RBA Suggests Introducing More Competition to Bring Down Card Surcharge Costs

RBA Governor Michele Bullock admitted the bank did not have power to investigate payment service providers’ over-surcharging.

A supplied undated image obtained on Dec. 6, 2019, shows a eftpos machine being used with a smart watch. AAP Image/Supplied by Tyro

The Reserve Bank of Australia (RBA) says introducing more competition could help deal with the problem of excessive surcharging by electronic payments.

At a recent parliamentary inquiry hearing, a member of the Standing Committee on Economics raised concerns that some merchant service providers were charging more than average rates.

He also noted that government agencies like the Australian Competition and Consumer Commission (ACCC) did not have the power to investigate excessive charges from providers.

In response, RBA Governor Michele Bullock said the bank did not have the power to investigate.

“So there are some payment service providers that we don’t actually have any power over,” she said.

“The ACCC has those particular powers … but they’re finding it very difficult to enforce it.”

At the same time, the governor pointed out that some service providers could circumvent oversight.

“Payment services providers have found a way to make it seem to the merchants like they’re not paying anything,” she said.

Australia's Reserve Bank Governor, Michele Bullock, speaks during the Monetary Policy Decision media conference in Sydney, Australia on Feb. 18, 2025. David Gray/AFP via Getty Images

“That, for us, is a challenge. It’s a completely unintended consequence of removing [the] ‘no surcharge rules,’” she added.

Amid the challenges, Bullock stated that more competition could be the key to solving over-surcharging.

“The typical way that these sorts of things would be worked out would be competition,” she said.

“If payment service providers are charging a lot more, then merchants would seek out [other services]. There'd be competition for someone to undercut them and so on.”

Bullock’s remarks came after the ACCC revealed that it receives at least 100,000 consumer complaints about surcharging practices each year.

The consumer watchdog said unexpected add-on costs at checkout had caused many Australian consumers to be upset and feel unfair.

The Risk of Unwanted Consequences

Meanwhile, RBA Assistant Governor Brad Jones said the sharp increase in surcharging since 2019 was one of the reasons that the bank commissioned a review of the payment system.

However, he said a careful approach to reforming the system was needed.

“When you think about the payment system, you have to think about a very broad ecosystem with lots of different stakeholders,”  he said.

“You’ve got consumers, you’ve got merchants, you’ve got acquirers, you’ve got card issuers, and then you’ve got the network operators, and each of them has different interests.

“If you focus on one part of that ecosystem, you might set off a chain reaction further upstream that might undo some of the intent of what you are trying to achieve.”

As such, the assistant governor said the RBA was taking careful action to consider what the spillover effects from different policy options could be across the entire payment system.

“Because one way or another, the costs in the system have to get distributed, and we want to make sure that’s done in a fair and equitable way,” he said.