairness in the payments ecosystem. This review has not emerged in a vacuum - it is the result of a series of pre-consultation meetings and engagement with the industry and other stakeholders. And the MRC welcomes the RBA’s intentional approach to building a framework that supports innovation while also ensuring transparency.
The discussion paper is available here. The MRC will submit a response on behalf of our members to the RBA by the deadline (26 August 2025). Please reach out to Kriti Trehan (kriti.trehan@merchantriskcouncil.org) if you’d like to discuss this further.
