By The Treasurer states that exposing ‘unfair’ practices is also part of the proposed surcharge overhaul, aimed at giving consumers a better deal and reducing costs for small businesses.
The federal government is planning to ban debit card fees and instruct the consumer watchdog to investigate excessive card costs, as the unpopular system of transaction charges is set for an overhaul.
Under the proposed changes, consumers would no longer have to pay fees when using their debit cards for everyday purchases, like coffee or major retail items. However, credit card fees would still remain in place.
Additionally, the government will allocate $2.1 million to the Australian Competition and Consumer Commission (ACCC) to investigate “illegal and unfair surcharging practices.”
Labor treasurer Jim Chalmers said these measures aim to secure a better deal for consumers, reduce costs for small businesses, and create a more competitive payment system.
“Consumers shouldn’t be penalized for using cards or digital payments, and small businesses shouldn’t have to pay high fees just to get paid,” Chalmers explained.
“We’re prepared to ban debit card surcharges, pending further work by the Reserve Bank and safeguards to ensure that both small businesses and consumers benefit from lower costs.”
This potential ban would align Australia’s policies with those of the UK and parts of Europe.
Although debit cards have been promoted as a cash alternative, a complex system of hidden fees has turned into a multibillion-dollar revenue stream for banks, card networks, and payment platforms.
Consumers often pay the same surcharge for debit and credit transactions, despite credit cards being a form of unsecured debt that offers rewards like loyalty points to the cardholder.
Currently, businesses are allowed to pass these fees on to customers through surcharges.
Small businesses have raised concerns about a potential surcharge ban, as they would have to cover the costs themselves. However, this could be addressed by reforms aimed at lowering the fees merchants pay to banks, card networks, and payment platforms.
The government announced that the Reserve Bank would release a consultation paper on Tuesday, reviewing merchant card payment costs and surcharges.
Prime minister Anthony Albanese emphasized that easing the cost of living for both households and businesses is a top priority.