The RBA Recommends Increasing Competition to Reduce Card Surcharge Expenses
RBA Governor Michele Bullock confessed that the bank lacks the authority to investigate excessive charges by payment service providers.
The Reserve Bank of Australia (RBA) suggests that introducing more competition could address the issue of overcharging on electronic payments.
During a recent parliamentary inquiry hearing, a member of the Standing Committee on Economics raised concerns about some merchant service providers charging rates above the average.
The member noted that government agencies like the Australian Competition and Consumer Commission (ACCC) lacked the power to investigate excessive charges by providers.
In response, RBA Governor Michele Bullock acknowledged that the bank does not possess the authority to investigate such matters.
“So there are some payment service providers that we don’t actually have any power over,” she explained.
“The ACCC has those particular powers … but they’re finding it very difficult to enforce it.”
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Simultaneously, Governor Bullock highlighted that certain service providers could evade oversight.
“Payment service providers have found a way to make it appear to merchants like they’re not paying anything,” she noted.
Australia’s Reserve Bank Governor, Michele Bullock, speaks during the Monetary Policy Decision media conference in Sydney, Australia on Feb. 18, 2025. David Gray/AFP via Getty Images
“That, for us, is a challenge. It’s a completely unintended consequence of removing [the] ‘no surcharge rules,’” she elaborated.
Despite the challenges, Bullock emphasized that increased competition could be the solution to overcharging issues.
“The usual way to address these issues would be through competition,” she highlighted.
“If payment service providers are imposing significantly higher charges, merchants would turn to other services, prompting competition to undercut them and so forth.”
The consumer protection agency mentioned that unexpected additional fees at checkout had left many Australian consumers feeling aggrieved and treated unfairly.
The Dangers of Unanticipated Outcomes
Meanwhile, RBA Assistant Governor Brad Jones pointed out that the significant surge in surcharging since 2019 prompted the bank to conduct a review of the payment system.
Nevertheless, he emphasized the need for a cautious approach when reforming the system.
“When considering the payment system, it is essential to take into account a diverse ecosystem with various stakeholders,” he remarked.
“You have consumers, merchants, acquirers, card issuers, and network operators, each with distinct interests.
“Focusing on one aspect of that ecosystem could trigger a cascade effect further upstream, potentially undermining the intended objective.”
Therefore, Jones indicated that the RBA was prudently evaluating the potential spillover effects of different policy options throughout the entirety of the payment system.
“Ultimately, the costs within the system must be dispersed, and we want to ensure that this is done in a just and fair manner,” he concluded.
