COSBOA responds to RBA’s Consultation Paper on surcharging and payment cost reforms

The Council of Small Business Organisations Australia (COSBOA) has responded to the Reserve Bank of Australia’s Consultation Paper released today, which proposes significant changes to Australia’s payment systems, including the removal of card surcharges on eftpos, Mastercard and Visa transactions.

Matthew Addison, Chair of COSBOA, said the proposals present a “mixed bag” for small businesses, offering some welcomed reforms in transparency and fee reductions, but risking serious unintended consequences by eliminating the right to surcharge.

“Removing surcharges doesn’t remove all the cost, it simply hides it,” said Mr Addison.

“For small businesses already managing tight margins, this means those costs would have to be absorbed into base prices, making it harder for businesses to be transparent and for consumers to make informed choices.”

“The RBA’s claim of $1.2 billion in consumer savings is a mirage. The reduced interchange fee is welcomed; however merchant fees include many other charges. The reality is that these fees will still be paid, just not disclosed. That cost will be baked into the price of coffee, groceries, and services across the country.”

COSBOA has long advocated that the right to surcharge is essential to small business viability. Forcing businesses to absorb processing fees, rather than passing them on to customers based on their payment choice, removes a critical cost management tool and risks reducing profitability for Australia’s smallest employers.

“Surcharging is not about penalising consumers, it’s about ensuring fairness and transparency,” said Mr Addison.

“A blanket ban ignores the real issue: high and complex payment costs driven by opaque pricing and a lack of competition.”

COSBOA made the following points in response to today’s announcement:

Key concerns:

• Hiding fees isn’t removing them: The proposed ban on surcharges will only disguise the cost of card payments, rather than eliminate them. This could mislead consumers and push small businesses to raise prices across the board.

• Impact on small businesses: Without the option to surcharge, many small operators may need to increase menu and service prices, potentially reducing competitiveness or even encouraging a shift to cash-only models, which creates new risks. 

• Redefining ‘consumer’ creates confusion: Small business operators often act as both merchants and consumers within the payments system. The proposed changes risk shifting costs unfairly without addressing the structural causes. 

What COSBOA supports:

• Lower interchange fees: COSBOA welcomes the RBA’s move to reduce interchange fee caps.

  
  

• Improved transparency: COSBOA strongly backs increased disclosure of acquiring, scheme, and interchange fees to help small businesses make informed decisions.

  
  

• Mandatory least-cost routing (LCR): COSBOA continues to call for mandatory LCR across all payment types to help lower transaction costs for merchants.

  
  

• All business should also be able to obtain at least the lower merchant costs awarded to larger business.

“If the RBA and government are serious about helping small business, the focus should be on increasing competition, enforcing least-cost routing, and regulating payment providers, not restricting merchant rights,” said Mr Addison.

COSBOA emphasised that any proposed reform must consider the real-world impacts on small business owners who face rising costs, wage pressures, and complex regulatory burdens. Removing surcharging without fixing the root issues risks creating a new layer of hidden costs that will ultimately hurt both businesses and consumers.

The consultation period on the RBA’s proposed changes runs until 26 August 2025, with implementation expected from July 2026.

For more information, visit www.cosboa.org.au.

-ENDS-

For media enquiries or interviews, please contact Matthew Addison, Chair, COSBOA, chair@cosboa.org.au.

About COSBOA

Established in 1979, The Council of Small Business Organisations Australia (COSBOA) is a member based not-for-profit organisation exclusively representing the interests of small businesses. The capability, representation, and reach of COSBOA are defined by a mix of over 50 national and state-based members. COSBOA's strength is its capacity to harness its members' views and advance consensus across policy areas common to many.

Our member organisations work with the COSBOA team to assist us with policy development and guide our advocacy - not just for small businesses but also for the benefit of the Australians they employ. In this capacity, COSBOA makes submissions and representations to the government, including its agencies, on issues affecting small businesses and to pursue good policy.

For more information, visit www.cosboa.org.au