Surcharges on credit cards have found their use-by date
Reserve Bank to stop surcharges in a major windfall for consumers who 'hate' paying the impost constantly.
THE Reserve Bank is to remove surcharges on debit and credit card payments, saving consumers and businesses about $1.8 billion a year.
The ban is due to take effect from the October 1.
RBA governor Michele Bullock said surcharging was no longer working as intended and it had become harder for people to avoid surcharges.
“Consumers and businesses find the rules complex and confusing,” she said.
“Surcharges are often not well disclosed and most consumers want surcharging to stop.”
The reform also include lowering caps on interchange fees paid by Australian businesses, with a focus on small businesses which currently pay the highest fees.
It comes after 18 months of consultation including more than 250 written submissions and 150 stakeholder meetings.
Card surcharges have become a major imposition, with about 75 per cent of merchant transactions now cashless.
“Australians hate paying these charges, let’s be blunt about it,” Treasurer Jim Chalmers said.
“What these changes will do is give consumers more certainty and transparency.”
Consumer groups have welcomed the reforms.
However, critics say merchants who are still charged by card companies will have to add the cost to their prices.
Banks have also warned against slashing the funding that maintains Australia’s payments system, saying it could advantage foreign multinationals over local companies.
“Australian banks invested more than $2 billion building Australia’s new payments system,” Australian Banking Association CEO Simon Birmingham said.
“These deep cuts to interchange will erode their ability to fund future modernisation of this critical infrastructure.”
