Banning card payment surcharges could have knock-on impacts for clients, insurance executives say.

The warning comes as the Reserve Bank of Australia considers the move following a public consultation.

The industry offers insureds various payment options, and credit card payments usually come with extra charges. Other options such as BPAY electronic transfers are free.

The RBA’s consultation paper flagged several proposals. One calls for the removal of surcharges on eftpos, Mastercard and Visa; another suggests reducing the interchange fees paid by businesses to card providers.

“Removing surcharging across debit and credit cards could save consumers a total of $1.2 billion each year,” the paper says. “It would also make card payments simpler, more transparent and help to increase competition.”

“Small merchants” would be about $185 million better off under the proposed measures, the RBA adds.

“Most small merchants currently pay interchange fees above the proposed interchange caps, and 90% of small merchants do not currently surcharge and instead choose to include their payment costs in the price of their goods or services.”

But insurance executives contacted by insuranceNEWS.com.au are not convinced consumers will be better off.

“The reality is, if card charges are passed onto the merchant, those charges will be built into the cost of products and services, so customers will ultimately pay for the convenience of using credit/debit cards,” Insurance Advisernet MD Shaun Standfield said.

Insurance Advisernet clients make payments via BPAY or credit card. They can also use premium funding facilities.

“Of all payments made directly to Insurance Advisernet Australia, over 95% are made by BPAY, which attract no client fees ... The remainder use credit cards, which attract the relevant card fee,” Mr Standfield said.

Former Insurance House head of finance Terri Baker urged brokers to join the debate.

"174 submissions to the RBA’s surcharge review and none address the business model most exposed: intermediaries, who collect money only to pay most of it away," she wrote on LinkedIn.

"For brokers, merchant fees aren’t a cost of goods – they’re a cost of facilitating collection of insurer and government money, often consuming a meaningful chunk of the small margin retained.

"If surcharging disappears, a 1–2% card fee against a 5–15% margin isn’t a minor impact."

A broking director in Melbourne, who asked not to be named, said: “Brokers will still incur fees on other non-surcharged payment methods and currently only pass on a portion of credit card charges. Those underlying costs don’t disappear. Everything comes at a cost.”

Premium funder Arteva Funding says it accepts payments via electronic transfer, Amex, Visa and Mastercard.

“We only pass on the exact fees charged to us by banks and merchant service providers in compliance with existing legislation,” CEO Daniel Gonert said.

The Reserve Bank expects to publish its conclusions by the end of the year.