The Reserve Bank of Australia (RBA) has issued a set of new guidelines to regulate card payments and safeguard consumers’ interest in the country.
Under the new rules, which will come into effect from 1 September 2016 for large merchants, the big retailers will not be able to impose excessive surcharges on credit and debit card payments. For other merchants, the rule will be enforced from 1 September 2017.
RBA said that surcharges will be limited to the direct costs of the payment method, including bank fees and terminal costs.
"With the cost of acceptance defined in percentage terms, merchants will not be able to impose high fixed-amount surcharges on low-value transactions, as has been typical for airlines," RBA said in a statement.
The new surcharging rules stems up from a recommendation in the final report of the Financial System Inquiry which seeks to improve the efficiency and effectiveness of price signals while slashing the potential for cross-subsidization between customer groups and merchant groups.
RBA noted that the new interchange standards will result in a reduction in payment costs to merchants, which will place downward pressure on the costs of goods and services for all consumers, regardless of the payment method they use.
The weighted-average benchmark for credit cards has been maintained at 0.50%, while the benchmark for debit cards has been reduced from 12 cents to eight cents.
The weighted-average benchmarks will be supplemented by ceilings on individual interchange rates which will cut payment costs for smaller merchants.
"To address issues of competitive neutrality, interchange-like payments to issuers in the American Express companion card system will now become subject to equivalent regulation to that applying to the MasterCard and Visa credit card systems," RBA added.
In order to avoid circumvention of the debit and credit interchange standards, there will be limits on any scheme payments to issuers that are not captured within the interchange benchmarks.