The federal government has announced plans to ban debit card surcharges as part of a crackdown on excessive fees linked to card payments.
To support this initiative, the Australian Competition and Consumer Commission (ACCC) will receive $2.1 million in funding to enhance enforcement.
The move aligns with the Reserve Bank of Australia’s (RBA) ongoing review of merchant payment costs and surcharging.
The review addresses growing frustration from consumers and businesses over hidden fees in everyday transactions. If approved, the ban on debit card payment fees could come into effect by January 2026.
Prime Minister Anthony Albanese said that the government’s primary focus is to alleviate the pressures of cost of living on households and businesses.
“My government’s number one priority is to ease the cost of living for households and businesses, and this is another step to protect Australians,” Albanese said in a statement.
“That’s why we have announced this additional funding for the ACCC while we wait for further work by the Reserve Bank of Australia.”
The RBA, responsible for regulating the country’s payment systems, is set to release its first consultation paper on merchant costs and card transaction fees. The government is expected to follow this report closely.
The $2.1 million given to the ACCC will allow the consumer watchdog to clamp down on illegal and unfair surcharging practices while boosting education and compliance efforts.
“This is all about getting a better deal for consumers, reducing costs for small businesses and promoting a more competitive payment system. 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,” said Treasurer Jim Chalmers on Oct. 15.
Assistant Treasurer Stephen Jones echoed this sentiment, stating that the surcharge ban would provide a fairer environment for consumers and businesses alike.
“The surcharges pile up and punch a big hole in the wallets of customers and the takings of small business owners,” he noted. “This is good news for consumers and small business owners and will help our payment systems keep up with the digital economy.”
The government says it was careful to balance the interests of both consumers and small businesses.
“While easing costs for consumers is a priority, the government is also mindful of not placing additional financial burdens on businesses or creating unintended consequences for the wider economy,” it said.
According to the ACCC, businesses in Australia can charge a surcharge for card paymeents, but the surcharge must not be more than what it costs the company to provide that service.
The new rules will also make it mandatory for financial companies to show how those costs are calculated.
“If there is no way for a consumer to pay without paying a surcharge, the business must include the surcharge in the displayed price,” says the ACCC.
Meanwhile, Jason Bryce of the Cash Welcome group, said the ban could actually lead to more hidden fees and higher retail prices for all consumers.
“By removing surcharges, banks and card schemes might hide costs from customers, raising prices without transparency. Cash users, in particular, would be unfairly burdened with the costs typically associated with premium credit cards, such as frequent flyer rewards,” Bryce said.
He further argued that this ban would effectively force all shoppers, including those who pay with cash, to subsidise card users’ rewards programs, driving up retail prices across the board.
