The Reserve Bank of Australia’s (RBA) July 2025 surcharging recommendations are significant and, in a way, a reset moment for how Australians pay and get paid.
The recently unveiled preliminary conclusions from its Merchant Card Payment Costs and Surcharging Review are far more than a technical adjustment; they represent a fundamental realignment around transparency, fairness, and efficiency within our national payments infrastructure. As the Co-founder and President of Zepto, a company deeply invested in the future of real-time payments, I view these proposals as a pivotal moment. One that, no doubt, will present some short term challenges, but will ultimately unlock immense opportunity, particularly for the acceleration of account-to-account (A2A) payment solutions like PayTo.
At Zepto, we've consistently advocated for a more streamlined, transparent, and cost-effective payments ecosystem. We commend the RBA for undertaking such a comprehensive and consultative process, culminating in recommendations that align closely with our vision for a financial landscape that truly serves businesses and consumers.
The RBA's Bold Stance: Addressing a System Out of Sync
For years, the payment surcharge, initially conceived in 2003 as a mechanism to signal the true cost of card acceptance and steer consumers towards more efficient payment methods, has become increasingly convoluted. What began as a tool for transparency has, for many, evolved into an opaque and often frustrating additional cost.
As cash usage has declined dramatically (from 70% of payments in 2007 to just 13% in 2022, according to RBA data), consumers have fewer easy alternatives to avoid surcharges, even when using their own money via debit cards.
Many businesses, too, have struggled with the complexity, often applying blended or flat surcharges that don't accurately reflect the varied costs of different card types. The RBA's issues paper from October last year had already flagged concerns about "excessive surcharges."
Now, the RBA’s Payments System Board has articulated a clear preliminary view that it's in the public interest to:
- Remove surcharging on eftpos, Mastercard, and Visa cards: This sweeping proposal directly addresses the $1.2 billion consumers currently pay in surcharges annually. The RBA argues that surcharging is no longer serving its intended purpose, making card payments simpler, more transparent, and fostering greater competition. This move goes further than the Albanese government's previous inclination to ban surcharges solely on debit cards, encompassing both debit and credit.
- Lower the cap on interchange fees: This critical measure aims to save businesses an additional $1.2 billion per year. Interchange fees – the fees paid by a merchant’s bank (acquirer) to a cardholder’s bank (issuer) for each transaction – are a significant component of a merchant's cost of acceptance. The RBA estimates that approximately 90% of Australian businesses would be "better off" under these reductions, with small businesses, who often pay fees closer to existing caps, seeing the most benefit. New caps on foreign interchange fees are also proposed, a welcome relief for businesses dealing with international transactions.
- Mandate transparency: Card networks and large acquirers would be required to publish the fees they charge. This enhanced transparency is designed to empower businesses to better understand their costs and shop around for more competitive deals, fostering a more robust and competitive payment service provider (PSP) market.
RBA Governor Michele Bullock's statement that "the time has come to address some of these high costs and inefficiencies in the system" resonates strongly. The RBA's objective is clear: to ensure "more competitive, efficient and safe payment systems for everyone."
While the RBA itself cannot legislate a ban on surcharging, it has made it clear that if card networks do not implement "no-surcharge" rules, it will recommend the federal government introduce laws to do so. The proposed start date of July 1, 2026, provides a clear roadmap for the industry to adapt.
Zepto's Strategic Lens: Fairness, Competition, and the A2A Imperative
From Zepto's vantage point, these preliminary conclusions are a decisive step towards a more equitable and dynamic payments landscape. We have always championed the cause of simplification and cost-efficiency for Australian businesses and consumers. The removal of surcharges aligns perfectly with this ethos, cutting through complexity and fostering a level playing field where costs are clear and predictable.
For consumers, it means an end to hidden fees and the frustration of choosing payment methods based on avoiding surcharges. For businesses, it means greater clarity on their true costs of acceptance.
However, a closer look reveals several critical areas of consideration that will define the ultimate success and impact of these reforms.
1. Upholding and Enhancing PSP Competition
The RBA's intent to foster greater competition is laudable, and the transparency requirements for card networks and large acquirers are a crucial step in this direction. However, as the payments landscape evolves, it's paramount that these reforms do not inadvertently consolidate power among larger, incumbent players or create new barriers to entry for agile fintechs.
Maintaining a healthy, competitive PSP ecosystem is vital for continued innovation and merchant choice. We need a regulatory framework that encourages all players, regardless of their size, to innovate and offer diverse, value-driven solutions. As surcharges disappear, PSPs will need to differentiate more acutely on core service, reliability, and integrated value, rather than simply on their surcharging policies. This will be a positive forcing function for the industry, but regulators must remain vigilant to ensure that the shift truly benefits all merchants through increased competition, not just a reshuffling of market share among a few dominant players.
The debate around interchange fees, for instance, highlights this tension. While lowering caps generally benefits merchants by reducing their costs, some industry participants argue that drastically reduced interchange could impact the revenue streams that smaller fintechs and issuers rely on to fund innovation, customer service, and fraud protection. The RBA's commitment to ensuring 90% of businesses are "better off" is a positive sign, particularly for small businesses who have historically faced higher proportional costs. It’s imperative that the final regulations strike a balance that encourages competition across all PSPs, fostering an environment where innovation thrives, rather than being constrained.
2. The Unveiling of True Costs: Opportunities for Transparency
The mandated transparency of fees from card networks and large acquirers is a game-changer. For too long, the intricacies of payment processing fees have been a black box for many merchants, particularly small and medium-sized enterprises (SMEs). This opacity has made it difficult for businesses to compare offerings, negotiate effectively, or even fully understand their true cost of acceptance.
By forcing greater transparency, the RBA is empowering merchants with the information they need to make informed decisions. This, in turn, will drive more intense competition among PSPs, as their pricing structures become more visible and comparable. Zepto strongly supports this move, as it aligns with our core belief in clarity and simplicity. We anticipate that this will lead to a more educated merchant base, better equipped to choose payment partners that truly offer value and efficiency.
3. The Unmistakable Surge for Account-to-Account (A2A) Payments
Perhaps the most significant long-term implication of the RBA’s review, particularly the removal of surcharging, is the strengthened case for cheaper and more efficient payment alternatives — enter account-to-account (A2A) and, in particular, PayTo.
For years, the ability to surcharge has, for some merchants, been a way to explicitly recoup the cost of accepting card payments. While this provided a direct cost signal, it often came at the expense of consumer experience and overall transparency. With surcharging set to disappear, businesses will now need to absorb these costs directly into their pricing models. This fundamental shift will compel merchants to deeply reassess their payment strategies, moving beyond simply passing on card fees to actively seeking out the most cost-effective payment methods.
This is where A2A payments truly shine.
Built directly on Australia's New Payments Platform (NPP), PayTo offers real-time, bank-account-based payment solutions that bypass the traditional card rails and their associated interchange and scheme fees. For merchants, this means a significantly lower cost of acceptance – often a fraction of credit card processing fees, and frequently even lower than debit card fees. The transparency is inherent: funds move directly from the customer's bank account to the merchant's, with minimal intermediaries.
Consider the compelling advantages:
- Cost Efficiency: A2A payments inherently reduce transaction costs for merchants, directly impacting their bottom line in a positive way. This becomes even more attractive when the option to surcharge card payments is no longer available.
- Real-Time Settlement: Funds are settled instantly, providing businesses with immediate access to their cash flow, improving liquidity and operational efficiency.
- Enhanced Security: Direct bank-to-bank transfers typically carry lower fraud risks compared to card payments, as sensitive card details are not transmitted or stored.
- Customer Experience: PayTo offers a streamlined, bank-authenticated payment experience, reducing friction at the checkout and enhancing trust. For recurring payments, it offers a modern alternative to traditional direct debits, with greater customer control and visibility.
As merchants reassess their payment strategies in light of these changes, the economic incentives to adopt A2A payment solutions will become undeniably stronger.
Businesses will look for ways to offset the newly absorbed card costs, and PayTo, with its lower transaction fees, presents a powerful solution. This creates a fertile ground for accelerated adoption of A2A payments across various sectors, from retail and e-commerce to recurring billing and B2B transactions.
The Road Ahead: Adaptation and Opportunity
With an expected implementation date of July 1, 2026, the industry has a clear runway to review, strategise, and adjust. This isn't just about technical compliance; it's about a strategic pivot for many businesses. Those who are proactive in exploring and adopting alternative payment methods, particularly A2A solutions, will be best positioned to thrive in this new landscape.
Zepto is already directly connected to the NPP and, as a Connected Institution, offers direct-to-the-rail access for PayTo. We are committed to supporting our partners and merchants through this significant transition. Our focus will be on helping businesses understand the implications of the RBA's changes and unlock the full benefits of A2A payments in this evolving market. This includes providing the necessary tools, integrations, and expertise to smoothly integrate PayTo into their existing payment flows.
The RBA's review is not just about removing a fee; it's about reshaping the fundamental economics of payments in Australia. It's a clear signal that the future lies in greater competition, transparency, and innovative payment alternatives that lower costs. For those ready to embrace this shift, the opportunities for efficiency and growth are substantial.
Core to all of this is greater competition which, I believe, enables better outcomes at every level of the payments ecosystem.
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