👉 Background: Back in 2003, the RBA changed laws to allow retailers to pass on credit and debit card fees to shoppers. At the time, it wasn't such a big deal because nearly 70% of purchases were still made with cash. But Australia’s payment landscape has changed a lot since the early 2000s.

‍👉 What happened: So now, with the majority of payments made with credit or debit cards, the RBA is recommending 3 key changes to Australia’s payment system:

1. They want to ban surcharges on all debit and credit transactions. This is estimated to save shoppers $1.2 billion dollars a year…or $60 a year for each “card-using adult”
2. They want banks to spill the beans on their hidden fees
3. They want Australia’s major banks to reduce their interchange fees, which are fees charged to businesses by payment facilitators.

‍👉 What else: Important to note that these are just recommendations at this stage, but for the next 6 weeks, the RBA will continue consulting on these recommendations before coming to a final conclusion.

What's the key learning?

💡As Aussies have traded in cash payments for cards, the payment system hasn’t kept up. A national RBA survey showed that usage of cash dropped by more than half in 2022 down to just 13% of total payments in Australia, yet we’re still getting pinged fees like its 2003.

💡Aussie retailers are still being hit with a fee which is then passed on to shoppers when using a card. That $6 coffee ends up being $6.21 with that additional surcharge.

💡But the big question is, if shoppers aren’t paying the surcharge, someone else will be — and that could be everyday businesses. This would put a lot of pressure on small business margins. So unless the RBA also forces payment giants to lower their fees, this policy might just shift the pain instead of fixing it.