Treasurer says uncovering ‘unfair’ practices also part of proposed surcharge revamp designed to give consumers better deal and cut small business’s costs
Follow our Australia news live blog for latest updates Get our breaking news email, free app or daily news podcastJonathan BarrettMon 14 Oct 2024 10.00 EDTLast modified on Tue 15 Oct 2024 06.28 EDTShareThe federal government is preparing to ban debit card fees and instruct the consumer watchdog to investigate excessive card costs, as the unpopular system of transaction charges gets set for an overhaul.
The proposed changes would mean consumers no longer pay a fee when using their debit card to buy their morning coffee or make a major retail purchase. Credit card fees would still apply.
At the same time, the government will provide $2.1m to the Australian Competition and Consumer Commission to investigate “illegal and unfair surcharging practices”.
The Labor treasurer, Jim Chalmers, said the measures were designed to get a better deal for consumers, reduce costs for small businesses and promote a more competitive payments system.
‘Opaque and complicated’ card surcharges are costing Australians billions. Is an overhaul needed?Read more“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.”
A ban would bring Australia’s practice into line with the UK and parts of Europe.
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While debit cards have long been promoted as a replacement to cash, a complicated system of opaque charges has created a multibillion-dollar revenue opportunity for the payments sector, which consists of banks, card networks and payment platforms.
Consumers now often pay the same fee for a debit transaction and a credit card, even though the latter is a form of unsecured debt and provides the card holder with financial rewards such as loyalty points.
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Businesses are currently allowed to pass the charges levied by the payments sector on to the customer via a surcharge.
While small businesses have previously raised concerns over a proposed ban on surcharges because they would need to bear that cost, the issue could be resolved via reforms that reduce the fees merchants pay banks, card networks and payment platforms.
The government said the Reserve Bank would release its consultation paper on Tuesday as part of its review of merchant card payment costs and surcharging.
The prime minister, Anthony Albanese, said in a statement it was a priority to “ease the cost of living for households and businesses”.
Shoppers to no longer pay fees when using debit cards under new Albanese government plan
