Debit and credit card surcharging ended at the start of October, Treasury said in a statement, and the government estimates consumers will save around $1.6 billion previously paid in card surcharges each year. Businesses are expected to save $910 million annually under the changes.
The ban is accompanied by a lowering of the cap on domestic interchange fees, which took effect at the same time. Transparency obligations are being phased in, requiring card companies and banks to disclose more about what they charge for card payment services. The RBA will monitor progress of the reforms.
Assistant Treasurer Daniel Mulino and Assistant Minister Andrew Leigh said the reforms are aimed at reducing cost-of-living pressure for consumers and cutting costs for small businesses. Businesses will be able to shop around for card payment services without navigating complex surcharging rules, the government said. The RBA and the ACCC published guidance documents to assist consumers and businesses in understanding the changes.
Business owners have raised concerns that they will have to pass card operator fees on to customers through other means following the ban, AAP reported. Westpac chief economist Luci Ellis said the surcharge ban was a logical decision, stating that surcharges no longer suited a largely cashless economy. She said businesses would most likely absorb the former surcharge into their shelf prices, meaning overall cost to customers stays the same while becoming more visible.
The government flagged readiness to ban debit card surcharges in late 2024, conditional on further Reserve Bank analysis and safeguards for small businesses and consumers. Around 17% of cafes tracked by an online platform called Small Flat White raised prices for a flat white compared with pre-ban levels. At cafes where prices rose following the ban, the increase was typically 50 cents per coffee, amounting to close to 10% of the price, well above the 0.5 to 1.5% surcharge that card users had previously paid.
Consumers can now use debit and credit cards at the checkout without being charged a separate surcharge. Small businesses no longer need to apply surcharging rules and can compare card payment service providers more easily, though some businesses, particularly in hospitality, have responded by raising listed prices rather than absorbing the card fees.
Official statements: Treasury
Reporting: AAP, Yahoo Finance
Background: ABC News
Written by Pick & Scroll News from the reporting and documents linked above.
