Merchant Card Payment Costs and Surcharging – Consultation Paper –
July 2025 Appendix C: Further Details on the Issuer Cost Study

The Issuer Cost Study was a targeted cost study undertaken for the purposes of this Review, seeking to provide estimates of the costs to issuers of providing card payments. The study sought costs data from 13 financial institutions, including the largest card issuers in Australia and some smaller issuers. The RBA received responses from 11 of the 13 institutions. Issuers provided data on costs relating to issuing cards and processing card payments over a 12-month period, including on cost categories relevant to ‘eligible costs’ as part of the RBA’s review of interchange fee regulation. These data were used to estimate issuer costs on a per-transaction basis. Several assumptions and decisions were made in the process of obtaining the estimates contained in the Consultation Paper. These include:

• accepting different (but valid) methodologies from respondents for the apportionment of shared costs across different card and transaction types
• aggregating costs for some categories where some respondents noted that such costs were incurred, but were unable to accurately report or allocate costs to those categories (this may have led to underestimates of the costs for some categories and overestimates for others on an aggregate basis)
• using the cost of processing foreign card transactions for domestic issuers as an indicator of the costs for foreign issuers to process transactions in Australia because the RBA is not able to directly survey foreign issuers.

The RBA sought targeted cost information from institutions relevant to key aspects of the Review while trying to minimise regulatory burden. In particular, the RBA did not seek specific information regarding commercial debit cards due to their smaller market share.

The study benefited from the cooperation of a range of financial institutions that had the opportunity to provide feedback on the study ahead of time and work with the RBA to refine their submissions.