Credit and debit card surcharge payments will be removed by October, according to new legislation announced by the Reserve Bank of Australia (RBA).

Following a decision made with the Payment Systems Board (PSB), the two monetary bodies decided on a series of payment reforms, effective from October 1.

“The surcharging framework, introduced more than two decades ago, is no longer achieving its intended purpose of steering consumers towards making more efficient payment choices,” the RBA said.

“The increased prevalence of businesses surcharging all cards at the same rate, challenges with enforcing the current surcharging framework, and consumers using less cash have reduced the effectiveness of the surcharging regime.”

It added that the removal of surcharges would make such payments “simpler, more transparent and (will) increase competition among payment service providers”. 

The ban will affect Eftpos, Mastercard, and Visa credit and debit payments. Part of the legislative changes will see interchange fees drop from 0.8 per cent to 0.3 per cent.

When first outlining its proposal to ban surcharge payments, the RBA said it could save consumers a total of $1.2 billion each year, it also added that it would make “around 90 per cent” of businesses better off.