RBA Interchange Consultation: Why Cheaper Cards Still Can't Beat PayID in Betting

A payments analyst at one of the major Australian acquirers sent me a wry message last winter. “If the RBA cap goes through, we all get cheaper. PayID still kills us on cost.” That one sentence sums up the entire interchange consultation story from the perspective of people who watch card economics for a living. The RBA wants cards cheaper. Cards are getting cheaper. PayID is still cheaper by a wide margin.

For betting specifically, this matters because the Reserve Bank’s work on interchange fees is the biggest possible tailwind for cards to reclaim cashier share from PayID. If it is not enough to actually close the gap, then PayID’s position as the default rail is essentially permanent. That conclusion has implications for how bookmakers invest in their cashiers over the next several years.

What the consultation proposes

The RBA’s consultation paper on the framework for card payments – released in 2025 and now moving toward final rules – proposes reducing the interchange cap on debit card payments in Australia from the current 0.8% ceiling toward around 0.3%. The stated rationale is to reduce costs to merchants and, by extension, to consumers through lower prices. Similar but smaller reductions are under consideration for credit card interchange fees.

The policy framework that sits behind this is well-established. The RBA has been actively regulating card payments in Australia for more than two decades, starting with the original 2003 interchange reforms that cut credit card interchange fees materially. The current consultation is the next major step in that ongoing regulatory project, responding to a payment market that has shifted substantially since the last major review.

For a bookmaker accepting debit-card deposits, the interchange fee is one component of the total merchant service fee the operator pays to its acquirer for processing a card transaction. A 0.3% interchange cap would reduce the interchange portion of the fee by roughly 60% compared to the current 0.8% ceiling. The remaining components – acquirer margin, scheme fees, processing costs – would be unaffected by the cap itself, though competitive pressure on the acquiring market might push those down marginally as well.

The consultation is part of a broader set of payments-policy initiatives the RBA is working through, including the continued promotion of the NPP as the domestic real-time payment infrastructure. The RBA’s own position on PayID specifically has been noteworthy: “Although customer adoption of PayIDs has been rising, with around one-fifth of NPP payments now being initiated using a PayID, the Bank would like to see financial institutions do more to promote use of PayID among their customers.” The regulator is actively supportive of the rail’s growth, not neutral about it.

Card costs after the cap

Running the math on post-cap debit card economics is useful because it sets the floor against which PayID’s cost needs to be compared.

A AU$100 debit card deposit at a bookmaker today incurs roughly 0.6% to 0.8% in total merchant service fees – call it AU$0.70 on average. The interchange portion of that is roughly 0.4% at average rates, or AU$0.40. After a 0.3% interchange cap, the interchange portion would drop to around AU$0.30. The acquirer margin and scheme fees would stay roughly constant, so the all-in merchant cost would land somewhere around AU$0.50 to AU$0.60 per AU$100 transaction.

For comparison, the same AU$100 deposit via PayID costs the operator approximately AU$0.04 on the underlying NPP rail, plus the operator’s bank-relationship costs. Even after a 60% reduction in card interchange fees, PayID remains more than an order of magnitude cheaper per transaction. The gap has narrowed but has not closed.

The math is even starker for smaller deposits. A AU$20 debit card deposit at current rates costs the operator roughly AU$0.14 in merchant service fees – about 0.7% of the transaction value. A AU$20 PayID deposit still costs approximately AU$0.04 on the rail side, effectively unchanged regardless of transaction size. The fixed-cost nature of the NPP rail versus the percentage-cost nature of card acquiring means PayID’s cost advantage is proportionally larger on smaller transactions.

The practical implication for bookmakers is clear. Even after the RBA cap takes effect, there is no card-based rail that can match PayID on cost. Operators who have built their cashiers around PayID will retain their cost advantage. Operators who are still card-heavy will have marginally lower costs under the new cap but will not close the gap with PayID-primary competitors.

Why PayID stays cheapest anyway

The fundamental reason PayID costs less than any card rail – now and after the interchange cap – sits in the structure of the NPP itself. The rail is owned by a collective of Australian banks through Australian Payments Plus. It does not have a profit-maximising scheme layer like Visa or Mastercard sitting on top of it. The wholesale cost per transaction reflects the actual infrastructure cost of running the rail, plus a modest margin to fund ongoing investment in the platform, rather than the cost of running a global payment scheme with shareholders.

That structural difference is why the NPP wholesale cost has dropped from around AU$0.39 per transaction in 2019 to roughly AU$0.04 in FY25 – a roughly 90% reduction as volume has scaled and the fixed costs have spread across more transactions. Card scheme costs do not show the same scaling pattern because they are structured differently. Card costs are set by ongoing negotiations between schemes, issuers, acquirers, and merchants, with regulatory caps as the outer limit. NPP costs are set by the economics of operating shared infrastructure at scale.

The NPP handles around 1.6 billion transactions worth roughly AU$1.99 trillion in 2024, and continues to grow at around 15% year-over-year. As volume grows, the per-transaction cost is likely to keep falling further. There is no equivalent pressure on card rail costs because each card transaction still has to fund an issuer, an acquirer, a scheme, and a series of cross-border-capable processing rails that the domestic NPP does not need to support.

For betting specifically, the NPP cost advantage translates directly into absorbed cashier costs. Operators can offer PayID deposits free to punters at any amount, which removes deposit-method surcharging as a consumer friction point. The credit card gambling ban that took effect on 11 June 2024 – carrying penalties of up to AU$247,500 for operators accepting prohibited payments – closed off the historically most expensive deposit rail entirely, leaving the cheap rail as the obvious default.

The interchange cap does not change any of this structurally. What it does is make the secondary question – which of the remaining non-PayID methods is cheapest – slightly more interesting for operators. Debit cards become somewhat cheaper. BPAY stays about where it is. Bank transfer stays the same. None of them get close to PayID on per-transaction cost.

Bookmaker cashier strategy after the cap

The practical strategic response operators will take once the interchange cap is final is worth predicting because it will shape what punters see in cashiers through 2026 and 2027.

The first response is to keep PayID prominent. Cashier placement matters a lot for adoption – the payment method that appears first captures a disproportionate share of deposit volume – and there is no reason to move PayID down the list when cards are still more expensive even after the cap. The current structure, where PayID is typically the top-listed option, will persist.

The second response is to selectively reduce or eliminate any remaining card surcharges that some operators have historically applied. With lower card costs, the case for surcharging debit card deposits becomes harder to defend. A handful of smaller operators that have historically charged debit-card surcharges may drop them, making cards free-to-punter on parity with PayID. That removes one of the small frictions that pushes punters toward PayID but does not change the operator-side economics.

The third response is to double down on cashier UX investment around PayID specifically. If PayID remains the cheapest rail and therefore the operator’s preferred deposit method, the next marginal investment is to make the PayID flow as smooth as possible, reducing abandonment and maximising conversion. This aligns with the incentives the 2027 advertising reform is likely to create.

The fourth response, less immediately visible, is continued interest in PayTo for specific narrow use cases where a standing mandate makes economic and operational sense. PayTo runs on the same NPP rail as PayID and carries similar cost economics, but solves a different consumer problem. A small number of operators are likely to experiment with PayTo integration for recurring-style deposits, loyalty payments, or specific premium-tier account features over the next two to three years. I cover the distinction between PayID and PayTo in depth elsewhere for anyone wanting the detail on how that second NPP rail might fit into betting.

Taken together, the RBA interchange reform is a useful case study in what moves the needle in payment economics and what does not. It will reduce card costs. It will marginally rebalance the card-versus-PayID competition inside cashiers. It will not displace PayID as the default deposit rail for Australian betting. The structural cost advantage the NPP enjoys over any card rail is large enough that interchange reform alone cannot close it.