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No more card surcharges: what the Reserve Bank’s proposed changes mean for your wallet

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No more card surcharges: what the Reserve Bank’s proposed changes mean for your wallet

Angel Zhong, RMIT University

That extra 10c on your morning coffee. That $2 surcharge on your taxi ride. The sneaky 1.5% fee when you pay by card at your local restaurant. These could all soon be history.

The Reserve Bank of Australia (RBA) has proposed a sweeping reform: abolishing card payment surcharges. The central bank says it’s in the public interest to scrap the system and estimates consumers could collectively save $1.2 billion annually.

But like all major financial reforms, the devil is in the detail.

The 20-year experiment is over

Surcharging was introduced more than two decades ago to expose the true cost of different payment methods. In the early 2000s, card fees were high, cash was king, and surcharges helped nudge consumers toward lower-cost options.

But fast-forward to 2025, and the payments ecosystem has changed dramatically. Cash now accounts for just 13% of in-person transactions, and the shift to contactless payments, accelerated by the pandemic, has made cards the default for most Australians.

When there’s no real alternative, a surcharge becomes less a useful price signal and more a penalty for convenience.

After an eight month review, the bank’s Payments System Board has concluded the surcharge model no longer works in a predominantly cashless economy. The proposal now on the table is to phase out surcharges and instead push for simplified, all-inclusive pricing.

Who saves – and who pays?

At first glance, removing surcharges looks like a win for consumers. Every household could save about $60 per year, based on the RBA’s estimates. But payment costs don’t vanish – they shift.

This is where the Reserve Bank’s proposal is more sophisticated than it may appear. Alongside banning surcharges, it plans to lower interchange fees (the fees merchants pay to card networks like Visa and Mastercard) and introduce caps on international card transactions.

These changes aim to reduce the burden on merchants, which in turn limits the pressure to raise prices.

Could prices still rise?

Some worry that without surcharges, businesses will simply embed the costs into product prices. That’s possible. However, the bank estimates this would result in only a 0.1 percentage point increase in consumer prices overall.

There are three reasons for that:

  1. most merchants already don’t surcharge, especially small businesses. Of them, 90% may have included card costs in their pricing
  2. competition keeps pricing in check. Retailers in competitive markets can’t raise prices without risking customers
  3. transparency is coming. The reforms will require payment providers to disclose fees more clearly, allowing merchants to compare and switch – fostering more competition and lower costs.

That said, the effects won’t be felt evenly. Merchants in sectors that do currently surcharge, like hospitality, transport, and tourism, will need to rethink their pricing strategies. Some may absorb costs; others may pass them on.

The winners

Consumers stand to benefit most. They’ll avoid surprise fees at checkout, won’t need to switch payment methods to dodge surcharges, and won’t have to report excessive fees to the Australian Consumer and Competition Commission. Combined with lower interchange fees, this means consumers should face less friction and more predictable pricing.

About 90% of small businesses don’t currently surcharge and would gain around $185 million in net benefits. These businesses often pay higher interchange fees, so the reform will reduce their costs. New transparency requirements will also make it easier to find better deals from payment service providers (PSPs).

Large businesses already receive lower domestic interchange rates, but they’ll benefit from new caps on foreign-issued card transactions, which is a win for those in e-commerce and tourism.

The losers

Banks that issue cards stand to lose about $900 million in interchange revenue under the preferred reform package. Some may respond by raising cardholder fees or cutting rewards, especially on premium credit cards. But they may also gain from increased credit card use as surcharges disappear.

The 10% of small and 12% of large merchants who currently surcharge will have to adjust. They may face retraining costs and need to revise their pricing strategies.
Most will be able to adapt, but the transition won’t be cost-free.

Payment service providers will face about $25 million in compliance costs to remove surcharges and provide clearer fee breakdowns. For some, this may involve significant system changes, though one-off in nature.

Will it work?

The Reserve Bank’s proposal tackles real problems: an outdated surcharge model, opaque pricing by payment service providers, and bundling of unrelated services into payment fees. Its success depends on how well these reforms are implemented and whether they deliver real price transparency and lower costs.

Removing visible price signals may create cross-subsidisation, where users of low-cost debit cards subsidise those who use high-cost rewards credit cards. Some economists argue this could reduce overall efficiency in the system.

International experience offers mixed lessons. While the European Union and United Kingdom banned most surcharges years ago, outcomes have varied depending on market conditions. Efficiency gains haven’t always followed, and small business concerns persist.

The road ahead

The Reserve Bank is seeking feedback until August 26, with a final decision due by year-end. If adopted, the reform will be phased in, allowing time for businesses to adapt.

For consumers, this may mark the end of hidden payment fees. But for the broader system, success will depend on more than just eliminating surcharges. It will require meaningful competition, transparency, and vigilance during the transition.

While not a major omission, mobile wallets (such as Apple Pay) and Buy Now, Pay Later (BNPL) services represent a missing component in the broader payments ecosystem that the current reforms do not yet address.

These platforms operate outside the traditional regulatory framework, often imposing higher merchant fees and lacking the transparency applied to card networks.

Their growing popularity, especially among younger consumers, means they increasingly shape payment behaviour and merchant cost structures. To build a truly future-ready and equitable payments system, these emerging models may need to be brought into the regulatory fold.The Conversation

Angel Zhong, Professor of Finance, RMIT University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Money

RBA stands pat on interest rates as hopes dim for future cuts

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RBA stands pat on interest rates as hopes dim for future cuts

Stella Huangfu, University of Sydney

The Reserve Bank kept the cash rate steady at 3.6% at today’s meeting. In its post-meeting statement, the central bank said the monetary policy board

judged that it was appropriate to remain cautious.

This pause follows three cuts earlier this year — in February, May and August, each by 25 basis points — which lowered the cash rate from 4.1% to its current level. Governor Michele Bullock said the bank is watching those previous cuts work through the economy.

Bullock stressed that while inflation has eased from its peak, progress remains uneven, and the bank is not ready to declare victory.

For now, patience is the safer course. The next big test will be the September quarter inflation report, due at the end of October. That release will go a long way to deciding whether cuts resume later this year or slip into 2026. Market pricing, once confident of a November move, now sees the odds as little better than a coin toss.

“By the next meeting in November, we’ll have more data on the labour market and inflation data for the September quarter,” Bullock told a press conference after the meeting.

Why the RBA is waiting

The monthly consumer price index (CPI) for August showed annual inflation rising to 3.0%, up from 2.8% in July. Although this is a 12-month high, much of the increase came from the expiry of electricity rebates — a temporary factor the bank had already anticipated.

Bullock has repeatedly said the Reserve Bank puts more weight on the quarterly “trimmed mean” inflation measure — a point she emphasised most recently before the House of Representatives economics committee. This measure strips out one-off price swings and gives a clearer picture of underlying inflation.

Even so, the monthly figures show the annual trimmed mean edged down from 2.7% in July to 2.6% in August. That suggests the underlying trend remains one of gradual disinflation (a slowing in the pace of price increases), despite the lift in the headline rate.

Bullock told reporters:

The monthly data are volatile […] I don’t want to suggest that inflation is running away, but we just need to be a little bit cautious.

Progress is not yet secure. Inflation must stay within the 2–3% target range on a sustained basis before the Reserve Bank can cut with confidence. Moving too early risks undoing hard-won gains and forcing harsher measures later.



Other data reinforce this cautious approach. June quarter economic growth surprised on the upside, showing the economy is more resilient than expected. Meanwhile, unemployment has ticked higher but remains low, pointing to a labour market that is cooling only gradually.

As the statement noted,

private consumption is picking up as real household incomes rise […] The housing market is strengthening […] Credit is readily available to both households and businesses.

Together, these signals give the Reserve Bank space to pause rather than rush into easing.

A big shift in expectations

The major banks have also adjusted their forecasts. NAB has ruled out any further move this year, dropping its earlier forecasts for November and February cuts and now expecting the next reduction in May 2026. Westpac still expects a November cut, but acknowledges the timing could slip.

Financial markets have also pared back their bets. Pricing once implied near-certainty of a November cut, but that probability has now fallen to roughly 50-50.

The September quarter consumer price index will be decisive: a softer result could revive expectations of an earlier cut, while a stronger one would reinforce the view that rate cuts will not resume until 2026.

With the economy stronger than forecast and CPI a touch higher, both banks and markets are pushing out the timing of cuts. The Reserve Bank’s message is clear: inflation must show sustained progress before policy can be eased. Until then, the next cut is a matter of when, not if.

Rates around the world

The Reserve Bank is not alone in being cautious. In the United States, the Federal Reserve delivered three cuts in 2024, but only made its first cut of 2025 in September. The European Central Bank has reduced rates four times this year, but has kept policy steady since June.

Political tensions, volatile energy prices and fragile global growth all add to the uncertainty, reinforcing the case for patience in Australia.

For households, today’s decision offers no relief. Mortgage repayments remain at an elevated level and consumer spending is weak.

Looking ahead, the Reserve Bank said it will remain data-driven and responsive to risks:

The Board will be attentive to the data […] focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome.

For households, that means the wait for relief goes on. The next move is a cut, but today’s decision makes clear it won’t be rushed.The Conversation

Stella Huangfu, Associate Professor, School of Economics, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Money

Markets remain strong amid potential government shutdown fears

Markets remain strong as investors anticipate jobs data while ignoring government shutdown and tariff concerns

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Markets remain strong as investors anticipate jobs data while ignoring government shutdown and tariff concerns

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In Short:
– Major indices are near session highs, with the Dow up 382 points and resilient to shutdown concerns.
– Rising Treasury yields may challenge bullish sentiment, while upcoming economic reports will influence market direction.
Major indices are trading near session highs, with the Dow Jones Industrial Average up by 382 points, the S&P 500 by 41 points, and the Nasdaq Composite by 100 points.
Investors seem undeterred by the looming government shutdown and new tariff announcements. Despite the challenges, markets appear resilient due to previous experiences with shutdowns.Banner

This coming week, markets should brace for monthly jobs data, assuming no shutdown occurs. Previous initial claims reports have lessened after reaching 263,000 on September 11.

Technical indicators show promise following a retreat to the 20-day SMA. The end of bearish seasonality approaches, coinciding with Q3 earnings season.

Market Perspective

However, rising Treasury yields could pose a challenge for bullish sentiment. The 10-year yield has increased over the past eight trading sessions and may close at a three-week peak.

If it stays below 4.25%, it could support ongoing bullish trends. A notable risk remains the potential negative impact of the jobs report.

Upcoming economic reports include pending home sales, consumer confidence, and nonfarm payrolls, all key to market direction.


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Crypto market plummets near $1 billion in liquidations

Crypto markets crash as liquidations approach $1 billion, marking a severe downturn in September 2025

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Crypto markets crash as liquidations approach $1 billion, marking a severe downturn in September 2025

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In Short:
– Cryptocurrency markets declined significantly, with liquidations nearing $1 billion and Bitcoin below $110,000.
– $442 million in positions were liquidated on Thursday, with Ethereum most affected, raising trader concerns.
Cryptocurrency markets faced significant declines on Thursday, with liquidations nearing $1 billion, contributing to a larger selloff that has cost the sector over $160 billion in market capitalisation.
Bitcoin fell below $110,000, trading around $111,400, while Ethereum dipped below the critical $4,000 support level, marking its lowest point in seven weeks.
The global crypto market capitalisation dropped by 2.2% to $3.91 trillion.Banner

Liquidation reports revealed that $442 million in positions were forcibly closed on Thursday, with Ethereum most affected, accounting for over $180 million.

The previous week saw a larger liquidation event, with $1.7 billion wiped out. Traders are concerned as a significant number of long positions were liquidated in this downturn.

Market Trends

Market analysts highlight a pattern of leveraged trading leading to cascading selloffs. Seasonal factors, regulatory uncertainty, and a strengthening US dollar contributed to the declines.

Despite the downturn, some large investors are taking the opportunity to accumulate assets.


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