Consumer watchdog to be given funding boost to tackle card surcharges

The convoluted mess of card surcharges boils down to consumers and small businesses having to pay more. Extra funding for the ACCC will hopefully address the problem.

The federal government is giving the consumer watchdog additional funding to clamp down on excessive purchase surcharges.

The Prime Minister and Treasurer say they are prepared to ban debit card surcharges from January 1, 2026, subject to the design of “safeguards” and work from the Reserve Bank.

“Consumers shouldn’t be punished for using cards or digital payments, and at the same time, small businesses shouldn’t have to pay hefty fees just to get paid themselves,” Treasurer Jim Chalmers said.

The government has announced it was directing an extra $2.1m to the Australian Competition and Consumer Commission (ACCC) to analyse excessive surcharges and report back while the RBA reviews the complicated surcharge ecosystem.

Banks and payment service companies dictate the surcharge fees. Picture: NewsWire / Luis Enrique Ascui

Legally a business has to include the surcharge in the display price if does not offer a way to pay without the surcharge, ACCC rules state. So if a cafe charges $5 for a coffee but does not accept cash, it can be fined for not properly advertising the coffee to include the surcharge amount.

Businesses have the right to pass on the extra fee they incur for processing a customer’s payment, but they cannot make a profit from it.

An ongoing RBA review is assessing what costs small businesses face when processing payments. This additional ACCC funding is looking at where excessive surcharges are being applied.

“This is all about getting a better deal for consumers, reducing costs for small businesses and promoting a more competitive payments system,” Treasurer Jim Chalmers said.

Treasurer Jim Chalmers says debit card surcharges should be banned. Picture: NewsWire / Martin Ollman

“We’re prepared to ban debit card surcharges, subject to further work by the Reserve Bank and safeguards to ensure small businesses and consumers can both benefit from

lower costs.”

The Reserve Bank has calculated Australians paid $960m in surcharges last year.

The UK and the European Union have banned card surcharges.

Large businesses typically do not pass on the surcharge, but smaller businesses have finer margins.

Anthony Albanese said this was “another step to protect Australians” struggling with the cost of living.

“That’s why we have announced this additional funding for the ACCC while we wait for further work by the Reserve Bank of Australia,” Mr Albanese said.

Small businesses are typically forced to pass on the surcharge fee to consumers, as opposed to big businesses which can absorb the cost. Picture: NewsWire / Max Mason-Hubers

In Australia most consumers can actually save money by inserting or swiping their debit card so the payment is processed on the cheaper eftpos network, rather than tapping and copping the more expensive MasterCard or Visa fee.

Eftpos transactions cost a business on average 0.3 per cent (30 cents in every $100), versus 0.5 to 1 per cent on Visa or MasterCard debit.

The banks and payment service providers charge businesses different flat rates. Renting the actual payment machines comes into the mix for those payment service providers too.

Financial Services Minister Stephen Jones said cracking down on surcharges would give small businesses and consumers “a fairer go”.

“The surcharges pile up and punch a big hole in the wallets of customers and the takings of small businesses owners.”

Originally published as Consumer watchdog to be given funding boost to tackle card surcharges