Review of Merchant Card Payment Costs and Surcharging – Phase 3 Glossary of Key Terms1
Conclusions Paper
March 2026
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| Acquirers | Acquirers provide card acceptance services to merchants through their membership of the relevant card networks. This involves processing transactions on behalf of merchants and often includes providing merchants with a point-of-sale terminal that allows merchants to accept card payments. Acquirers can provide card acceptance services both in store and online through a payment gateway. |
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| Australian Competition and Consumer Commission (ACCC) | The ACCC is an independent Commonwealth statutory authority that promotes competition, fair trading, and product safety for the benefit of consumers, businesses and the Australian community. The ACCC’s responsibilities include enforcing compliance with the Competition and Consumer Act 2010. Section 55B of the Act prohibits merchants from charging a card payment surcharge that is excessive. A card payment surcharge is excessive if it is higher than a merchant’s cost of accepting payments by the relevant card of a designated debit, prepaid or credit card network. The ACCC has powers to investigate and take enforcement action in relation to alleged excessive card payment surcharging. |
| Benchmark | A benchmark in relation to interchange fees refers to the RBA’s regulation that is designed to ensure that card networks do not charge total interchange fees in a given period above the level of the weighted-average benchmark on a per-transaction basis. |
| Blended plans | Blended plans are pricing plans provided to merchants by acquirers or PSPs that ‘blend together’ certain categories of transactions for a single price, but still provide differentiated pricing for different transaction types (i.e. do not include ‘simple or single-rate plans’). An example of this could be one rate for all debit (eftpos, Mastercard and Visa) transactions and one rate for all credit (Mastercard and Visa) transactions. |
| Cap | A cap in relation to interchange fees refers to the RBA’s regulation that effectively prevents card networks from setting interchange fee rates on a per-transaction basis above the level of the cap. This sets a maximum fee for each individual interchange fee category. |
| Card networks | The RBA regulates payment systems including the eftpos, Mastercard and Visa card networks. The card networks facilitate electronic payments being made by debit, prepaid and credit cards by cardholders at businesses that accept card payments through their PSP. |
| Card-not-present (CNP) transactions | Transactions made by consumers online. |
| Card-present (CP) transactions | Transactions made by consumers in store at the merchant’s premises or at the merchant’s physical point-of-sale device. |
| Combination cards | A payment card that allows the cardholder to access both debit card and credit card functionality (see ‘Credit cards’; ‘Debit cards’). |
| Commercial cards | A commercial card is a business or corporate debit or credit card that is issued to businesses or their employees to make business-related purchases. |
| Consultation Paper | The second phase of the RBA’s Review of Merchant Card Payment Costs and Surcharging began with the publication of a Consultation Paper in July 2025. |
| Cost of acceptance | A merchant’s cost of acceptance refers to the fees merchants are charged by their PSP to accept card payments. There are several components to a merchant’s cost of acceptance including interchange fees, scheme fees and an acquirer or PSP margin. Merchants are generally not permitted to surcharge above their cost of acceptance. For more information, see the Backgrounder on Payment Surcharges in Australia. |
| Credit cards | A payment card that allows cardholders to borrow money via the card issuer to undertake transactions, with the obligation on the cardholder to repay the borrowed amount at a pre-determined date. These cards can attract interest and other fees but may also provide other benefits such as loyalty points or travel insurance. |
| Debit cards | A payment card where the cardholder’s own funds are used for transactions. |
| Designated debit, prepaid and credit card systems or designated card networks | Card systems that have been ‘designated’ by the RBA as subject to its regulations under the PSRA. The RBA regulates the following designated debit card systems: eftpos, Debit MasterCard and Visa debit. The RBA regulates the following designated prepaid card systems: eftpos prepaid, MasterCard prepaid and Visa prepaid. The RBA regulates the following designated credit card systems: MasterCard and Visa. For more information, see Regulations. |
| Domestic-issued card transactions acquired in Australia | These are transactions that are accepted by a merchant in Australia made by a card issued in Australia. |
| Drip pricing | Drip pricing is when a price is advertised at the beginning of a purchase, but then extra fees and charges (such as booking and service fees) are gradually added during the purchase process. This can result in consumers paying more than they initially expected. |
| Dual-network debit cards (DNDCs) | DNDCs are debit cards that can have transactions routed via more than one card network. In Australia, they have one card network on the front of the card and a different card network on the back of the card. |
| Dynamic least-cost routing | Dynamic routing is a form of LCR where each transaction is assessed at the individual level to determine which is the cheapest card network for that particular transaction to be routed through for processing. |
| Foreign-issued card transactions acquired in Australia | These are transactions that are accepted by a merchant in Australia made by a card issued overseas. |
| Interchange fee | When a card payment is made, interchange fees are paid by the merchant’s acquirer to the cardholder’s card issuer. For more information, see the Backgrounder on Interchange and Scheme Fees. |
| Issuers | A card issuer provides payment cards to consumers and businesses. They are typically financial institutions. Card issuers may provide additional services with the payment cards they issue such as a line of credit, rewards and fraud protection. Domestic card issuers are based in Australia and typically provide cards to Australian resident customers, while foreign card issuers typically provide cards to customers residing overseas. Domestically issued cards can sometimes be used overseas and foreign-issued cards can sometimes be used in Australia. |
| Issues Paper | The first phase of the RBA’s Review of Merchant Card Payment Costs and Surcharging began with the publication of an Issues Paper in October 2024. |
| Least-cost routing (LCR) | A function that allows the merchant to choose which card network processes DNDC transactions. The aim of LCR is to provide merchants with the ability to route transactions to the cheaper network to reduce merchants’ card payment costs. For more information, see the Backgrounder on Least-cost Routing. |
| Merchant | A business selling goods or services. |
| ‘No-surcharge’ rules | ‘No-surcharge’ rules have previously been imposed by the card networks on merchants to prevent them from applying an extra fee (surcharge) when consumers pay with a card from their network. That is, the merchant is not allowed to surcharge a consumer to accept a card payment from a card network that imposes a ‘no-surcharge’ rule. See also ‘Surcharges’. |
| Payment facilitator | A PSP that arranges or procures acquiring services from an acquirer for its merchants. Payment facilitators are often not direct members of card networks and rely on an acquirer to process transactions on behalf of its merchants. |
| Payment service providers (PSPs) | A PSP is a broad term for entities that provide card payment acceptance services to merchants. This includes acquirers, payment facilitators and those that provide online payment gateway services. PSPs may or may not be direct members of card networks. |
| Payments System Board (PSB) | Under the Reserve Bank Act 1959, the PSB has responsibility for determining the RBA’s payments system policy, which includes policy for the purposes of the RBA’s functions and powers under the PSRA. Broadly speaking, section 10B of the Reserve Bank Act requires the PSB to fulfil this responsibility in a way that is directed to the greatest advantage of the Australian people and to ensure that the RBA’s powers under the PSRA are exercised in a way that best contributes to controlling risk in the financial system and promoting the efficiency and competitiveness of the payments system. |
| Payment Systems (Regulation) Act 1998 (Cth) (PSRA) | The PSRA sets out the regulatory powers of the RBA in respect of payment systems and payment system participants. |
| Prepaid cards | A payment card that allows cardholders to undertake transactions using funds that have been prepaid or pre-funded onto the card. This differs from a debit card, which is linked directly to a cardholder’s bank account. |
| Public interest | When setting standards under the PSRA, section 8 of the Act sets out that in
determining public interest, the ‘Reserve Bank is to have regard to the desirability
of payment systems:
The RBA may have regard to other matters that it considers are relevant, but is not required to do so. |
| Reserve Bank of Australia (RBA) | The RBA has powers under the PSRA to regulate payment systems and payment system participants in the public interest. The PSB sets the RBA’s payments system policy and the RBA implements these policies through its ability to designate payment systems, set standards and impose access regimes. |
| RBA Standards | The RBA may designate a payment system if it considers that designating the system is in the public interest. It may then determine standards that participants in the system must comply with. Standards determined by the RBA to date have generally set out rules that relate to the governance or operation of designated payment systems and the conduct of participants within those systems. The RBA has three current standards in relation to card payments: Standard No. 1 of 2016, Standard No. 2 of 2016 and Standard No. 3 of 2016. For more information, see Regulations. |
| Scheme fees | Scheme fees are charged by card networks – such as eftpos, Mastercard and Visa – to acquirers and issuers for the services they provide. These fees can include assessment fees, processing fees, licensing fees or access fees. For more information, see the Backgrounder on Interchange and Scheme Fees. |
| Single-network debit cards (SNDCs) | SNDCs are debit cards where transactions can only be routed via one card network. |
| Single-rate plans | Single-rate plans are pricing plans provided to merchants by PSPs that charge merchants one single rate for all transactions. |
| Surcharges | A surcharge in the context of card payments is an extra fee charged by a merchant to a consumer for using a particular card to pay for a transaction. |
| Tokenised transactions | Tokenisation of card payments involves replacing sensitive information – the cardholder’s primary account number (PAN) – with a unique ‘token’ that contains less critical information than the PAN and can be restricted for use on a particular device, at a specific merchant or for a limited number of uses. For more information, see The Australian Debit Card Market: Default Settings and Tokenisation, p 8. |
| Unblended plans | Unblended plans (also called ‘interchange plus’ or ‘interchange plus plus’ plans) are pricing plans provided to merchants by PSPs that charge merchants the wholesale cost (i.e. relevant interchange and scheme fees) of each transaction plus the PSP’s margin. This means merchants can pay a different rate for each transaction, depending on factors such as the card type (e.g. credit or debit), transaction type (e.g. in-person or online) and card network (eftpos, Visa or Mastercard). |
| Wholesale fees | Wholesale fees refers to interchange and scheme fees. |
Endnotes
1 The purpose of this glossary is to provide a general meaning or explanation of key terms used in this Conclusions Paper to assist stakeholders with their understanding of the issues and questions covered by it. Many of these terms have a specific meaning under, and for the purposes of, the current and varied RBA Standards (see Appendix D: Varied Standards).