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Australia to Ban Debit Card Fees and Surcharges

Payment and Card

Business Honor
14 October, 2024

Australia plans to ban debit card fees and investigate surcharging practices to reduce costs for consumers and small businesses.

The Australian federal government prepares to ban the debit card charges and instruct the ACCC to check high card cost, which indicates a complete overhaul in the current mode of payment system. Changes would completely eliminate the charge on debit card transactions, for example, while buying a coffee or buying something big at retail. These changes will have no impact on credit card fee.

Treasurer Jim Chalmers said that the measures will make consumer experiences better, reduce costs for small businesses, and create a more competitive payments ecosystem. "Consumers shouldn't be penalized for paying with cards or digital payments, and at the same time, small businesses shouldn't have to pay high fees just to get paid themselves," Chalmers said.

The government also plans to fund $2.1 million to the ACCC to investigate "illegal and unfair surcharging practices" by businesses that pass on card processing fees to customers. Surcharging, which has been a contentious issue for long and has led to significant costs for consumers, would be banned. Australia would be aligned with practices in the UK and parts of Europe, where surcharges on debit card transactions are already banned.

Currently, businesses can pass the charges imposed by payment providers (such as banks and card networks) onto consumers. However, this has led to concerns that small businesses may face higher operational costs if surcharges are eliminated. The government aims to address these concerns by implementing reforms that would lower the fees merchants pay for card payments.

The government intends to make life easier for the cost of living issues across every single household and every small business by Premier Anthony Albanese. Another aspect is the fact that the Reserve Bank of Australia will release its consultation paper included in its review about the cost of merchant card payments as well as the resultant surcharging associated with it. This step paves the way forward to a transparent as well as a consumer-favorable environment for payment.