Key Highlights

  • The RBA expects lower interchange caps to cut merchants' wholesale card costs by around $910 million a year.
  • The figure compares with about $1.8 billion a year the RBA estimated was being paid in surcharges.
  • It is an estimate of the expected annual saving, not a measured result, and individual savings depend on providers' pricing.

The Reserve Bank expects lower interchange fee caps to cut merchants' wholesale card costs by around $910 million a year, a figure at the heart of the reform package that ended card surcharging on 1 October.

When card surcharges disappeared from Australian checkouts on 1 October 2026, most of the attention went to shoppers. But a second change took effect the same day, one that operates largely out of sight: reductions to the caps on domestic interchange fees.

The Reserve Bank of Australia (RBA) has put a figure on what that change is expected to deliver. In the Conclusions Paper of its Review of Merchant Card Payment Costs and Surcharging, published in March 2026, the RBA said the lower caps are expected to cut merchants' wholesale card costs "by around $910 million per year".

That number is central to the logic of the reform. If businesses can no longer recover card costs by surcharging customers, those costs need to come down. Here is what the figure means, and what it does not.

What interchange is, in brief

Every time a customer pays by card, several parties are involved. Interchange fees are wholesale fees that sit within the overall cost a merchant pays to accept a card payment. The RBA regulates them by setting caps on how high they can be.

Because interchange is a wholesale cost, merchants rarely see it as a separate item. They pay their payment provider, often called an acquirer, a fee for each transaction, and interchange forms part of what the provider in turn pays. Lowering the caps reduces this underlying cost.

The RBA's reform lowered domestic interchange caps from 1 October 2026. The commercial credit card cap was retained at its current level, and a foreign card interchange cap takes effect on 1 April 2027. This article does not state specific cap levels, as those figures are not part of the verified information available today.

Why the RBA moved on surcharging and caps together

The Conclusions Paper found that 16 per cent of merchants were surcharging and that the prevalence of surcharging had doubled since 2022. It also found: "Consumers are estimated to be paying $1.6 billion of a total $1.8 billion in card payment surcharges" each year.

Governor Michele Bullock summarised the outcome in her Opening Statement to the Senate Economics Legislation Committee on 28 October 2026. She said the Payments System Board had concluded that removing card surcharging, reducing interchange fee caps and improving transparency was in the public interest.

The two steps are designed to work together. Ending surcharges removes a cost that was falling mainly on consumers. Lowering interchange caps reduces the cost base for merchants, so the removal of surcharging does not simply leave businesses absorbing the full amount.

Putting $910 million in context

The following comparisons are simple arithmetic based on the RBA's published estimates. They are an illustration only, not calculations made by the RBA.

  • Against total surcharges: the expected saving of around $910 million a year is roughly half of the $1.8 billion a year the RBA estimated was being paid in card surcharges in total.
  • On a monthly basis: $910 million a year works out to roughly $76 million a month.
  • On a daily basis: spread evenly across a 365-day year, it is roughly $2.5 million a day.

These comparisons help convey scale, but they should not be read as precise. The saving is an estimate of an annual effect across the whole merchant sector. How it is distributed between large and small businesses, and across different industries, will depend on how much of the wholesale reduction payment providers pass on.

That last point is where the first real-world signals have emerged, nearly four weeks after the caps were lowered. Governor Bullock told senators that several large providers have cut card processing fees for small businesses, and that competition is showing signs of increasing.

Those are encouraging indications that some of the wholesale saving is flowing through to merchants. But the Governor's statement, as verified today, did not quantify the reductions. It is too early to say how much of the estimated $910 million has so far reached businesses in practice.

The RBA is also relying on transparency to support pass-through. From 1 April 2027, some transparency changes take effect. eftpos, Mastercard, Visa and large acquirers must publish the fees they charge, and businesses are to receive standardised fee information on their statements. Clearer pricing is intended to make it easier for merchants to compare providers, which in turn could increase competition. For businesses, the standardised statements may also offer a practical way to see whether their own costs have moved since the caps were lowered, something the standardised format is designed to make easier.

What the estimate doesn't tell us

It is worth being clear about the limits of the $910 million figure:

  • It is a forecast of the expected annual saving in wholesale costs, not a measured result.
  • It relates to merchants' wholesale card costs, not the total fees every business pays.
  • It does not, on its own, show how much individual businesses will save, which depends on their providers' pricing.

The RBA's broader payments agenda may also shape the landscape further. The Governor told senators that the Review of Payments System Regulation, which released an Issues Paper in June, drew stakeholder comment on mobile wallets, three-party card schemes, account-to-account payments and agentic commerce. "We intend to release regulatory priorities by the end of 2026," she said, with further consultation by mid-2027. The Payments System Board next meets on 19 November 2026.

These reforms are separate from the Monetary Policy Board's interest rate decision on 3 November, which has not been made.

The bottom line

The $910 million figure is the RBA's estimate of how much lower interchange caps will cut merchants' wholesale card costs each year, and it underpins the case for ending surcharging. Early signs, according to the Governor, are that large providers are cutting fees for small businesses and competition is increasing. Whether the full saving reaches merchants will depend on pass-through, which the transparency measures arriving in April 2027 are designed to make easier to see.