The Customer Owned Banking Association (COBA) acknowledges the Reserve Bank of Australia’s (RBA) announcement on the regulation of surcharging and interchange fees for card payments.
Consumers will welcome an end to card surcharging. The RBA has announced that cuts to credit and debit card interchange fees will be introduced on 1 October 2026.
In its Conclusion paper, the RBA recognises the importance of debit cards to smaller issuers such as customer-owned banks and has decided to moderate its initial proposal for debit card interchange to be set at 8 cents per transaction rather than 6 cents per transaction. The RBA will also permit single network debit cards to continue.
“We support a competitive, efficient payments system that delivers genuine value for Australians, and the RBA’s approach provides a degree of recognition that while customer-owned banks face unique structural disadvantages, they play a vital role in providing essential competition, innovation, and choice for consumers,” COBA CEO Michael Lawrence said.
Debit cards form the primary card issuance business for customer-owned banks, and banks will need to carefully consider the implications of the interchange decision. Where mutual banks and credit unions offer credit cards, they typically focus on low-interest, low-fee products to provide valuable credit access for their customers. The RBA has acknowledged that lowering debit card interchange would impact small issuers including mutual banks and have modified their original proposal accordingly.
“COBA has advocated for a fairer approach to interchanges fees to ensure our sector can continue to offer competitive payment solutions for their members. We will continue to do so,” Mr. Lawrence said.
Interchange fees provide customer-owned banks with vital income that helps them cover some of the costs of providing card payment functionality to customers. This includes managing risks, ensuring payment guarantees, fees paid to global giants such as Visa, Mastercard and Apple, and offering services like fraud monitoring, customer support, and account maintenance.
The challenge of competition is further compounded by a complex payments landscape where players like Apple Pay and Buy Now Pay Later services remain lightly regulated despite holding significant market power, which creates a market imbalance that distorts competition. COBA welcomes the RBA consulting on the regulation of these players in mid-2026, and hope this will focus on competitive imbalances in the system and the costs imposed on customer-owned banks.
COBA has always advocated for a diverse banking system where both large investor-owned institutions and strong customer-owned banks can thrive. Customer-owned banks provide a distinct alternative to investor-owned banks and are committed to putting people and communities first.
ENDS
For further information or to arrange interviews, please contact Mira Palomaki on 0459 954 035 or media@coba.asn.au.
The Customer Owned Banking Association is the industry body for mutual banks, credit unions and building societies. For almost 180 years our sector has put customers first, returning profits to 5.4 million Australians who put their trust in customer-owned banks.