This Explanatory Statement relates to the Payment Systems (Regulation) Standards (Merchant Card Payment Costs and Surcharging) Variation 2026 (the Variation Instrument):

The Explanatory Statement is approved by the Reserve Bank of Australia (RBA).

1. Summary and Purpose

The Variation Instrument amends three principal instruments:

•            Standard No. 1 of 2016 The Setting of Interchange Fees in the Designated Credit Card Schemes and Net Payments to Issuers (Standard No. 1);
•            Standard No. 2 of 2016 The Setting of Interchange Fees in the Designated Debit and Prepaid Card Schemes and Net Payments to Issuers (Standard No. 2); and
•            Standard No. 3 of 2016 Scheme Rules Relating to Merchant Pricing for Credit, Debit and Prepaid Card Transactions (Standard No. 3).

Throughout this Explanatory Statement, Standard No. 1, Standard No. 2 and Standard No. 3 are collectively referred to as the Standards.

Under the Reserve Bank Act 1959, the RBA’s Payments System Board (PSB) has responsibility for determining the RBA’s payments system policy. This includes policy for the purposes of the RBA’s functions and powers under the Payment Systems (Regulation) Act 1998 (PSRA). The RBA implements these policies, including through its ability to set standards under the PSRA that apply to participants in designated payment systems.

The Standards were determined by the RBA in 2016 following a comprehensive review of retail payments regulation. The Standards have since been varied, including most recently in 2021. The Variation Instrument implements relevant policy decisions of the PSB following the RBA’s most recent review of its retail payments regulatory framework - the Review of Merchant Card Payment Costs and Surcharging (Review). Those policy decisions are set out in the Conclusions Paper of the Review published in March 2026 (the Conclusions Paper).[1]

The PSB decided:

• surcharging: that the prohibition on ‘no-surcharge’ rules should be removed for all designated credit, debit and prepaid card schemes because the surcharging framework is no longer fit for purpose;
• interchange fees: to reduce interchange fee caps on domestic and international credit and debit transactions acquired in Australia on designated card schemes, which is expected to help merchants manage card acceptance costs when surcharging is removed; and
• transparency: to implement transparency measures to help payment service providers compare wholesale fees set by the schemes and help merchants to obtain personalised quotes from payments service providers and compare payment plans.

Surcharging

Background

The RBA’s surcharging framework was first introduced in 2003 and is currently applied under Standard No. 3. The framework prohibits designated card schemes from imposing ‘no-surcharge’ rules, thereby allowing merchants to apply a surcharge to card transactions. Prior to the introduction of the framework, these card scheme rules generally prevented Australian merchants from applying a surcharge to card transactions. The framework was intended to promote the efficiency of the payments system by encouraging consumers to use lower-cost payment methods at a time of strong growth in higher-cost credit card transactions, to put downward pricing pressure on card schemes.

The framework was amended in 2013 and 2016 to define the costs that merchants are permitted to recover through a surcharge. In 2016, the Australian Competition and Consumer Commission was given powers under the Competition and Consumer Act 2010 to take action against merchant surcharging that exceeds the merchant’s cost of card acceptance. However, the RBA considers that the surcharging framework is no longer fit for purpose given the significant changes in the payments landscape.

The PSB has concluded that it is in the public interest for surcharging to be removed and for the RBA to lift the prohibition on ‘no-surcharge’ rules under Standard No. 3 for all designated card schemes (eftpos debit and prepaid, Mastercard credit, debit and prepaid and Visa credit, debit and prepaid).

Amendments

The variations to Standard No. 3 remove the prohibition on ‘no surcharge’ rules for all designated card schemes. These changes would allow the designated card schemes to re-impose ‘no surcharge’ rules.

Interchange fees

Background

In a card payment made on four-party card schemes, the merchant’s payments provider pays interchange fees to the cardholder’s bank, and this cost is borne by the merchant, and ultimately, the merchant’s customers. Interchange fees are set by the operators of card schemes.

Competition between schemes for issuers’ business can lead to higher interchange fees in well-established card schemes, which can in turn increase merchant service fees and ultimately consumer costs. The PSB has long considered this is the case in Australia’s ubiquitous and mature card system, and has warranted regulation of interchange fees.

Standard No. 1 and Standard No. 2 implement this policy. For designated credit, debit and prepaid card systems, these standards set benchmarks for average interchange fees in the designated systems and also a maximum level (‘cap’) of any individual interchange rate. These standards also require designated schemes to ensure that their weighted-average interchange rates are below the applicable benchmark on a quarterly basis.

Standard No. 1 and Standard No. 2 also seek to prevent the circumvention of the interchange benchmarks and caps through non-interchange payments or other incentives being provided by schemes to card issuers (the Net Compensation provisions).

The PSB has concluded that it would be in the public interest to lower the interchange fees on transactions acquired in Australia for both domestic and foreign-issued card transactions of the designated card schemes. The PSB has also determined that it would be in the public interest to update the Net Compensation provisions.

Amendments

The variations to Standard No. 1 and Standard No. 2 make a number of changes to the interchange framework by:

•            lowering interchange fee caps on domestic-issued debit and consumer credit card transactions acquired in Australia;
•            introducing a cap on interchange fees on foreign-issued card transactions acquired in Australia; and
•            updating the Net Compensation provisions to reflect existing practice and prevent circumvention of interchange regulations.

Transparency

Background

The RBA has received evidence that many merchants, particularly small merchants, are not equipped with relevant information to easily compare payment fees across providers and may not be aware they are paying significantly higher fees than other merchants of a similar size. More useful and consistent information can enable merchants to compare providers’ pricing and compare payment plans.

The RBA has also received evidence that many participants in the card schemes find interchange and scheme fees overly complex and difficult to compare across schemes. Publication of wholesale fee information at the scheme level can enable payment service providers to better compare and scrutinise fees.

Amendments

The variations to Standard No. 3 enhance existing transparency and fee disclosure provisions in Standard No. 3 by introducing measures designed to:

•            help merchants compare fees across acquiring services; and
•            increase transparency over the pass-through of interchange reductions by acquirers to merchants.

The variations to Standard No. 1 and Standard No. 2 promote transparency of wholesale fees by:

•            helping participants compare interchange fees across schemes, card types and form factors; and
•            helping participants compare issuing and acquiring scheme fees and rebates across schemes, card types and form factors.

2. Legislative Authority

The RBA has made the Variation Instrument pursuant to subsection 18(1) of the PSRA.

The Standards were made under subsection 18(1) of the PSRA. Subsection 18(1) states the RBA may, by legislative instrument, determine standards to be complied with by participants in a designated payment system if it considers that determining the standard is in the public interest. The public interest is defined in section 8 of the PSRA. Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power is to be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend or vary any such instrument.

The RBA considers that the variations to the Standards under the Variation Instrument are in the public interest (see further the analysis and reasons set out in the Conclusions Paper).

The Variation Instrument is a disallowable legislative instrument under section 42 of the Legislation Act 2003.

3. Consultation

Issues Paper

The RBA published an Issues Paper in October 2024,[2] which sought stakeholder views on whether the surcharging framework remains fit for purpose and the potential for further regulatory actions to promote competition and efficiency by putting downward pressure on merchant card payment costs. The consultation period ran for six weeks, with extensions granted upon request. The RBA received written submissions to the Issues Paper from over 90 organisations and individuals and conducted around 40 consultation meetings.[3] From February 2025, to inform any proposed changes to interchange regulations, the RBA undertook the first iteration of the Issuer Cost Study in consultation with issuers.

Consultation Paper

The RBA published a Consultation Paper in July 2025,[4] seeking feedback on the PSB’s preliminary conclusions and proposed variations of the Standards. The RBA also published additional material including statistics on surcharging[5] and further information on the Issuer Cost Study[6] in August 2025 to assist stakeholders with preparing their submissions on the Consultation Paper.

The consultation period ran for a total of six weeks, with extensions provided of up to two weeks, upon request. The RBA received over 170 written submissions,[7] conducted over 100 stakeholder meetings and wrote to numerous stakeholders seeking further evidence and feedback. The RBA published a summary of submissions in October 2025,[8] and conducted a second iteration of the Issuer Cost Study in late 2025 to early 2026.

Conclusions Paper

The RBA received a broad range of views on the policy proposals set out in the Consultation Paper, and its final decisions were influenced by evidence provided by these stakeholders.

The RBA decided to implement a package of policies that includes:

1.         Lifting the RBA’s prohibition on ‘no-surcharge’ rules for all designated debit, prepaid and credit card schemes;

2.         Reducing the interchange cap on domestic-issued consumer credit card transactions acquired in Australia to 0.3 per cent of transaction value and removing the weighted-average benchmark;

3.         Retaining the interchange cap on domestic-issued commercial credit card transactions acquired in Australia at 0.8 per cent of transaction value and removing the weighted-average benchmark;

4.         Reducing the interchange cap on domestic-issued debit and prepaid card transactions acquired in Australia to 8 cents per transaction and 0.16 per cent of transaction value. Retaining the weighted-average interchange benchmark at 8 cents per transaction. The sub-benchmark for weighted-average interchange fees on SNDCs would also remain at 8 cents per transaction;

5.         Introducing caps on interchange fees paid on foreign-issued card transactions acquired in Australia at 1.0 per cent of transaction value;

6.         Amending the Net Compensation provision so that all Australian issuers are clearly captured (including those sponsored by a foreign entity) and transactions on domestic-issued cards acquired overseas are also captured;

7.         Setting an expectation that the designated card schemes improve scheme fee billing procedures by making their price-setting practices more transparent and better supporting scheme fee reconciliation processes for participants;

8.         Requiring designated card schemes to publish their aggregate interchange fees on transactions acquired in Australia on a quarterly basis with breakdowns by card type and form factors;

9.         Requiring designated card schemes to publish their aggregate interchange fees on transactions acquired in Australia on a quarterly basis with breakdowns by card type and form factors;

10.     Requiring designated card schemes to publish their aggregate scheme fees and rebates charged to Australian acquirers and issuers on a quarterly basis with breakdowns by acquirer and issuer scheme fees, card type and form factors;

11.     Requiring large acquirers to publish the fees they charge merchants on a quarterly basis, with breakdowns by merchant size and card type. This would only apply to acquirers that process more than $10 billion of card transactions in Australia annually on behalf of direct merchants;

12.     Requiring acquirers to include more information on merchants’ statements, including a breakdown by domestic-issued versus foreign-issued cards and card-present versus card-not-present transactions;

13.     Requiring large acquirers to publish a measure of interchange pass-through for the first four quarters following the interchange reductions; and

14.     The RBA collecting quarterly data from acquirers on their merchant service fees, broken down by interchange fees, scheme fees and acquirer margin.

These policies are to be implemented by the Variation Instrument, except for the policies described in 7. and 14. above.

4. Operation of the Instrument

See Attachment A for detailed explanation of the Variation Instrument.

5. Commencement and effect

The Variation Instrument will commence on 1 October 2026 and, subject to certain transitional and application provisions, the variations to all three Standards will come into effect on and from that date. See Appendix C and Appendix D of the Conclusions Paper and Appendix A of this Explanatory Statement for further details of transitional arrangements, particularly for the 2026/27 financial year.

The Variation Instrument does not commence retrospectively (prior to 1 October 2026).

The Variation Instrument contains provisions that require:

• the card schemes to first provide to the RBA and publish their wholesale fee data (Schedules 1-3 in Standard No. 1 and Standard No. 2) by 30 October 2026, which is after the commencement date; and
• large acquirers to first provide to the RBA and publish their average merchant service fees (Schedule 1 in Standard No. 3) by 30 October 2026, which is after the commencement date.

For each of these new requirements, the first reporting period is 1 July 2026 to 30 September 2026 (that is, the data to be provided and published relates to a period prior to the commencement date of the Variation Instrument). However, the Variation Instrument does not make failure to publish or provide that data prior to any period before 1 October 2026 a breach of any of the three Standards.

The RBA has determined that publishing wholesale fee and merchant service fee data (and providing the data to the RBA) that relates to the period one quarter prior to the changes to the interchange caps and benchmarks under these two Standards would be in the public interest. This is so that the RBA and payments industry participants can monitor how the card schemes respond to changes in interchange settings. In particular, there is strong concern about the potential of rising scheme fees (or acquiring fees) that will offset the intended benefits of reductions in interchange. There is also significant concern that acquirers will not pass on the reductions in interchange to merchants by lowering their merchant service fees. These data together can allow some inference as to whether any potential lack of pass-through of interchange savings to merchants is as a result of the increased fees of card schemes or acquirers.

In determining the first reporting period for the purposes of the requirement for card schemes to publish their wholesale fee data, the RBA took into account the following factors (amongst others):

•            the designated card schemes currently provide similar data to the RBA;
•            the RBA expects that the Variation Instrument will be registered and the schemes will be notified of the variations to the Standards well in advance of the publication requirements coming into effect so that the card schemes can take steps to be prepared for compliance by 30 October 2026;
•            draft variations to the Standards (including proposed wholesale fee data publication requirements) have been in the public domain since July 2025; and
•            changes made to the publication requirements since the Consultation Paper have been made in consultation with the card schemes with the intent to align the requirements closely to the reporting currently undertaken by the schemes in order to reduce the burden of compliance.

In determining the first reporting period for the purposes of the requirement for large acquirers to publish their average merchant service fee data, the RBA took into account the following factors (amongst others):

•            large acquirers currently provide merchant service fee data to the RBA on a monthly basis as part of the RBA’s Retail Payments Statistics data collection;
•            the RBA expects that the Variation Instrument will be registered and large acquirers will be notified of the variations to the Standards well in advance of the publication requirements coming into effect so that these acquirers can take steps to be prepared for compliance by 30 October 2026; and
•            draft variations to the Standards have been in the public domain since July 2025, and changes made to the publication requirements since the Consultation Paper have been made to align the requirements more closely with concepts in the Retail Payments Statistics.

The Variation Instrument also contains Net Compensation provisions that relate to 12 month periods ending 30 June and require certification of compliance (clauses 5 and 6.5 in Standards No. 1 and Standard No. 2). The Commencement and Implementation provisions in clause 7 in Standards No. 1 and Standard No. 2 modify the application of those provisions in respect of the 12 month period ending 30 June 2027. This is described further at paragraph [42] of Schedule 1 of Attachment A and paragraph [64] of Schedule 2 of Attachment A.  

6. Statement of Compatibility with Human Rights

The Explanatory Statement for a disallowable instrument must contain a Statement of Compatibility with Human Rights prepared under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011.

A Statement of Compatibility with Human Rights in respect of the Variation Instrument is contained in Attachment B.

7. Exemption from sunsetting

Each of the Standards and the Variation Instrument is exempt from sunsetting pursuant to item 50(c) of the table in regulation 12 of the Legislation (Exemptions and Other Matters) Regulation 2015. Standards imposed under the PSRA are designed to be enduring and commercial certainty would be undermined by sunsetting.

In the context of the RBA’s regulation of retail payment systems, the RBA has determined standards relating to interchange fees and merchant pricing that apply to participants in certain card payment systems designated under the PSRA and imposed access regimes in relation to certain payment systems designated under the PSRA.

Notwithstanding the fact that the Standards (and any variations to the Standards) are exempt from sunsetting, the RBA periodically reviews the Standards to ensure that they remain necessary and fit for purpose. It is the RBA’s view that the timing of review of its standards and access regimes should be driven by these processes and in responses to developments in the payments landscape or issues raised by stakeholders, rather than by a fixed sunset deadline. Such a fixed deadline may trigger an additional burden on both the RBA and the industry at a time when their respective resources are better spent in other activities. The recent Review completed by the RBA in March 2026 was launched in response to stakeholder concerns around payment surcharges and associated merchant card payment costs. This led to a comprehensive examination of the regulatory framework for card payments and surcharging which involved extensive public and stakeholder consultation, consistent with the RBA’s consultation obligations under the Legislation Act 2003. The timing of future reviews can remain flexible to developments in the payments landscape. For example, the recent amendments to the PSRA in 2025 also provide a natural point at which the RBA will review its standards and access regimes in the context of the expanded regulatory remit of the amended PSRA.

In addition to formal reviews, the RBA regularly considers the appropriateness of its standards and access regimes through other informal mechanisms. For example, the RBA’s Payments Policy Department monitors and reports to the PSB each quarter on trends and developments in retail payments. Further, the RBA’s staff have ongoing engagement with the card schemes, issuers, acquirers and other payment service providers, large merchants, small merchant groups, fintechs, mobile wallet providers and government entities or other regulators. The RBA also regularly engages with the payments industry through public forums including speeches, conferences and industry roundtables. Each of these processes provides a mechanism for the RBA to consider, on an ongoing basis, the effectiveness of its standards and access regimes, and any need for variation to, for example, address competition and efficiency concerns raised by developments in retail payment systems or through stakeholder engagement.

8. Documents incorporated by reference  

The Variation Instrument does not incorporate any document by reference.

Michele Bullock

Governor

Approved by the Reserve Bank of Australia

10 April 2026

Attachment A – Detailed explanation of the Variation Instrument

Schedule 1 – Amendments to Standard No. 1 of 2016

References to item numbers in this Schedule refer to item numbers in Schedule 1 of the Variation Instrument and references to clauses refer to clauses in Standard No. 1.

Key changes

The variations to Standard No. 1:

1.         Set a revised interchange fee cap of 0.3 per cent of transaction value for consumer credit cards and retains the existing interchange fee cap of 0.8 per cent of transaction value for commercial credit cards.

2.         Remove the weighted-average benchmark that previously applied to both consumer and commercial credit cards in combination.

3.         Introduce a cap on interchange fees on foreign-issued card transactions acquired in Australia of 1.0 per cent of transaction value.

4.         Amend the Net Compensation provisions to:

(a)       capture transactions acquired overseas on Australian-issued cards in the calculations of whether Net Compensation is received, as is currently the existing industry practice; and

(b)      clarify that Australian Issuers that are sponsored members of the designated card schemes by a foreign entity are Direct Issuer Participants and subject to the Net Compensation provisions.

5.         Introduce transparency measures that require the designated card schemes to publish data relating to their interchange fees, scheme fees and scheme fee rebates on a quarterly basis (and provide the data to the RBA).

Clause 1 (Objective)

1.                  No change to this clause.

Clause 2 (Application)

Clause 2.3 – Definitions

1.                  Item 1 repeals the definition ‘Above Benchmark Reference Period’ as the benchmark for credit interchange fees has been removed.
2.                  Item 2 repeals the definition of ‘Acquirer’ and substitutes an amended definition which adds references to a Merchant ‘in Australia’. This is a consequential amendment as a result of the amended definition of Merchant so that ‘Acquirer’ continues to refer to Acquirers that provide acquiring services to Merchants in Australia.
3.                  Item 3 inserts definitions of ‘Card Not Present Transaction’ and ‘Card Present Transaction’. These terms are used in clauses which impose new obligations for the credit card schemes to provide reporting on interchange and scheme fee data.
   1.             Card Present Transactions include transactions where the holder of a card or other Device is with the card or device and the Merchant’s physical point-of-sale device, such as a card payment acceptance terminal, and the card or other Device or a tokenised version of the primary account number relating to the Device interacts with the Merchant’s physical point-of-sale device. This definition clarifies that transactions that are conducted when the holder of the device is in the Merchant’s store but are processed online should be treated as a Card Not Present Transaction. Examples include when a customer scans a QR code that leads to a website to enter their card details which is subsequently processed online.
   2.             Card Not Present Transactions are transactions other than Card Present Transactions.
4.                  Item 4 inserts definitions of ‘Commercial Credit Card’, ‘Commercial Credit Card Transaction’ and ‘Consumer Credit Card Transaction’. These terms are used in clause 4.1(a), which sets interchange fee caps.
   1.             ‘Commercial Credit Card’ is defined, in relation to a Scheme, as a Credit Card of that Scheme issued for use by the holder of the Credit Card wholly or predominantly for business purposes. It is intended to cover cards that are issued to business customers for primarily business use. ‘Commercial Credit Card Transaction’ is defined by reference to a transaction made using a Commercial Credit Card.
   2.             ‘Consumer Credit Card Transaction’ is a Credit Card Transaction that is not a Commercial Credit Card Transaction. This covers transactions using a Credit Card issued to individual cardholders or consumers for personal, rather than business, purposes.
5.                  Item 5 repeals the definition of ‘Credit Card Account’ as it is no longer used in the Standard.
6.                  Item 6 inserts a further term ‘Credit Card of the Scheme’ to which the existing definition of ‘Credit Card of a Scheme or Credit Card of that Scheme’ also applies. The amended Standard refers to ‘Credit Card of the Scheme’, as well as ‘Credit Card of a Scheme’ and ‘Credit Card of that Scheme’.
7.                  Item 7 inserts a reference to ‘in Australia’, to clarify that the reference to ‘Merchant’ in the definition of ‘Credit Card Transaction’ is limited to a Merchant in Australia. The clarification is necessary because the amended definition of ‘Merchant’ can include an overseas Merchant, but the term Credit Card Transactions refers to transactions where the card is domestically-issued and acquired by an Australian Acquirer for a Merchant in Australia.
8.                  Item 8 repeals the definition of ‘Direct Issuer Participant’ and substitutes an amended definition which clarifies that Australian Issuers that are participants of the Mastercard or Visa system through sponsorship by a foreign entity are considered to be Direct Issuer Participants (and therefore subject to the Net Compensation provisions). Entities acting as Issuers through this type of arrangement are known or described as an Affiliate Customer in the Mastercard scheme in Australia and a Participant-Type Member or Associate-Type Member in the Visa scheme in Australia. This amendment prevents circumvention of the Net Compensation provisions of the Standard by ensuring that only entities acting as Issuers through sponsorship by a domestic entity are treated as Indirect Issuer Participants (and therefore not directly subject to the Net Compensation provisions). Changes were also made to reflect how these entities are known or described in the Schemes. These changes have been made for clarity and are not intended to change the meaning of this term.
9.              Item 9 amends paragraph (a)(ii) of the definition of ‘Fair Value’ and inserts a reference to Acquirer in addition to the existing reference to Direct Issuer Participant. This reflects the amended requirement (in clause 6.11) for schemes to report data to the RBA about acquiring scheme fees and rebates, in addition to issuer scheme fees and rebates.
10.              Item 10 amends paragraph (ii) of the definition of ‘Incentive Test’ to add a reference to ‘or Overseas Merchant Transactions’ after the reference to ‘Credit Card Transactions’. This ensures that these transactions are included the Incentive Test, which is used in the Net Compensation provisions.
11.              Item 11 repeals the definition of ‘Indirect Issuer Participant’ and substitutes an amended definition which expressly excludes from this definition Australian entities acting as Issuers through sponsorship by a foreign entity. This change clarifies that only Issuers that are sponsored by an Australian sponsor would be considered ‘Indirect Issuer Participants’ for the purposes of the Net Compensation provisions. That definition has also been amended for consistency with how entities are described in the definition of ‘Direct Issuer Participant’. Those amendments have been made for clarity and are not intended to change the meaning of this term.
12.              Item 12 inserts a new definition ‘International Acquirer’. This definition is intended to cover an overseas acquirer that provides acquiring services for overseas Merchants. Paragraph (b) of this definition captures self-acquirers, where a Merchant acquires transactions on their own behalf or on behalf of a related entity.
13.              Item 13 repeals the definition ‘International Card Transaction’ and substitutes an amended definition. These are consequential amendments to the addition of new definitions ‘International Credit Card of the Scheme’ and ‘Merchant’.
14.              Item 14 inserts a new definition for ‘International Credit Card of that Scheme or International Credit Card of the Scheme’ which refers to foreign-issued cards.
15.              Item 15 amends the definition of ‘International Interchange Fee Category’ to reflect the defined term 'Merchant'.
16.              Item 16 amends the definition of ‘International Issuer’ and replaces the reference to ‘participant’ with a reference to ‘an entity that participates’. This is a drafting amendment that has been made for clarity and is not intended to change the meaning of this term.
17.              Item 17 repeals the definition ‘Merchant’ and substitutes an amended definition that includes domestic and overseas merchants (including a merchant that accepts a foreign-issued card).
18.              Item 18 makes a drafting change to the definition ‘New Issuer’ by inserting the word ‘Credit’. As a result, this definition now refers to the term ‘Credit Cards of that Scheme’. This amendment does not change the meaning of the term ‘New Issuer’.
19.              Item 19 inserts new definitions ‘Overseas Merchant Transaction’ and ‘Overseas Merchant Transaction Interchange Fees’.
    1.             ‘Overseas Merchant Transaction’ is intended to cover transactions where the card is issued by an issuer in Australia (Australian Issuer) and both the acquirer and Merchant are overseas.
    2.             ‘Overseas Merchant Transaction Interchange Fees’ covers interchange fees for Overseas Merchant Transactions paid by overseas acquirers to Australian Issuers.
20.              Item 19 also inserts a new definition ‘Physical Point of Sale Device’. This term is used to identify a ‘Card Present Transaction’.
21.              Item 20 moves the definition of ‘Property’ so that it is presented in alphabetical order.
22.              Item 21 inserts the definitions ‘Rebate (Acquirer)’ and ‘Rebate (Issuer)’. These terms are used in clauses 6.11 and 6.13 to specify reporting and publication requirements applicable to scheme administrators. These definitions are modelled on information that operators of designated schemes are already reporting to the RBA.
    1.             The definition of ‘Rebate (Acquirer)’ includes payments made from scheme operators to Acquirers. It excludes interchange fees paid to the entity by an Associated Entity that is an Australian or overseas Issuer, as such ‘negative’ interchange fees should be excluded from the definition of Rebate (Acquirer).
    2.             Likewise, the definition of ‘Rebate (Issuer)’ includes payments made from scheme operators to Issuers. It excludes interchange fees paid to the entity by an Associated Entity that is an Australian or overseas acquirer, as such interchange fees should be excluded from the definition.
23.              Item 22 repeals the definition of ‘Reference Period’ as it was used in the concept of weighted-average benchmark, which has been repealed.
24.              Item 23 inserts a definition for ‘Relevant Rebate’ to refer to rebates for either acquiring or issuing scheme fees, as applicable in the relevant situation.
25.              Item 24 inserts a definition for ‘Required Information’ to refer to specified information that designated schemes are required to publish on their website and report to the RBA under clauses 6.8 to 6.13.
26.              Item 25 inserts definitions of ‘Scheme Fees’, ‘Scheme Fees (Acquirer)’ and ‘Scheme Fees (Issuer)’. These terms are used to define specified information that designated schemes are required to publish on their website and report to the RBA under clauses 6.8 to 6.13. These definitions are modelled on information that operators of designated schemes are already reporting to the RBA.
    1.             ‘Scheme Fees (Acquirer)’ refers to scheme fees payable by Acquirers to relevant scheme operators in relation to transactions acquired in Australia from domestic-issued and foreign-issued card transactions acquired in Australia. This definition excludes interchange fees paid to the entity by an Associated Entity that is an Australian or overseas Issuer, as such ‘negative’ interchange fees should be excluded from the definition of Rebate (Acquirer).
    2.             ‘Scheme Fees (Issuer)’ refers to scheme fees payable by Issuers to relevant scheme operators in relation to transactions made by domestic-issued card transactions acquired in Australia or overseas. It excludes interchange fees paid to the entity by an Associated Entity that is an Australian or overseas acquirer, as such interchange fees should be excluded from the definition.
    3.              ‘Scheme Fees’ refers to either Scheme Fee (Acquirer) or Scheme Fee (Issuer), as applicable in the relevant clause.
27.              Item 26 amends the definition of 'Sponsor'. The change has been made for clarity and is not intended to change the meaning of this term.
28.              Item 27 inserts definitions of ‘Tokenised Transaction’ and ‘Transaction Category’. These terms are used to define specified categories of fees that designated schemes are required to publish on their website and report to the RBA.
    1.             ‘Tokenised Transaction’ is intended to cover transactions where sensitive information such as the cardholder’s primary account number (PAN) is replaced with a unique ‘token’ that contains less critical information than the PAN, and where the token (rather than the PAN) is provisioned for use and can be restricted for use on a particular device, at a specific merchant or for a limited number of uses.
    2.             ‘Transaction Category’ refers to the types of data breakdowns that are required as part of the transparency requirements for interchange and scheme fees, outlined in clauses 6.10(a)(i) to (v), 6.10(b)(i) to (v), 6.12(a)(i) to (v) and 6.12(b)(i) to (v).

Clause 2.8

1.              Item 28 repeals this clause and substitutes an amended clause which includes an additional reference to interchange fees for foreign-issued card transactions acquired in Australia, in the event that there are negative interchange fees for these transactions.

Clause 3 (Anti-avoidance)

1.              No change to this clause.

Clause 4 (Interchange Fees and International Interchange Fees)

Heading

1.              Item 29 repeals the heading of this clause and substitutes an amended title which includes a reference to International Interchange Fees, given the extension of interchange fee regulation to foreign-issued card transactions acquired in Australia.

Clause 4.1

1.              Item 30 repeals this clause and substitutes a new clause 4.1 relating to caps on domestic and international interchange fees.
   1.             Clause 4.1(a) sets two separate interchange caps for Consumer Credit Card Transactions and Commercial Credit Card Transactions at 0.300 per cent and 0.800 per cent of the value of the relevant transactions respectively. The RBA has determined that it would be in the public interest for there to be a separate higher cap for commercial credit interchange fees than that for consumer credit cards, given the competitive dynamics between three- and four-party card schemes differ for commercial cards.[9]
   2.             Clause 4.1(aa) sets an interchange cap for foreign-issued credit card transactions acquired in Australia at 1.000 per cent of transaction value. This cap comes into effect on 1 April 2027. The RBA has determined that it would be in the public interest to introduce a cap for the maximum interchange fee that can be charged to Australian Acquirers (which may then be passed onto Australian merchants) for foreign-issued card transactions acquired in Australia.
   3.              Clause 4.1(b) remains the same as the previous version of this sub-clause.
   4.             Clause 4.1(c) is an equivalent of the existing clause 4.1(b) for international interchange fees and indicates that the fee must be set as a percentage or a fixed amount of International Card Transactions. This clause comes into effect on 1 April 2027, at the same time as the interchange fee cap on these transactions.

Clauses 4.2 and 4.3

1.              Item 31 repeals these clauses as the RBA has decided that a weighted-average benchmark is not required, given the separate caps for consumer and commercial credit card transactions. This will simplify the regulatory regime and is expected to reduce the compliance burden for participants.

Clause 5 (Net Payments to Direct Issuer Participants)

1.              The provisions under clause 5 are known as the Net Compensation provisions. Throughout these sub-clauses, references to Overseas Merchant Transactions have been added (see items 32, 34, 35, 36, 37 and 38). The RBA has decided to include these transactions in the Net Compensation provisions to update the Standard to reflect existing industry practice. The inclusion of these transactions will also prevent potential circumvention of the provisions by the schemes through increasing scheme fee rebates on Overseas Merchant Transactions. See Appendix D of the Conclusions Paper for more information.
2.              Item 33 also amends clause 5.2(a) to include a reference to ‘International Acquirer’ and ‘Overseas Merchant Transaction Interchange Fees’ to ensure that interchange fees paid by a related entity of a scheme that is an overseas acquirer are not included in the calculations of Direct Issuer Participant Receipts, as these are interchange fees and already subject to interchange caps.

Clause 6 (Reporting and Transparency)

Clause 6.2A

1.              Item 39 inserts a clause that replicates clause 6.2 but for International Interchange Fees. It requires Acquirers to report interchange fees for foreign-issued card transactions acquired in Australia to the RBA if they are not multilateral interchange fees.

Clause 6.3

1.              Item 40 amends this clause by including a reference to International Interchange Fees to mirror the certification requirements currently required for domestic interchange fees. This is for the purposes of the RBA monitoring that the schemes/Issuers have complied with the interchange caps.

Clauses 6.7 – 6.15

1.              Item 41 inserts new clauses relating to reporting and transparency requirements.
   1.             Clause 6.7 replicates the existing clause 6.6 for International Interchange Fees for foreign-issued card transactions acquired in Australia.
   2.             Clauses 6.8 and 6.9 specify the data required to be published by the card schemes and provided to the RBA for the purposes of transparency requirements on interchange fees. The corresponding number and value of transactions are also to be provided and published, as well as the quarter and year to which the data relate. These requirements include domestic-issued card transactions acquired in Australia and foreign-issued card transactions acquired in Australia. The relevant data categories are specified in clauses 6.8(a)(i)-(v) and (b)(i)-(v). Schedule 1 provides the format in which this data is to be published.
   3.              Clauses 6.10 and 6.11 specify the data required to be published by the card schemes and provided to the RBA for the purposes of transparency requirements on acquiring scheme fees and rebates. The corresponding number and value of transactions are also to be provided and published, as well as the quarter and year to which the data relate. These requirements include domestic-issued card transactions acquired in Australia and foreign-issued card transactions acquired in Australia. The relevant data categories are specified in clauses 6.10(a)(i)-(v) and (b)(i)-(v). Schedule 2 provides the format in which this data is to be published.
   4.             Clauses 6.12 and 6.13 specify the data required to be published by the card schemes and provided to the RBA for the purposes of transparency requirements on issuing scheme fees and rebates. The corresponding number and value of transactions are also to be provided and published, as well as the quarter and year to which the data relate. These requirements include domestic-issued card transactions acquired in Australia and overseas. The relevant data categories are specified in clauses 6.12(a)(i)-(v) and (b)(i)-(v). Schedule 3 provides the format in which this data is to be published.
   5.             Clause 6.14 describes methods for apportionment of scheme fees and rebates if they do not solely apply to a single transaction. For example, there may be scheme fees or rebates that apply to more than one type of credit card transaction, or apply to both credit and debit or prepaid transactions (e.g. general fees that an Issuer or Acquirer pays to the schemes as part of being a participant). Clauses 6.14(b) and (c) describes fair and reasonable methods of apportionment, such as apportioning on a pro-rata basis by the value of transactions in each transaction category. Clause 14(d) describes methods of apportionment across multiple quarters such as on a pro-rata basis. It provides that the method chosen must be used consistently across quarters unless agreed to by the RBA in writing.
   6.               Clause 6.15 requires the published transparency information to be on an easily accessible part of the schemes’ websites.

Clause 7 (Commencement and Implementation)

1.              Item 42 repeals clause 7.2 and substitutes a new clause which outlines that, subject to the transitional and application provisions specified, the variations to this Standard come into effect on 1 October 2026.
2.              The cap on international interchange fees comes into effect on 1 April 2027 and transitional provisions are dealt with under clauses 7.3 to 7.10.

Transitional provisions[10]

1.              Item 43 inserts several clauses which describe transition arrangements for this Standard. These transitional provisions take into account the fact that variations to the Standard come into effect part way through a financial year.
   1.             Clause 7.3 provides for how clause 6.2A is to be complied with for the Reporting Period ending 30 June 2027. As the cap on international interchange fees does not come into effect until 1 April 2027, the relevant Reporting Period is taken to be the period 1 April 2027 to 30 June 2027.
   2.             Clause 7.4 addresses transitional arrangements for the certification requirements for domestic interchange fees and international interchange fees for the Reporting Period ending 30 June 2027. For domestic interchange fees, the schemes must certify compliance with the cap and benchmark under the current Standard No. 1 up until and including 30 September 2026. For the period from 1 October 2026 to 30 June 2027, the schemes must certify compliance with the new caps which are separate for consumer and commercial interchange. The schemes must certify their compliance with the new international interchange fee caps for the period from 1 April 2027 to 30 June 2027. A later commencement date has been provided for international interchange fee caps due to feedback from consultation that this change would take longer to implement given the wide range of participants that may be affected.
   3.              Clause 7.5 essentially provides for Issuers that become Direct Issuer Participants as a result of the change in the Standard (e.g. Australian Issuers with a foreign sponsor) to be treated in the same way as a New Issuer under the Standard, for the 2026/27 financial year. These Issuers will have until 31 July 2028 to certify their compliance with clause 5 for the period 1 October 2026 to 30 June 2028 (inclusive).
   4.             In respect of the Net Compensation provisions, clause 7.6 provides for existing Direct Issuer Participants to choose to comply with the Standard as currently in effect or the Standard as varied with effect from 1 October 2026 for the financial year 2026/27. The RBA expects that this will result in no practical change for most Issuers because the Net Compensation provisions are being updated to be consistent with existing practice through the inclusion of Overseas Merchant Transactions. However, to not potentially disadvantage any Issuers, Issuers have the option to comply with the existing Net Compensation provisions for the 2026/27 financial year. See Appendix D of the Conclusions Paper for further information. Issuers must notify their choice to the relevant scheme by 1 April 2027 and under clause 7.7, the Issuer and scheme’s respective certification to the RBA must be consistent with that choice. Clause 7.8 provides that if the Direct Issuer Participant does not make a choice, it is presumed to have chosen to comply with the existing Net Compensation provisions of the Standard (that does not include references to Overseas Merchant Transactions).
   5.             Clause 7.9 clarifies that the schemes do not need to report International Interchange Fees to the RBA under clause 6.7 for periods before 1 October 2026.
   6.               Clause 7.10 clarifies that the first reporting period for the transparency measures outlined in clauses 6.6 to 6.15 and Schedules 1-3 is the quarter ending 30 September 2026. The data relating to this quarter must be published and provided to the RBA by no later than 30 October 2026.

Schedules 1-3

1.              Item 44 inserts three schedules (tables) which provide the format in which the transparency requirements must be published by each card scheme. These tables have been provided to ensure consistency and comparability in reporting across the schemes.

Schedule 2—Amendments to Standard No. 2

References to item numbers in this Schedule refer to item numbers in Schedule 2 of the Variation Instrument and references to clauses are to clauses of Standard No. 2.

Key changes

The variations to Standard No. 2:

1.         Amend the interchange fee cap to 8 cents per transaction or 0.16 per cent of transaction value for debit and prepaid cards.

2.         Retain the weighted-average benchmark of 8 cents per transaction (including the SNDC sub-benchmark of 8 cents per transaction).

3.         Introduce a cap on interchange fees on foreign-issued card transactions acquired in Australia of 1.0 per cent of transaction value.

4.         Amend the Net Compensation provisions to:

(a)       capture transactions acquired overseas on Australian-issued cards are captured in the calculations of whether Net Compensation is received, as is currently the existing industry practice; and

(b)      clarify that Australian Issuers that are sponsored members of the designated card schemes by a foreign entity are Direct Issuer Participants and subject to the Net Compensation provisions.

5.         Introduce transparency measures that require the designated card schemes to publish their interchange fees, scheme fees and scheme fee rebates on a quarterly basis (and provide the data to the RBA).

Many of the changes to Standard No. 1, which apply to credit cards, have been replicated in Standard No. 2, which applies to debit and prepaid cards.

Clause 1 (Objective)

1.              No change to this clause.

Clause 2 (Application)

Clause 2.3 – Definitions

1.              The following items make equivalent changes to these following definitions as in clause 2.3 of Standard No. 1, as applied to debit and prepaid card transactions:

1.              Item 4 inserts a further term ‘Card of the Scheme’ to which the existing definition of ‘Card of a Scheme or Card of that Scheme’ also applies. The amended Standard refers to ‘Card of the Scheme’, as well as ‘Card of a Scheme’ and ‘Card of that Scheme’.
2.              Item 6 amends the definition ‘Debit Card Transaction’ to insert a reference to Merchants being ‘in Australia’ due to the broadened definition of Merchant, which now includes merchants in Australia and overseas.
3.              Item 7 repeals the definition ‘Direct Issuer Participant’ and substitutes an amended definition to clarify that Australian Issuers that are participants of the Mastercard or Visa system through sponsorship by a foreign entity are considered to be Direct Issuer Participants (and therefore subject to the Net Compensation provisions), rather than Indirect Issuer Participants. Item 10 makes a corresponding change to the definition of ‘Indirect Issuer Participant’. The purpose of these changes is to prevent circumvention of the Net Compensation provisions of the Standard by ensuring that Issuers that participate in a scheme through a foreign sponsor are required to comply with, and certify compliance with, these provisions. Changes were also made to the definitions of Direct Issuer Participant and Indirect Issuer Participant to reflect how these entities are known or described in the Schemes. These changes have been made for clarity and are not intended to change the meaning of these terms.
4.              Item 17 moves the definition ‘Public Launch’ so that it is presented in alphabetical order.
5.              Item 18 amends the definition ‘Prepaid Card Transaction’ to insert a reference to Merchants being ‘in Australia’. This is a consequential amendment required due to the broadened definition of Merchant, which now include merchants in Australia and overseas.
6.              Items 23 and 24 amend the definitions of 'Scheme Pair' and 'Sponsor' to reflect the way the Visa schemes are defined in clause 2.2.

Clause 2.8

1.              Item 26 repeals the clause and substitutes an amended clause to reflect the changes in Standard No. 1 for the same rationale.[11]

Clause 3 (Anti-avoidance)

1.              No change to this clause.

Clause 4 (Interchange Fees and International Interchange Fees)

Heading

1.              Item 27 repeals the title of clause 4 and substitutes an amended clause to reflect the changes in Standard No. 1 for the same rationale.

Clause 4.1

1.              Item 28 repeals this clause and substitutes new clauses relating to caps on domestic and international interchange fees.
   1.             Clause 4.1(a) sets interchange fee caps for domestic-issued debit and prepaid card transactions of 8.0 cents per transaction or 0.16 per cent of transaction value.[12]
   2.             Clause 4.1(aa) sets an interchange cap for foreign-issued debit and prepaid card transactions acquired in Australia at 1.000 per cent of transaction value. This cap comes into effect on 1 April 2027. The RBA has determined that it would be in the public interest to introduce a cap for the maximum interchange fee that can be charged to Australian Acquirers (which may then be passed onto Australian merchants) for foreign-issued card transactions acquired in Australia.[13]
   3.              Clause 4.1(b) remains the same as the previous version of this sub-clause.
   4.             Clause 4.1(c) has been amended to reflect the changes in Standard No. 1 and for the same rationale.

Clause 5 (Net Payments to Direct Issuer Participants)

1.              The provisions under clause 5 are known as the Net Compensation provisions. As in Standard No. 1, a reference to ‘Overseas Merchant Transactions’ has been added to clause 5.1 (see item 29). The RBA decided to include these transactions in the Net Compensation provisions to update the Standard to reflect existing industry practice. The inclusion of these transactions will also prevent potential circumvention of the provisions by the schemes through increasing scheme fee rebates on Overseas Merchant Transactions. See Appendix D of the Conclusions Paper for more information.
2.              Item 30 amends clause 5.2(a) to include a reference to ‘International Acquirer’ and ‘Overseas Merchant Transaction Interchange Fees’ to ensure that interchange fees paid by a related entity of a scheme that is an overseas acquirer are not included in the calculations of Direct Issuer Participant Receipts, as these are interchange fees and already subject to interchange caps.
3.              Item 31 amends clause 5.2(b) for consistency with formatting.
4.              A difference between Standard No. 1 and Standard No. 2 is that amendments to include Overseas Merchant Transactions are not made to clause 5.2(b) of Standard No. 2 (as they are in Standard No. 1) as Scheme Pair Transactions are already defined to include Overseas Merchant Transactions in clause 5.1.

Clause 6 (Reporting and Transparency)

Clause 6.2A

1.              Item 32 inserts new clause 6.2A for the same rationale as for the equivalent clause in Standard No. 1, as applied to domestic and prepaid card transactions.

Clause 6.3

1.              Item 33 amends this clause for the same rationale as for the equivalent clause in Standard No. 1, as applied to domestic and prepaid card transactions.

Clause 6.6(f)

1.              Item 34 repeals this clause and substitutes an amended clause to clarify that the RBA requires information to be provided for each Scheme, not for each Scheme Pair. Although the amendments to clause 5.1 mean that Scheme Pair Transactions now include Overseas Merchant Transactions, that amendment does not affect this paragraph because Interchange Fees (as defined) are not payable in respect of Overseas Merchant Transactions.

Clauses 6.7 – 6.15

1.              Item 35 inserts new clauses relating to reporting and transparency requirements.
   1.             Clause 6.7 replicates the existing clause 6.6 for International Interchange Fees for foreign-issued card transactions acquired in Australia for the purposes of certification and reporting of International Interchange Fees and the relevant transactions to the RBA, as occurs for domestic Interchange Fees. The reporting requirements closely mirror those for the domestic transactions. However, reporting of SNDC transactions is not separately required as the distinction between SNDCs and DNDCs is not relevant for foreign-issued cards (as nearly all cards are SNDCs and no weighted-average benchmark applies separately for SNDCs compared to DNDCs for foreign-issued cards).
   2.             Clauses 6.8 – 6.13 contain transparency requirements equivalent to those under Standard No. 1, as applied to debit and prepaid cards under Standard No. 2.
   3.              Clause 6.14 is inserted for the same rationale as the equivalent clause in Standard No. 1.
   4.             Clause 6.15 is inserted for the same rationale as the equivalent clause in Standard No. 1.

Clause 7 (Commencement and Implementation)

1.              Items 36 to 41 insert new clauses (and repeal previous clauses where relevant) to reflect the equivalent changes in Standard No. 1 regarding transition arrangements, as applied to debit and prepaid card transactions.

Schedules 1-3

1.              Item 42 inserts three schedules (tables) which provide the format in which the transparency requirements must be published by each card scheme. These tables have been provided to ensure consistency and comparability in reporting across the schemes.

Schedule 3 – Amendments to Standard No. 3 of 2016

References to item numbers in this Schedule refer to item numbers in Schedule 3 of the Variation Instrument and references to clauses refer to clauses of Standard No. 3.

Key changes

The variations to Standard No. 3:

1.         Remove the prohibition on designated card schemes from imposing ‘no-surcharge’ rules.

2.         Introduce transparency requirements for large Acquirers to publish the average merchant service fees they charge their merchants, broken down by card type and merchant size.

3.         Amend the data required to be provided on merchant statements.

4.         Introduce a transparency requirement for large Acquirers to publish the rate of interchange savings they have passed through to their merchants.

Clause 1 (Objective)

1.              Item 1 amends the objective of the Standard as it is no longer aimed at giving merchants the freedom to surcharge and information needed to calculate their cost of acceptance for the purposes of surcharging. Standard No. 3 (as varied) is intended to ensure certain information relating to the cost of accepting card payments is provided to merchants or published, as well as retaining existing provisions relating to the identification of debit and prepaid cards.

Clause 2 (Application)

Clause 2.3– Definitions

1.              The following items repeal these definitions because they relate to surcharging and are no longer required, or are not used in the Standard:

1.              Item 19 repeals the definition ‘Reference Period’ as more specific definitions regarding time periods are required in the Standard for different contexts.
2.              Item 3 inserts the definitions ‘Average Merchant Service Fee’, ‘Average Off-Us Interchange Fee’ and ‘Average Off-Us Merchant Service Fee’.
   1.             ‘Average Merchant Service Fee’ describes the data that Large Acquirers will be required to publish on a quarterly basis as part of the transparency measures required by the RBA. This fee is required to be broken down into several categories of transaction and card types.
   2.             Definitions of the ‘Average Off-Us Interchange Fee’ and ‘Average Off-Us Merchant Service Fee’ has been added for the purposes of the calculation of the interchange Passthrough Rate which Large Acquirers will be required to publish.
3.              Item 4 inserts the definitions for ‘Card Not Present Transaction’ and ‘Card Present Transaction’ which reflect those in Standard No. 1 and Standard No. 2.
4.              Item 6 inserts the definitions ‘Direct Merchant’, ‘Direct Merchant Group’, ‘Domestic Credit Card (Card Not Present) Transaction’, ‘Domestic Credit Card (Card Present) Transaction’, ‘Domestic Credit Card Transaction’, ‘Domestic Debit and Prepaid Card (Card Not Present) Transaction’, ‘Domestic Debit and Prepaid Card (Card Present) Transaction’ and ‘Domestic Debit and Prepaid Card Transaction’.
   1.             The definition ‘Direct Merchant’ is intended to capture Merchants with which the Acquirer has a direct relationship. This does not include Merchants that Acquirers acquire transactions for via a Payment Facilitator. However, where an Acquirer has a related entity that is a Payment Facilitator and the Acquirer acquires transactions for Merchants via that Payment Facilitator, these Merchants would be considered to be a Direct Merchant of that Acquirer.
   2.             A ’Direct Merchant Group’ is intended to cover Direct Merchants that are related entities and ensure consistent treatment of such Merchants for the purposes of the new transparency requirements under Standard No. 3. If an Acquirer is aware that it has multiple Direct Merchants that are related entities, these would be considered to be a Direct Merchant Group. A single Direct Merchant is also considered to be a Direct Merchant Group.
   3.              The following transaction types are categories of domestic transactions where the debit, prepaid or credit card is issued by an Australian Issuer:
      1.        Domestic Credit Card Transaction. Sub-categories of this transaction type include:
         1.        Domestic Credit Card (Card Not Present) Transaction
         2.       Domestic Credit Card (Card Present) Transaction
      2.        Domestic Debit and Prepaid Card Transaction. Sub-categories of this transaction type include:
         1.        Domestic Debit and Prepaid (Card Not Present) Transaction
         2.       Domestic Debit and Prepaid (Card Present) Transaction
5.              Item 7 inserts the definitions ‘Interchange Fee’, ‘International Credit Card Transaction’ and ‘International Debit and Prepaid Card Transaction’.
   1.             The definition of ‘Interchange Fee’ mirrors that used in Standard No. 1 and Standard No. 2.
   2.             Definitions for ‘International Credit Card Transaction’ and ‘International Debit and Prepaid Card Transaction’ are intended to capture foreign-issued card transactions acquired in Australia.
6.              Item 8 inserts the definition ‘Large Acquirer’ to refer to Acquirers that acquired more than $10 billion in card transactions of the designated schemes in the last four quarters. In calculating the value acquired by Large Acquirers, this should exclude cash withdrawals, self-acquired transactions or any acquired for non-Direct Merchants.
7.              Item 10 inserts the definition ‘Medium-sized Merchant’ to refer to Merchants that process card transactions with an aggregate value of between $1 million and $10 million in the relevant 12-month reporting period. For the purposes of calculating the transactions processed by a Merchant, amounts processed by related entity Merchants at the same Acquirer should be added together (see ‘Direct Merchant Group’). Sub-paragraph (b) of this definition provides for the scenario where a Merchant is new to the Acquirer in the relevant 12-month reporting period, in which case the amount of transactions processed should be calculated on a quarterly pro-rated basis (i.e. processing between $250,000 and $2.5 million in transactions in the last quarter).
8.              Item 11 inserts the definition ‘Merchant Category’ to refer to the merchant size categories that will be used in the transparency measures. This includes all Direct Merchants, Small Merchants and Medium-sized Merchants.
9.              Item 12 amends the definition ‘Merchant Service Fee’ to make a minor wording change for clarity and consistency with the drafting approach adopted under new clauses included in Standard No 3. This is not intended to change the meaning of the definition.
10.              Item 13 inserts the definitions ‘Off-Us Transaction’ and ‘Passthrough Rate’.
    1.             ‘Off-Us Transaction’ refers to the transactions that will be relevant for the calculation of the interchange pass-through rate at each Acquirer (see clause 7.4 below for more details).
    2.             ‘Passthrough Rate’ is inserted for the purposes of the transparency requirements for Large Acquirers to publish the amount of interchange reductions they have passed through to their Merchants (see clause 7.4 below for more details).
11.              Item 17 inserts the definition ‘Physical Point of Sale Device’ to provide additional clarification to the meaning of a Card Present Transaction. See the corresponding explanatory notes above in Standard No. 1 for this definition.
12.              Item 18 inserts the definition ‘Quarter’ to clarify the relevant start and end dates of each quarter referred to in this Standard.
13.              Item 20 inserts the definitions ‘Relevant Period’, ‘Represented Acquirer’, ‘Represented Issuer’ and ‘Required Information’.
    1.             ‘Relevant Period’ is used to clarify the relevant time periods referred to in various parts of the Standard.
    2.             Definitions for ‘Represented Acquirer’ and ‘Represented Issuer’ have been added for the purposes of calculating a Passthrough Rate (see clause 7.4 below for more details).
    3.              ‘Required Information’ refers to the data Acquirers are required to provide under clause 7.2A.
14.              Item 21 inserts the definitions ‘Self Acquired Card Transaction’, ‘Small Merchant’ and ‘Specified Period’.
    1.             A ‘Self Acquired Card Transaction’ is a debit, prepaid or credit card transaction that the Merchant acquires on their own behalf, under sub-paragraph (a). It also covers transactions where the Acquirer and Merchant are related entities under sub-paragraph (b). For the avoidance of doubt, a transaction where an Acquirer and Payment Facilitator are related entities is not considered a self-acquired transaction, because the Payment Facilitator is providing acquiring services to another Merchant that is not a related entity. For clarity, if an entity self-acquires some transactions, it does not necessarily follow that all transactions acquired by this entity are self-acquired transactions.
    2.             A definition for ‘Small Merchant’ has been added to refer to Merchants that process card transactions with an aggregate value of less than $1 million in the relevant 12-month reporting period. For the purposes of calculating the transactions processed by a Merchant, amounts processed by related entity Merchants at the same Acquirer should be added together (see ‘Direct Merchant Group’). Sub-paragraph (b) of this definition provides for the scenario where a Merchant is new to the Acquirer in the relevant 12-month reporting period, in which case the amount of transactions processed should be calculated on a quarterly basis (i.e. processing less than $250,000 in transactions in the last quarter).
    3.              A definition for ‘Specified Period’ has been added to refer to the time periods relevant for the calculation of the Passthrough Rate in clause 7.4.
15.              Item 23 inserts the definition ‘Transaction Type’ to refer to the data categories that Large Acquirers will need to report as part of the transparency measures.

Clause 2.7

1.              Item 24 repeals this clause. The RBA’s surcharging framework previously provided a carve out in respect of payments for taxi fares using a designated scheme card because surcharging of taxi fares is subject to regulation by relevant State and Territory regulators. This clause is being removed from this Standard and the transparency requirements under this Standard will apply to payments for taxi fares that are made using a designated scheme card. To the extent that surcharging continues in respect of payments for taxi fares, these surcharges will continue to be subject to any applicable relevant State and Territory legislation.

Clauses 3 – 5 (Merchant Pricing, Permitted Surcharge, Cost of Acceptance)

1.              Items 25, 26 and 27 repeal these clauses. These clauses are being removed as the RBA has determined that it would be in the public interest for the prohibition on ‘no-surcharge’ rules under clause 3 to be removed for the designated card schemes.[14] Clauses 4 and 5, which deal with the calculation of a Permitted Surcharge using a Cost of Acceptance calculation, are no longer required due to the removal of the prohibition on ‘no-surcharge’ rules.

Clause 6 (Card Identification)

1.              No changes are made to clause 6.

Clause 7 (Transparency)  

Clause 7.1, 7.1A and 7.1B

1.              Item 28 repeals clause 7.1 and substitutes a new clause. The previous clause 7.1 has been removed as it is no longer required.
2.              Item 29 inserts the new clauses 7.1A and 7.1B which form part of the transparency requirements that Large Acquirers will need to comply with.
3.              As a result of these changes, Large Acquirers will need to publish their Average Merchant Service Fee on a quarterly basis, for the categories listed in clause 7.1. They will be required to publish this for three merchant categories, as outlined in clause 7.1A. They will also need to provide this data to the RBA. Schedule 1 of this Standard provides the format in which this data must be published. For more information, see Appendix C of the Conclusions Paper.

Clauses 7.2 and 7.2A

1.              Item 30 repeals clause 7.2 and substitutes an amended clause. Item 31 inserts a new clause 7.2A. These clauses outline the changes in the information that Acquirers are required to provide their Merchants on their merchant statements (see Appendix C of the Conclusions Paper for more details). Under clause 7.2A, Acquirers must provide Merchants with the number and value of card transactions acquired, Merchant Service Fees charged in dollar terms and as a percentage of card transaction values. Clause 7.2(b) outlines the categories of transactions for which the Acquirer must provide the Required Information under clause 7.2A. Clause 7.2(b) relates to a statement for a statement period and clause 7.2(c) repeats the same for the Merchants’ financial year statements. Clauses 7.2(b) and (c) clarify that the Required Information must be provided for each credit card scheme and each scheme pair (debit and prepaid). This means data for eftpos debit and prepaid, Mastercard debit and prepaid, Mastercard credit, Visa debit and prepaid and Visa credit are required to be reported separately. The format of the statements is not specified and Acquirers may include other types of aggregation and disaggregation of information along with the Required Information.

Clause 7.3

1.              Item 32 repeals this clause and substitutes an amended version. References to notices required under the previous form of clause 7.1 have been removed as they are no longer required. Acquirers will continue to be able to meet their obligations to provide the Required Information on merchant statements via their Payment Facilitator as is currently the case.

Clause 7.4

1.              Item 33 inserts a new clause 7.4 which introduces a requirement for Large Acquirers to publish a ‘Passthrough Rate’ for four quarters following 1 October 2026. The published data is required to be on these Acquirers’ websites until 30 September 2028. The calculation of the Passthrough Rate is outlined in Appendix C of the Conclusions Paper. This requirement only applies to ‘Off-Us Transactions’, where the Acquirer and Issuer are separate entities or separate brands. Transactions that are ‘on-us’ effectively do not attract interchange because the Acquirer and Issuer are the same entity or brand. Large Acquirers are therefore required to calculate the Average Interchange Fee they are charged for Off-Us Transactions, and the Average Merchant Service Fee they charge their Direct Merchants for Off-Us Transactions. Transactions that are Self-Acquired or processed indirectly via a Payment Facilitator are excluded from reporting.
   1.             The concepts of ‘Represented Acquirer’ and ‘Represented Issuer’ are introduced as there could be transactions where the Issuer and Acquirer are the same legal entity but relevantly operating under different brands. In such a case, this is to be treated as an ‘Off-Us Transaction’ as the Represented Acquirer is a different brand to the Represented Issuer. Where an Issuer and Acquirer are separate entities, this is also considered to be an Off-Us Transaction.
   2.             The reporting periods for this requirement are cumulative, beginning in 1 October 2026 and extended by an additional quarter for each instance of reporting, until one year from 1 October 2026 to 30 September 2027 (inclusive) of the Passthrough Rate has been reported. See Appendix C of the Conclusions Paper for a table on reporting periods and deadlines.

Clause 8 (Anti-avoidance)

Clause 8.3

1.              Item 34 repeals this clause as it relates to restrictions on the Rules of a Scheme and conduct in relation to surcharging which is no longer required.

Clause 9 (Commencement and Implementation)

Clause 9.2

1.              Item 35 repeals clause 9.2 and substitutes an amended clause which outlines that, subject to the transitional provisions specified, the variations to this Standard come into effect on 1 October 2026.

Clause 9.3-9.6

1.              Item 36 inserts clauses 9.3, 9.4, 9.5 and 9.6.
   1.             Clause 9.3 provides that the requirement in clause 7.1 for Large Acquirers to provide to the RBA and publish their Average Merchant Service Fee must be complied with by 30 October 2026. The first reporting period for this requirement is the quarter ending 30 September 2026.
   2.             Clause 9.4 provides that, subject to the transitional provisions in clause 9.5, the new data requirements relating to monthly merchant statements under clause 7.2(b) come into effect on 1 October 2026 and apply to the first full statement period that commences on or after 1 October 2026. Clause 9.5 provides a transition period for the period between 1 October 2026 to 30 March 2027 (inclusive) – during this time, Acquirers can provide monthly statements that comply with either the new requirements (under the Standard as in effect on 1 October 2026) or the previous requirements (under the Standard as in effect on 30 September 2026). For the first statement period that commences on or after 1 April 2027, Acquirers must comply with the new requirements in this Standard as varied with effect from 1 October 2026. See Appendix C of the Conclusions Paper for more information.
   3.              Acquirers are required to provide a merchant statement that covers the full financial year during the last full statement period of that financial year. Under clause 9.6, Acquirers would not be subject to any particular reporting requirements for the 2026/27 financial year period. In other words, Acquirers would not be required to update their full financial year statements to meet the new requirements until the last statement period for the 2027/28 financial year. See Appendix C of the Conclusions Paper for more information.

Schedule 1

1.              Item 37 inserts a Schedule that outlines the format of the data required to be published by Large Acquirers.

Attachment B– Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Payment Systems (Regulation) Standards (Merchant Card Payment Costs and Surcharging) Variation 2026  

This Disallowable Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Disallowable Legislative Instrument

The purpose of this Disallowable Legislative Instrument is to amend the following instruments that have been made by the Reserve Bank of Australia under subsection 18(1) of the Payment Systems (Regulation) Act 1998:

•            Standard No. 1 of 2016 The Setting of Interchange Fees in the Designated Credit Card Schemes and Net Payments to Issuers
•            Standard No. 2 of 2016 The Setting of Interchange Fees in the Designated Debit and Prepaid Card Schemes and Net Payments to Issuers
•            Standard No. 3 of 2016 Scheme Rules Relating to Merchant Pricing for Credit, Debit and Prepaid Card Transactions

The Disallowable Legislative Instrument:

•            Amends Standard No. 3 to remove a prohibition on designated card schemes having card scheme rules that prevent merchants from passing on the cost of accepting payments to their customers (surcharging). This removal would enable designated card schemes to introduce scheme rules that prohibit surcharging. Designated card schemes are Visa credit, debit and prepaid, Mastercard credit, debit and prepaid and eftpos debit and prepaid.
•            Amends the limits placed under Standard No. 1 and Standard No. 2 on the amount of interchange fees that can be required to be paid under the scheme rules of designated card schemes. Interchange fees are paid by entities that enable merchants to accept payments (and ultimately, by the merchant) to entities that issue cards, and the interchange fees for specific transactions are set under scheme rules. The limits applied under Standard No. 1 and Standard No. 2 are based on cost recovery principles, such that they allow card issuers to recover costs arising from card issuing from merchants where the costs directly provide a benefit to merchants, and limits card issuers’ ability to recover costs from merchants where the costs provide a benefit to the cardholder rather than the merchant. It updates the Net Compensation provisions to prevent circumvention of these limits by issuers and schemes. It also introduces transparency measures that require the designated card schemes to publish their interchange fees, scheme fees and scheme fee rebates quarterly. This helps participants compare interchange fees and scheme fees and rebates across schemes, card types and form factors.
•            Also amends Standard No. 3 to require entities that enable merchants to accept payments to provide, to their merchant customers, specified information about the cost of accepting specified types of payments. Providing such information in a standardised format can help merchants to compare payments offerings from multiple providers and choose the payments offering that is more suitable for the circumstances of their business. It also requires large entities that enable merchants to accept payments to publish Average Merchant Service Fees and Passthrough Rates which increase transparency including over the pass-through of interchange fee reductions by acquirers to merchants.

Human rights implications

This Disallowable Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Disallowable Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

[1]  The Conclusions Paper can be found at https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/.  

[2]  See Review of Merchant Card Payment Costs and Surcharging – Issues Paper at https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2024-10/.

[3]  To view public submissions, see Submissions on Review of Merchant Card Payment Costs and Surcharging – Issues Paper at https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2025-01/.

[4]  See Review of Merchant Card Payment Costs and Surcharging – Consultation Paper at https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2025-07/.

[5]  See Review of Merchant Card Payment Costs and Surcharging – FAQs at https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/faqs/review-of-merchant-card-payment-costs-and-surcharging.html.

[6]  See Review of Merchant Card Payment Costs and Surcharging – Issuer Cost Study at https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/issuer-cost-study/2025-08/pdf/issuer-cost-study.pdf.

[7]  To view public submissions, see Submissions on Review of Merchant Card Payment Costs and Surcharging – Consultation Paper at https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2025-07/submissions/.

[8]  See Summary of Submissions to the Review of Merchant Card Payment Costs and Surcharging Consultation Paper | RBA at https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2025-07/summary-of-submissions-to-the-consultation-paper/.

[9]  See Chapter 3 of the Conclusions Paper for further information.

[10]  See Appendix D of the Conclusions Paper for further description of the transitional arrangements for the financial year 2026/27.

[11]  See item 28 of Schedule 1 in the Variation Instrument.

[12]  See Chapter 3 of the Conclusions Paper for further details.

[13]  See Chapter 3 of the Conclusions Paper for further details.

[14]  See Chapter 2 of the Conclusions Paper for further details.