Australia bans card surcharges from October 1, reshaping fees and rewards

Effective 1 October, the Reserve Bank of Australia will ban merchants from adding surcharges to debit and credit card transactions, a move projected to save shoppers about $1.6 billion each year. To offset the loss of interchange revenue, banks are tightening reward structures, capping points, removing travel insurance, and increasing annual fees and interest rates on outstanding balances. The RBA will also lower the maximum interchange fee for small businesses from 0.80% to 0.30% of a purchase, potentially saving merchants $910 million annually.

While the reform aims to increase price transparency, some businesses may pass higher processing costs onto consumers, leading to a modest one-off price rise of roughly 0.1%. Experts warn that credit-card “churning” will become harder as sign-up bonuses shrink and cooling-off periods lengthen. Consumers are urged to review communications from their card providers and compare offers to find the best value.