Review of Merchant Card Payment Costs and Surcharging – Phase 3 Appendix B: Issuer Cost Study

The RBA conducted the second iteration of the Issuer Cost Study for this Review (the second study) between October 2025 and January 2026, collecting two years’ worth of data for the 2023/24 and 2024/25 reporting periods. The study covered the same set of 11 institutions as the first iteration of the study (the first study)⁷⁴ that was included in the July 2025 Consultation Paper and accounted for slightly over 90 per cent of aggregate card issuing transactions by value. Four smaller issuers also voluntarily provided cost information. Because these voluntary returns were not submitted with sufficient granularity or in the required template format, or included information beyond the scope of card issuing, they could not be included in the numerical analysis of the Issuer Cost Study. However, the information provided by these was still considered in the advice provided to the PSB in relation to issuer costs.

Domestic institutions reported issuing costs for domestic-acquired cards separately from costs associated with transactions acquired outside Australia. The RBA contacted over 30 of the largest foreign issuers whose cards are used in Australia, across multiple jurisdictions, to address feedback received during consultation that relying on domestic-issuer costs on transactions acquired outside Australia as a proxy for foreign-issuer costs on transactions acquired in Australia may not fully reflect foreign-issuer cost structures. However, only two issuers agreed to participate. Given the lack of participation from foreign issuers, the RBA continued to rely on the data from the cost study on domestic-issued card transactions acquired outside Australia. The information provided by foreign issuers was still considered in the advice provided to the PSB.

Participating institutions completed structured collection forms accompanied by definitions and reporting guidance. The second study applied targeted refinements to improve clarity and comparability relative to the first study run ahead of the Consultation process, which had been modified to balance industry burden with targeted lines of enquiry of the RBA. The specific refinements and process timeline in the second study are described in Chapter 3: Interchange Fees and are not repeated here.

Received submissions were subject to a multi-step validation process that included:

• internal consistency checks against the template structure and definitions
• comparison with each institution’s first Issuer Cost Study submission, where applicable
• peer benchmarking across institutions with similar profiles
• cross-referencing to other relevant data collections, where available.

The RBA engaged directly with institutions to resolve any discrepancies and ensure consistent interpretation of definitions before finalising the dataset. This resulted in resubmissions from several participating institutions.

Transaction volumes and values were sourced directly from reporting institutions for time-series consistency. These were cross-checked against data from the RBA’s Retail Payment Statistics for accuracy. Using aggregated cost and transaction data:

• costs were expressed as a percentage of transaction value
• for domestic-issued debit transactions acquired in Australia, costs were also expressed on a per-transaction cents basis, calculated as total dollar costs divided by the number of transactions.

As explained in Chapter 3: Interchange Fees, the approach reinstated the net costs of disputes and chargebacks, including chargeback write-offs, as eligible costs to maintain consistency with cost studies conducted prior to this Review and in response to stakeholder feedback. The discussion of the eligible-costs rationale and the list of categories is set out in the body of the paper and is not repeated here. Issuer costs have generally trended lower as a share of transaction values and volumes, partly reflecting greater scale and technological improvements, which lower costs. In the most recent year, estimated eligible issuer costs were within one basis point of the prior year’s estimate

As with the first study, the RBA undertook a thorough quality-assurance process. In re-running the study, the RBA also recognised potential incentives for some participants to reallocate costs toward eligible cost categories; validation steps were calibrated to detect and address such behaviours to preserve the integrity and comparability of the dataset.

Headline results from the second Issuer Cost Study are presented in Chapter 3: Interchange Fees, and more detailed results can be found below.

Endnotes

74 See RBA (2025b) for further details.