Sydney, July 15 Australia's central bank has proposed banning surcharges on card payments in a move it says will save consumers over a billion Australian dollars every year.
In a consultation paper released on Tuesday, the Reserve Bank of Australia (RBA) said that a review of merchant card payment costs and surcharges found it would be in the public interest to remove surcharging on payments made using eftpos (the domestic debit card network), Mastercard and Visa cards.
It said that Australians currently pay 1.2 billion Australian dollars (768 million US dollars) in card payment surcharges every year and that surcharging is no longer achieving its "intended purpose" of steering customers towards more efficient payment choices as cash usage has declined.
"We think the time has come to address some of these high costs and inefficiencies in the system," RBA Governor Michele Bullock said at a press conference.
Under current rules, businesses are prohibited from imposing a surcharge greater than what it costs to accept a specific payment type. According to the RBA, eftpos and debit cards are typically less expensive for merchants to accept than credit cards, reported Xinhua news agency.
However, its review found that businesses are increasingly charging the same surcharge rate across all cards.
"Removing surcharging would make card payments simpler, more transparent and help to increase competition in the card payments system," it said.
Australia's Treasurer Jim Chalmers announced last October that the federal government would ban surcharges for debit card payments. The RBA review concluded it would be simpler to remove surcharges on debit and credit cards to avoid confusion and implementation issues.
The central bank also proposed lowering the cap on interchange fees paid by businesses, which it said would benefit 90 per cent of businesses and save another 1.2 billion Australian dollars a year.
Additionally, its proposal would force credit card networks such as Visa and Mastercard to publish the fees they charge to improve transparency and competition.
The review will be finalised following a six-week consultation period.
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