Treasurer Jim Chalmers has announced that the Federal Government is looking to ban debit card surcharges to the benefit of consumers and small businesses alike.
At a time when the overwhelming majority of Australians use electronic payment methods – a 2023 report from the Reserve Bank of Australia (RBA) showed that as of 2022 only 13 per cent of all transactions in the country were made by cash – consumers are being slugged with a surcharge fee every time they pay by card. The RBA has also estimated those surcharges cost Australians about $1 billion a year. Federal Treasurer Jim Chalmers says he is looking to ban this practice, subject to a review by the RBA and safeguards that will protect consumers and businesses alike.
“Consumers shouldn’t be punished for using cards or digital payments, and at the same time, small businesses shouldn’t have to pay hefty fees just to get paid themselves,” Chalmers said.
“We’re prepared to ban debit card surcharges, subject to further work by the Reserve Bank and safeguards to ensure small businesses and consumers can both benefit from lower costs.”
Protecting businesses in the payment ecosystem
Assistant Treasurer and Minister for Financial Services Stephen Jones spoke on ABC Radio’s RN Drive program also, explaining how it was important that a ban on debit card surcharges didn’t mean that businesses were then lumped with the fees.
“The plan, we want to ensure that we remove those surcharges, but we want to do it in a way that doesn’t lump the cost of that on small businesses, a simple ban on its own would mean that small businesses are picking up the tab,” stated Jones.
“So, we’ve got to go upstream to look at that whole network of charges that is leading or ending in a small business and their customers. So, it’s the banks, it’s the card service providers, Visa, Mastercard, EFTPOS, but it’s also the payment systems operators. So, we’ve got to look at all of that, untangle it, work out what a reasonable cost for providing those services is, and ensuring that Australians aren’t being slugged by these unreasonable surcharges just to access their own money.”
The RBA has also announced that its commencing its Review into Retail Payments Regulation.
“Australians extensively use cards to pay for goods and services. They benefit from the convenience and security provided by card payments. However, in an environment of heightened concern around the cost of living, card payment costs and surcharging are attracting more attention from merchants and consumers,” the RBA statement read.
“These issues are linked, since merchants would be less likely to surcharge consumers if card payment costs were lower. It is timely, therefore, to review whether regulatory settings could be adjusted to put further downward pressure on merchant card payment costs and whether the RBA’s surcharging framework remains fit for purpose. This recognises that many years have passed since these rules first came into effect.”
AHA national CEO Stephen Ferguson said the cost of electronic payments for business is significant and “the AHA is already engaged with the RBA on this issue.”
“The electronic payments system is complex and involves many parts – including for example, consumers, merchants, terminal providers, Point of Sale providers, banks, and debit and credit card companies.
Ferguson concluded: “The AHA will work with the RBA and Government to ensure that if debit card surcharges are banned, costs are not simply shifted to other parts of the electronic payment supply chain.”
The RBA has today released an Issues Paper, inviting stakeholders to provide detailed feedback on the current regulatory framework and to suggest potential regulatory responses. Written submissions are required by 3 December 2024.