The Reserve Bank of Australia (RBA) wants to end debit and credit card surcharges in Australia and says it would save consumers $1.2 billion every year. The changes would come into effect from July, 2026.

Surcharges on EFTPOS, Mastercard and Visa card payments would be scrapped, under the RBA’s proposal. The cap on interchange fees paid by businesses, which are charged by payment service providers to merchants, would also be lowered.

The RBA estimates this would benefit nine in 10 Australian businesses and save them around $1.2 billion in fees each year. It would also require card networks and larger acquirers to publish their fees.

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RBA governor Michele Bullock said the “time has come to address some of these high costs and inefficiencies in the system”.

"We know these proposals will spark discussion, especially among businesses that currently surcharge, which is why we are consulting on these proposals for six weeks,” Bullock said.

"Our goal is a more competitive, efficient and safe payments system for everyone."

The RBA found surcharging was no longer achieving its intended purpose of steering consumers towards cheaper payment methods. It noted fewer people were using cash and businesses increasingly charged the same surcharge rate across debit and credit cards.

The payments industry will have six weeks to provide its feedback on the RBA’s plans, with a final proposal due by the end of the year.

Will your business be impacted by the proposed ban? Share your story with tamika.seeto@yahooinc.com

The proposal goes beyond what the federal government had previously suggested. Treasurer Jim Chalmers had flagged plans to ban surcharging on debit transactions, but the RBA's proposal would also include credit cards.

Australian Payments Plus chief payments and schemes officer Adrian Lovney welcomed the RBA’s consultation paper.

“The proposed changes will simplify the payment experience for customers and bring consistency across the industry,” he said.

“But it also means merchants will need to absorb these costs, making efficient payment routing and competitive and transparent pricing more important than ever.”

Visa Oceania group country manager Alan Machet said its study had found 95 per cent of Australians wanted more action taken on surcharging.