Paying by card? It may soon cost you less.
The federal government has announced a proposed ban on debit card surcharges – and additional funding for the ACCC to investigate surcharge practices. An RMIT expert explains the proposal.
Dr Angel Zhong, Associate Professor of Finance
“Excessive debit card surcharges undermine consumer trust and place undue financial strain on small businesses, which are the backbone of the Australian economy.
“The proposed surcharge ban would be beneficial to consumers, especially as they continue to face cost of living pressures. Policymakers should also consider the implications of credit card surcharges – both to consumers and businesses.
“Surcharges were introduced as a way for businesses to pass down the fees for processing transactions and leasing payment terminals from banks. However, this practice becomes problematic when surcharges exceed the actual cost of processing payments – an issue currently under review by the RBA.
“Excessive surcharges have already been banned in the UK and parts of Europe. A comprehensive strategy should be developed in Australia to ensure that any regulations are balanced and fair, preventing undue financial burdens on consumers while also considering the operational costs for businesses.
“However, it is also important for any reforms to maintain an optimal balance to support businesses, which may have to bear extra bank costs to continue operating payment terminals.
"Some businesses may also find ways to bypass new rules by introducing other fees, such as service costs or higher holiday/weekend surcharges. The ACCC needs to monitor and address these practices as well.”
Dr Angel Zhong is an Associate Professor of Finance, specialising in global financial markets, behaviour and trends.
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