The Federal Government has announced plans to ban debit card surcharges by 2026. It will also fund a consumer watchdog investigation into ways to reduce payment fees for consumers.
A surcharge is added by a business to the price of a product or service when paying by card, to compensate for the cost applied by the card issuer.
The ban will not extend to additional fees for credit cards.
The Opposition says an overhaul “won’t make a difference” for Australians facing a cost of living crisis.
Card surcharges
A card surcharge is issued by a business to cover the cost passed on to them by banks and card networks (Mastercard, Visa etc) for processing payments.
EFTPOS transactions (inserting the card) carry the lowest surcharge, while tapping a card routes payments through the card network, resulting in a higher fee. Cards with rewards for customers, like credit cards, are typically the most expensive to process.
According to the Reserve Bank (RBA), you will be charged around 0.2% for the average EFTPOS transaction.
The RBA sets rules about surcharging, and the Australian Competition and Consumer Commission (ACCC) enforces these rules.
Businesses are allowed to surcharge, but no more than what it costs the business to use that payment type.
Typically, smaller businesses will add the surcharge onto a consumer’s purchase, while larger businesses (e.g supermarkets, department stores) absorb it.
The RBA estimates Australian businesses pay close to $2 billion a year to card networks.
Crackdown
The Government says it is cracking down on “unfair and excessive card surcharges” in Australia.
It will move to ban debit card surcharging from 1 January 2026, subject to an ongoing review by the RBA.
Treasurer Jim Chalmers said: “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.”
ACCC
As part of the overhaul, the Government will provide $2.1 million of funding to the ACCC to investigate card surcharging in Australia, as well as new ways to reduce payment fees.
The ACCC said it welcomed the announcement from the Government, noting that surcharging “continues to be a key concern for consumers and small businesses.”
Opposition
The Opposition called the Government’s plan a “desperate attempt” to conceal “failed” cost of living measures.
Shadow Treasurer Angus Taylor said the overhaul is a “band-aid solution” that lacks necessary detail.
Taylor said: “This ‘announcement’ is completely void of detail and doesn’t offer any tangible solutions to the cost of living crisis in the here and now.”
