Reserve Bank of Australia data shows bank fees rising for small business but not big business

Banks are increasing their fee take from small businesses while cutting charges for the big end of town.

Banks are increasing their fee take from small businesses while cutting charges for the big end of town.

The smashing of SMEs is revealed in a new Reserve Bank of Australia report, which shows an extra $234 million was taken from businesses in 2018, a rise of 2.7 per cent to $8.79 billion.

Nearly every dollar of that growth came from small businesses, whose merchant service costs are soaring in the ‘tap and go’ era.

There was eight per cent increase in total charges to accept card payments last year.

The bill breached $3 billion for the first time, the RBA report shows.

What Qantas Frequent Flyer changes really mean

Lenders drag heels with rate cuts

One thing that can future proof your kids

Contactless payments are increasing businesses’ merchant service fee costs. Picture: iStock

Loan fees rose a relatively modest 0.6 per cent to $3.74 billion.

But this overall figure disguised a troubling trend.

“The increase in fees charged for business loans in 2018 reflected higher fee income from smaller businesses, partly offset by a decrease in the fees charged to large businesses,” the RBA researchers found after sifting through data covering nine-tenths of the banking sector.

In good news, fees charged to households fell 6.5 per cent, led by a decline in charges on deposits and home loans. Credit-card fee income kept on rising.

Deposit fee income fell nearly 20 per cent reflecting the abolition of ATM withdrawal charges.

A seven per cent fall in charges related to home loans was due to a decline in sales volumes.

However the banking industry, which has been under siege for years, leapt on the household figures in the RBA research to declare they were now the good guys.

Big bank ATMs are now fee-free. Source: AFP’s Peter Parks

“While power bills, gas bills, health care and other items are going up, bank fees charged to households are going down, dropping by 6.5 per cent over the last 12 months,” Australian Banking Association chief Anna Bligh said.

“The drop in fees is a direct result of banks listening to community concerns and abolishing many fees which were out of step with community expectations,” Ms Bligh said.

“Banks continue to work hard to earn back the trust of the Australian public, through abolishing fees that are seen as out of step with the community and other initiatives such as the new Banking Code of Practice which will deliver new rights and protections for customers when it goes live on July 1 this year,” she said.

Originally published as Reserve Bank of Australia data shows bank fees rising for small business but not big business