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At a time when Australians are watching every dollar, the Reserve Bank of Australia’s proposal to ban credit card surcharges is meeting growing unease from one of the nation’s most exposed sectors, the travel industry. And according to the Australian Travel Industry Association (ATIA), the policy risks doing the very thing the RBA says it wants to avoid: pushing prices higher across the board and stoking inflation.

In a pointed warning issued on 28 November 2025, ATIA said removing the ability for businesses to recover credit card processing costs would not make those costs disappear. Instead, they would be folded into higher headline prices for everyone, including customers who deliberately avoid credit cards altogether.

ATIA Chief Executive Officer Dean Long said the travel sector sits in a uniquely vulnerable position when it comes to payment risk and cash flow, and blunt regulatory tools fail to reflect that reality.

“Travel industry operators already give consumers the option to avoid credit card surcharges if they pay by cash or EFTPOS,” Long said. “If credit card surcharging is banned, the cost will have to be passed on to everyone, not just people who pay by credit. This seems unfair and will be reflected in higher overall prices and this will stoke inflation.”

A sector carrying outsized risk

Unlike many retail purchases, travel transactions are large, exposed to currency volatility and often booked months in advance. International travel purchases typically range between $6,400 and $10,000 and are commonly paid 70 to 100 days before departure. That delay leaves travel agents, tour operators and wholesalers carrying both financial and chargeback risk long before a customer ever boards a plane.

On a $6,400 booking, a typical 1.3 per cent credit card surcharge equates to around $83. According to ATIA, 95 per cent of accredited travel businesses rely on these surcharges to recover card processing costs when customers choose to pay by credit card.

Crucially, customers already have a choice. ATIA estimates that 47 per cent of travel customers pay via cash or electronic funds transfer, avoiding surcharges entirely. Credit cards account for 44 per cent of transactions, with debit cards making up the remaining 10 per cent.

A full surcharge ban would dismantle that choice and force businesses into one of two outcomes: embed the cost into higher base fares or impose flat service fees across all transactions. Either way, the industry says, the burden would fall on everyone, not just card users.

Subsidising perks for the wealthy

ATIA’s concern extends beyond fundamental pricing fairness. The association argues that scrapping surcharges would effectively force lower-income Australians to subsidise the premium benefits enjoyed by wealthier cardholders.

“People who choose not to pay by credit card will be subsidising the benefits enjoyed by those who do, such as complimentary travel insurance, rewards points, lounge access and preferential access to entertainment,” Long said.

He was even more direct on the generational divide that the policy could entrench.

“Given credit cards, particularly platinum and premium credit cards are predominantly used by wealthier, older Australians, this is tantamount to Gen Zs and Millennials at the back of the plane in Economy subsidising Baby Boomers in Business and First Class.”

In an economy already grappling with intergenerational inequality, the optics and the economics are difficult to ignore.

Debit and credit are already distinguishable.

ATIA has called on the RBA to at least draw a line between debit and credit cards, arguing that payment processors already possess the technical capability to differentiate the two at the point of sale. A restricted ban applying only to debit cards would preserve consumer protection without dismantling cost recovery for higher-risk credit transactions.

Travel payment providers already apply differentiated pricing structures. The industry says claims that such distinctions are “too difficult” across the broader economy reflect a lack of commitment from major banks to support both merchants and consumers with modern infrastructure.

Inflation risk at the worst possible time

The economic contradiction sits at the heart of ATIA’s warning. The Reserve Bank has been publicly vigilant about the risk of inflation resurging. Yet, by forcing businesses to absorb unrecoverable transaction costs, the policy could drive a quiet but widespread lift in base pricing.

“Scrapping credit card surcharging is an idea that just won’t fly and will ultimately add to inflation at a time when the RBA is concerned about its resurgence,” Long said.

For an industry already operating on compressed margins after years of pandemic disruption, rising operating costs, higher insurance premiums and volatile exchange rates, the ability to transparently pass on payment costs remains one of the few remaining financial pressure valves.

A policy with unintended consequences

While the intention behind the surcharge ban may be consumer simplicity, the travel sector warns that oversimplification of complex payment ecosystems rarely produces simple outcomes. Instead, it risks reducing pricing transparency, lifting costs universally and redistributing money from the young and financially cautious to those most capable of absorbing or enjoying premium credit.

In the end, the concern from travel operators is not ideological. It is practical. If businesses cannot recover legitimate transaction expenses at the point of payment, they will recover them elsewhere. Economics, as ever, is immune to good intentions.