Banks to Suffer $600 Million Loss as Reserve Bans Credit Card Fees

The Reserve Bank of Australia has made a decision to prohibit merchants from charging credit or debit card fees on transactions, effective October 1. This change is expected to cost banks around $600 million in income.

As a result, banks are introducing changes to their rewards programs to claw back the lost revenue. For example, the Commonwealth Bank's Qantas arrangement will see customers receive fewer Qantas points for every dollar spent and will have to pay an annual fee of $149 to be part of the program.

Some argue that the Reserve Bank's decision is a step towards weaning the economy off cash. The bank estimates it costs around $50 million per year to supply enough banknotes for Australians, with cash also posing a security risk and costing merchants in terms of banking and storage.