The Reserve Bank of Australia (RBA) has decided to ban merchant card payment costs and surcharging, likely impacting ASX bank share earnings.
Today, the RBA’s Payments System Board (PSB) has published a ‘Conclusions Paper‘ about its decision.
The PSB has decided to remove surcharging, reduce interchange fees and increase transparency because it would be “in the public interest and promote competition and efficiency in the payments system”.
RBA to remove surcharges
The PSB said that the surcharging framework is no longer achieving its intended purpose of steering consumers towards making more efficient payment chances.
There is an increasing prevalence of businesses surcharging all cards at the same rate, as well as consumers using less cash.
The RBA said that removing surcharging would make card payments simpler, more transparent and increase competition among payment service providers.
On top of that, the RBA also noted that removing surcharging also aligns with the preference of most consumers for payment costs to be incorporated into advertised prices.
Interchange fees paid by Australian businesses will also be lowered for when they accept domestic or overseas card payments. The RBA said that small businesses should benefit the most because they tend to pay fees closer to the existing caps.
What does this mean for ASX bank shares?
The RBA said that most of these changes will come into effect on 1 October 2026.
An introduction of an interchange cap on foreign cards and some changes to payment cost transparency will come into effect later on 1 April 2027 to ensure the payments industry has sufficient time to implement these more complex changes.
The RBA plans to start a public consultation in mid-2026 to assess the public interest case for regulating areas of the retail payments system that were not covered under this review, including mobile wallets, three-party card networks, buy now, pay later services and e-commerce platforms.
According to the Australian Financial Review, ASX bank shares expect the change could reduce their revenue by $660 million a year. That includes names like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB).
While that’s not exactly the biggest portion of their earnings, it’s a sizeable part of the non-loan earnings.
