Highlights

  • Debit and credit cards account for approximately 75% of consumer payments in Australia.
  • Domestic interchange rate reductions took effect on 1 October 2026.
  • Changes affecting international card interchange rates are scheduled for 1 April 2027.
  • The RBA expects greater merchant fee transparency and lower payment processing costs.

Australia's payment industry is undergoing important changes as the Reserve Bank of Australia implements reforms intended to improve pricing transparency and reduce merchant payment costs. Speaking at the AFIA Conference on 20 October 2026, Ellis Connolly, Head of Payments Policy Department, explained how interchange fee reductions and additional disclosure requirements form part of the central bank's broader efforts to improve payment system efficiency.

Card Payments Dominate Consumer Transactions

Payment cards have become the leading method for consumer transactions in Australia.

Connolly indicated that debit and credit cards account for approximately 75% of payments, reflecting the continued shift away from cash.

The expansion of contactless cards and smartphone wallets has made payment processing costs increasingly relevant to businesses.

For merchants, even relatively small processing fees can become significant when applied across large transaction volumes.

These costs have therefore become an important focus of the RBA's regulatory programme.

Interchange Fee Reductions Take Effect

One of the major changes involves lower interchange rates.

Interchange fees are payments made between financial institutions involved in processing card transactions.

Reductions affecting domestic credit and debit cards came into effect on 1 October 2026.

Additional changes to international card interchange arrangements are scheduled for 1 April 2027.

The central bank expects these adjustments to place downward pressure on the fees businesses pay for card acceptance.

However, whether individual merchants experience lower overall expenses depends on how payment providers pass through the changes.

Greater Transparency for Merchants

The reforms also introduce additional disclosure expectations for major payment acquirers and card schemes.

These organisations are required to publish more information about the fees associated with payment processing.

Improved disclosure is intended to help merchants compare competing providers and assess whether their existing arrangements remain commercially competitive.

This may be particularly relevant for smaller businesses with limited resources to analyse complex payment fee structures.

Greater transparency could also support competition among merchant payment service providers.

Consumer Pricing Is Another Key Objective

The RBA is seeking to improve the consistency between advertised prices and final amounts charged to consumers using cards or mobile wallets.

Connolly linked the reforms to the objective of improving pricing transparency for consumers.

The central bank will monitor implementation and assess whether lower interchange fees are reflected in merchant service charges.

The effectiveness of these changes will depend partly on industry compliance and commercial responses.