Commonwealth Bank of Australia (CBA) has urged the Reserve Bank of Australia (RBA) to ban surcharges on credit and debit cards as the central bank considers the future of Australia’s A$1 trillion-plus payments system.
CBA said it had noted in recent years a shift to contactless payments and e-commerce and an increase in payments solutions that sit outside the RBA’s bank’s mandate and regulation, including buy now, pay later, digital wallets and three party schemes.
In a response to an RBA issues paper, Australia’s largest bank said it supported the spirit of the review because payments affected all consumers and businesses and the safety, reliability, efficiency and convenience of the system was paramount.
CBA asked the central bank not to formulate policy responses to some of the matters raised in its issues paper, which would be possible only when the Payment System Regulation Act (PSRA) was amended.
The remaining issues for consultation could be addressed without changes to the PSRA, including surcharging, which is the imposition of an additional fee by a merchant or institutions for card payments.
“We believe the most impactful initiative would be to address surcharging on debit and credit,” the CBA said in its Merchant Card Payments Costs and Surcharging submission.
“A debit-only ban would only lead only to operational inefficiency and unintended consequences.
“We suggest there are only two reasonable courses of action: significantly uplift disclosure and enforcement mechanisms or banning surcharging for both debit and credit cards to minimise complexity for consumers and merchants, subject to additional support for small businesses.”
CBA said a ban on both would be a simple solution for merchants and consumers and would remove the need to monitor and enforce unlawful surcharging practices, such as disclosing the charge only after payment has been made.
Surcharging was introduced in Australia in 2003 to provide a price signals to consumers about the relative costs of different payment methods.