Labor to ban debit card fees, surcharges that are ‘unfair’ for Australians using own money

The Albanese government is set to outlaw surcharges on debit cards, saying the fees are ‘unfair and excessive’ for Australians using their own money.

The RBA has started a review of Australia’s retail payments regulation to look at the costs that merchants face when accepting card payments and the framework for surcharging. Picture: Dan Himbrechts/AAP Image

The Reserve Bank has started a review of Australia’s retail payments regulation to look at the costs that merchants face when accepting card payments and the framework for surcharging.

It came as Anthony Albanese said the government is “cracking down on unfair and excessive card surcharges to get a better deal for Australians and small businesses at the physical and online checkout.”

The government announced $2.1m of new funding for the Australian Competition & Consumer Commission to tackle excessive surcharges, with further work underway to reduce payment fees.

The Prime Minister said the government is “prepared to ban debit card surcharges”, subject to further work by the RBA and safeguards to ensure both small businesses and consumers can benefit from lower costs.

“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,” he said.

“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”.

Anthony Albanese with Queensland’s deputy premier Cameron Dick in Meadowbrook. Picture: Steve Pohlner/NewsWire

Mr Albanese said the government is working to reduce payment fees for small businesses and consumers.

“We are prepared to ban debit card surcharging from 1 January 2026, subject to the consultation undertaken by the RBA, and sufficient steps and safeguards to ensure both small businesses and consumers can benefit from lower costs.”

The RBA said card payment costs and surcharging are “attracting more attention” from merchants and consumers in an “environment of heightened concern around the cost of living.”

“It is timely, therefore, to review whether regulatory settings could be adjusted to put further downward pressure on merchant card payment costs and whether the RBA’s surcharging framework remains fit for purpose.

“This recognises that many years have passed since these rules first came into effect.”

The cost of living, card payment costs and surcharging were “linked” because merchants would be less likely to surcharge consumers if card payment costs were lower, the RBA added.

The issues paper “Merchant Card Payments Costs and Surcharging” released by the RBA invites stakeholders to comment on the current regulatory framework and to suggest potential regulatory responses has been issued. Stakeholders can provide written submissions by 3 December 2024.

“This feedback will be crucial in shaping future reforms to ensure a safe and efficient payments system,” the RBA said.

“If the Payments System Board forms a view that consultation on regulatory action is in the public interest, the RBA will further consult on any reform proposals prior to any decisions being made.”

News of the review sparked sharp falls in the share prices of electronic payments solutions providers including SmartPay Holdings and Tyro Payments on Tuesday.

“Smartpay is aware of articles in today’s press reflecting comments made by the Australian Prime Minister and the Treasurer relating to proposed changes to the debit card surcharging rules in Australia and the review currently underway by the Reserve Bank of Australia into card surcharging in the Australian Market,” SmartPay said in an ASX statement.

“Smartpay is engaged with the RBA on the review of surcharging and will provide further information on any potential impacts of any changes once there is more certainty of the conclusion of the review or once the consultation and review period has been completed,” the company added.

Smartpay shares were down 11 per cent at $0.76 after hitting a two-year low of $0.66.

Tyro Payments shares were down 12 per cent at 80c after hitting a four-month low of 76.5c.

Tyro told the ASX that it has been “actively engaged with the RBA and welcomes reviews that assess the true cost of card acceptance for small businesses and consumers.”

“Debit offers consumers and merchants the ability to make convenient, secure and traceable transactions,” Tyro CEO Jon Davey said.

“Consumers should not pay excessive surcharges, nor should businesses fund the consumer benefits that come with high-cost cards and loyalty programs.

“We support any review that assesses the true cost of card acceptance, including both debit and credit, for the fair regulation of payment acceptance in Australia.”

A Tyro Payments eftpos machine. Picture: Supplied

Tyro provides integrated point of sale payments and banking services for small to mid-sized businesses. Any crackdown is likely to see payments players and banks absorb some of the fees of surcharging that are currently passed on to shoppers. Payments represent nearly 90 per cent of Tyro’s gross profit, with banking services making up the balance.

Originally published as Labor to ban debit card fees, surcharges that are ‘unfair’ for Australians using own money