Merchant Card Payment Costs and Surcharging – Issues Paper –
October 2024 1. Background

The RBA has regulatory powers in respect of payment systems and their participants under the Payment Systems (Regulation) Act 1998 (PSRA). Under the Reserve Bank Act 1959, the RBA’s payments system policy is set by the Payments System Board (PSB) and aims to control risk in the financial system, promote the efficiency of the payments system and promote competition in the market for payment services consistent with the overall stability of the financial system. The RBA has used these powers since the early 2000s to introduce standards and access regimes relating to card payments and has periodically reviewed its regulations to ensure they remain fit for purpose given ongoing changes in the payments landscape.

The RBA is conducting a Review of Retail Payments Regulation (Review), with the first phase of the Review focusing on merchant card payment costs and surcharging – the subject of this issues paper. A series of ‘Backgrounders’ providing general information on relevant payments topics discussed in this paper is available separately, as referenced throughout this paper.

The RBA recognises that there are other payments issues that have implications for the safety, efficiency and competitiveness of the payments system. Subsequent phases of the Review will focus on a range of issues in the broader payments ecosystem, including issues that would be better addressed after the passage of proposed amendments to the PSRA that are currently before the Australian Parliament (see Section 3.1 for further details).

Stakeholders are invited to provide written submissions on issues that they think the RBA should consider in this phase of the Review relating to merchant card payment costs and surcharging. Key questions for stakeholders are included in Section 2 and collated in Appendix A. The RBA will review written submissions received and endeavour to meet with key stakeholders to discuss their submissions in more detail. If in the PSB’s view there is a public interest case for consulting on regulatory action, the RBA will prepare and release detailed regulatory proposals for further consultation.

For a list of current RBA interventions, see the Backgrounder on the RBA’s Current Payments Regulations.