Australian banks are trimming card rewards and changing fees as businesses prepare for a ban on card payment surcharges from October 1. A report published by ABC News on Monday, September 28, details the adjustments ahead of a nationwide shift that will affect checkout prices, payment systems and credit card benefits.
The Reserve Bank of Australia decided in March to allow eftpos, Mastercard and Visa to prohibit surcharges on their debit, prepaid and credit card networks. Those networks have adopted rules starting Thursday. The change concerns an extra charge for paying by card; it does not cover weekend, holiday or separate booking fees, according to the Reserve Bank and the Australian Competition and Consumer Commission.
At the same time, the ceiling on interchange fees for domestic consumer credit cards falls from 0.8% to 0.3%. ABC News reported an estimated A$910 million annual reduction in fees flowing from merchants to banks. Commonwealth Bank says its eligible flat merchant transaction rate will fall from 1.10% to 0.99% on October 1, while other pricing depends on each provider and contract.
The ABC reported that major banks are raising some card fees, reducing rewards and scaling back travel insurance benefits as they adjust to lower interchange revenue. Commonwealth Bank has ended a link to the Qantas Frequent Flyer program for one customer interviewed by the broadcaster. The Reserve Bank says card rewards and benefits remain commercial decisions for individual banks.
Some small businesses say they may absorb processing costs, increase general prices or encourage bank transfers. A swim school owner told the ABC that covering card costs could add about A$1 per lesson. The consumer regulator says merchants may include acceptance costs in overall prices, but should remove card specific charges and update signs, websites and payment terminals before the new rules take effect.
The final impact on shoppers will depend on how banks change card products and how merchants set prices. The Reserve Bank says providers will publish more information on payment fees from late October, followed by reports in January showing how lower interchange fees have passed through to merchants. Businesses and customers will be able to compare those changes after the October 1 transition.
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