Submission to the Merchant Card Payment Costs and Surcharging Issues Paper

29 January 2025

The Business Council of Australia (BCA) welcomes the opportunity to make this submission in response to the Merchant Card Payment Costs and Surcharging Issues Paper. The BCA is supportive of efforts to promote competition and efficiency in the payments system, including for credit and debit cards. It is appropriate for the Reserve Bank of Australia (RBA) to consider whether the existing payment costs and surcharging framework remains fit for purpose, taking account of trends in the use of consumer payment methods, as part of its broader Review of Retail Payments Regulation.

The BCA is concerned that the potential interventions canvassed in this Issues Paper around merchant card payment costs and surcharging are being addressed separately from consideration of the broader payments ecosystem. As the Issues Paper itself notes, these issues would be better addressed after the passage of the proposed amendments to the Payment Systems (Regulation) Act 1998 (PSRA) currently before Parliament. This legislation will give the RBA broader legislative authority over the emerging payments ecosystem, including buy now pay later (BNPL) and pass through digital wallet services (for example, Apple Pay).

The BCA notes that the government would appear to have pre-empted the review with a proposal to ban merchant surcharging for debit cards. This proposal and any proposed regulatory options arising from this consultation should be the subject of a further consultation process. The BCA welcomes the RBA's commitment to further consultation in this regard.

The BCA is of the view that the Review of Retail Payments Regulation, of which this Issues Paper is a part, should proceed on the basis of a comprehensive and joint consideration of the entire payments ecosystem once the legislative basis for the RBA's expanded regulatory authority is put in place. It is generally not good practice for policymaking to get out in front of legislative change.

The broader review needs to consider a rapidly evolving payments landscape, including the entry of new business models built around new payments technology. In this context, the review needs to consider how the existing regime of price controls in relation to interchange fees and surcharging should be adapted to this rapidly evolving payments ecosystem. The regulation of card payments should avoid creating barriers to the wider adoption of digital technologies that have may productivity and consumer benefits.

Read our full submission here.

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