The Albanese Government has launched a federal crackdown on “unfair and excessive” card surcharges in a bid to get a better deal for Australians and small businesses at the physical and online checkout.
Part of this includes splashing $2.1 million in new funding for the ACCC to tackle excessive surcharges, with further work underway to reduce payment fees.
The Government added it is prepared to ban debit card surcharges from January 1, 2026, subject to further work by the Reserve Bank of Australia (RBA) and safeguards to ensure both small businesses and consumers can benefit from lower costs.
According to the Albanese Government, the declining use of cash and the rise of electronic payments means that more Australians are getting slugged by surcharges, even when they use their own money.
The RBA is responsible for regulating the payments system and is undertaking a review of merchant card payment costs and surcharging, with its first consultation paper released today.
As well as easing costs for consumers, the government said it wants to avoid added costs for small business, or unintended consequences for the broader economy.
"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,” Prime Minister Anthony Albanese said.
"That's why we have announced this additional funding for the ACCC while we wait for further work by the Reserve Bank of Australia."
Treasurer Jim Chalmers added that this is all about promoting a more competitive payments 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,” he 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."
Some industry delegates say this will bring Australia into line with most other developed countries.
“We await the detail on whether fixed, blended and bundled pricing should be banned, as we expect the card companies will lobby to ensure ongoing loopholes that allow them to continue imposing blanket ‘payment service fees’,” Waave co-founder and CEO Ben Zyl. “If not, already stretched merchants will have to continue wearing these costs.
“This means the clock is ticking for merchants to review what payments they offer and how much it’s costing them. Until now merchants have based their payments on consumer choice. However, cost is about to become the new battleground for payments, and the turning point in our payments innovation curve.”
Zyl added that the ban on debit card surcharging will see Australia follow the global trend of account-to-account payments.
“Australia’s modern PayTo payment rails have been in existence for a couple of years, but uptake has been subdued. Whether merchants need to cut payment costs to survive the surcharging ban or improve their payments user experience and security, Pay by Bank (powered by PayTo) is currently the only alternative that achieves these outcomes.
“Merchants can preempt where the tide is taking us by reviewing their payments now, or face the looming cost.”
Meanwhile, the Minister for Financial Services and Assistant Treasurer Stephen Jones said these actions will give small business and consumers a fairer go.
“The surcharges pile up and punch a big hole in the wallets of customers and the takings of small businesses owners,” Jones said.
“This is good news for consumers and for small business owners and will help our payment systems keep up with the digital economy.”