Australia's Card Interchange Landscape Is About to Change. Here's What Issuers & Acquirers Need to Know. (Part 1 of 3)
Australia is heading into a reset of card payment economics that will matter well beyond Australia.
On March 5, the RBA's Payments System Board confirmed it will publish a Conclusions Paper and implementation timeline by the end of March. This wraps up nearly two years of consultation, 170+ written submissions, 100+ bilateral stakeholder meetings, and a six-month extension beyond the original timeline.
What's coming is not incremental. This is the most significant reset of Australia's card payment economics in over a decade.
If you're an issuer, acquirer, or BIN sponsor operating in this market, the revenue and cost implications are real.
And if you operate outside Australia, you should still pay attention, because Australia is often an early signal for where regulators go next.
The quick take (what to pay attention to)
Three changes land at once:
Domestic interchange compresses hard (especially credit)
International (foreign-issued) interchange gets capped for the first time
Surcharging rules and acquirer transparency move, which changes how savings flow through the system
That combination forces issuers and acquirers to do something many have delayed: re-evaluate portfolio economics and get serious about profitability levers that don't depend on interchange.
What are Australia's current interchange rules?
Australia has regulated interchange since the early 2000s, with the RBA tightening caps through multiple review cycles. Before these proposed reforms, the framework looked like this:
Domestic credit
Weighted-average benchmark: 0.50%
Hard cap: 0.80%
Domestic debit and prepaid
Weighted-average benchmark: 8 cents per transaction
Individual cap: 10 cents (or 0.20% if specified in percentage terms)
International card transactions
No regulated interchange caps today.
Foreign-issued cards acquired in Australia have attracted interchange well above domestic levels. The RBA's own data showed foreign cards accounting for roughly 20% of total interchange fees paid by Australian merchants, despite representing only about 3% of total transactions.
Surcharging (today)
The existing framework allows merchants to pass card acceptance costs to consumers at the point of sale. That was originally designed to steer consumers toward lower-cost payment methods.
The RBA's view is that the steering effect has diminished, surcharging has become inconsistent and opaque, and the framework is no longer working as intended.
How much will domestic interchange drop under the new RBA rules?
Domestic credit interchange
Hard cap drops from 0.80% to 0.30% of transaction value
The weighted-average benchmark gets abolished entirely, replaced by a simple hard cap
For context, the EU has capped consumer credit interchange at 0.30% since 2015. Australia is aligning to that level.
One sentence from the PSB deserves special attention: it said it remains unconvinced that commercial and consumer credit cards justify different treatment when setting cap levels.
If you have a meaningful commercial card portfolio, this is not academic. Commercial and virtual B2B cards have historically operated at much higher interchange tiers. In the US, for example, Visa recently consolidated all B2B Virtual Payments to a 2% interchange rate.
If Australian regulators set a precedent that commercial and consumer cards should be capped equally, other markets could follow. For B2B fintech business models built on high-interchange virtual card programs, that's an existential challenge.
Domestic debit and prepaid interchange
Weighted-average benchmark drops from 8 cents to 6 cents per transaction
Individual cap drops from 10 cents (or 0.20%) to 6 cents (or 0.12%)
This compresses the spread on low-value transactions, where the cents-based cap already created disproportionately high effective interchange rates for smaller merchants.
What are the proposed caps on international card interchange in Australia?
For the first time, the RBA is proposing regulated caps on foreign-issued card transactions acquired in Australia:
Debit card-present: 0.20%
Debit card-not-present: 1.15%
Credit card-present: 0.40%
Credit card-not-present: 1.50%
These mirror the caps Visa and Mastercard agreed to in Europe and the UK. The elevated CNP rates reflect higher fraud costs, but they still represent a significant reduction from current unregulated levels.
Will the RBA ban card surcharging in Australia?
The RBA doesn't have direct authority to ban merchant surcharging. The mechanism is indirect.
The RBA proposes lifting its prohibition on "no-surcharge" rules for all designated card systems (EFTPOS, Visa, Mastercard) across debit, credit, and prepaid.
The expectation is that Visa and Mastercard will reintroduce no-surcharge scheme rules once the RBA lifts the prohibition. If the schemes don't act, government legislation would follow.
Who benefits more from interchange reform: IC++ merchants or blended pricing merchants?
This matters enormously, and it's one reason the RBA is pushing so hard on acquirer transparency.
IC++ (Interchange++)
Merchants see interchange as a separate line item. When interchange caps drop, the savings flow through immediately. The merchant sees the reduction in real time.
Blended / flat-rate pricing
Merchants pay a single bundled rate that wraps interchange, scheme fees, and acquirer margin into one number. When interchange drops, the savings sit with the acquirer unless the acquirer voluntarily passes them through.
There is no automatic mechanism to ensure merchants on blended pricing benefit from interchange regulation.
The RBA clearly understands this. That's why the proposed transparency requirements include mandating that large acquirers publish their merchants' average cost of acceptance broken down by card type and merchant size. The intent is to make it visible whether acquirers are actually passing through the savings.
What is the RBA interchange reform timeline?
As proposed:
July 1, 2026: Interchange cap changes, surcharging removal, and merchant-level disclosure requirements take effect
Upon publication of the Conclusions Paper: Scheme fee transparency expectations take effect immediately
How will lower interchange affect Australian card issuers?
The RBA estimated these reforms would cost domestic card issuers approximately A$880 million (~US$615 million) in aggregate.
Credit issuers take the biggest hit, with the cap dropping from 0.80% to 0.30%. For a mid-sized issuer processing A$5 billion (~US$3.5 billion) in annual credit volume, that's a potential reduction from A$40 million (~US$28 million) to A$15 million (~US$10.5 million) in credit interchange revenue, depending on current effective rates.
Debit issuers with high volumes of low-value transactions will feel the compression too. A small merchant transaction of A$15 (~US$10.50) that previously generated 10 cents in interchange now generates 6 cents or less.
The key point isn't the arithmetic. It's the operating reality:
If your profitability model relies on interchange headroom, you need a new plan.
Are acquirers required to pass interchange savings to merchants?
The RBA has been explicit that interchange reductions need to flow through to merchants. The transparency requirements are designed to make that visible.
Acquirers running blended pricing models will face pressure to demonstrate that lower wholesale costs are actually reaching the merchant.
The RBA estimates small merchants would collectively save approximately A$185 million (~US$130 million) per year from lower interchange. But the Independent Payments Forum and other small business groups have pushed back hard, arguing the 300-400% fee gap between small and large merchants persists because scheme fees, acquirer margins, and pricing opacity aren't fully addressed by interchange reform alone.
What comes next (and what most people are missing)
The Conclusions Paper drops in the next few days. Once published, the interchange cap Standards are legally binding on designated card systems under the Payment Systems (Regulation) Act 1998. Implementation begins July 1, 2026.
But here's the part that isn't getting enough attention:
The RBA's Consultation Paper also addressed scheme fees directly, and the language was pointed. Net scheme fees in Australia hit A$2.0 billion (~US$1.4 billion) in 2024/25, up 11% year-over-year, and the PSB noted that growth in scheme fees has noticeably outpaced transaction growth since 2021/22.
The PSB stopped short of proposing a hard cap on scheme fees. But it set a regulatory expectation that scheme fees should not rise relative to transaction values without clear justification, and explicitly said it would consider caps or mandating dual-network credit cards if the networks don't self-correct.
In Part 2 of this series, I'll look at why this scheme fee dynamic isn't unique to Australia, and what the data is showing across regulated markets globally.
Follow me for Part 2.
Steven Leitman is Managing Partner and CEO of Consulting Resource Group, a boutique payments consultancy specializing in card network fee optimization for issuers, acquirers and ISOs. Through our CardTraq capabilities, we help issuers and acquirers globally optimize profitability.