Major payment change coming for millions of Aussies as budget moves country towards becoming a cashless society: What you need to know
The Albanese government has signalled the end of debit card surcharges, but stopped short of banning the practice.
The 2025 Federal Budget unveiled on Tuesday night took aim at the unfair charges that were being slapped on Aussies due to their choice of payment method.
‘The Government is addressing unfair excessive card surcharges to get a better deal for consumers at the checkout,’ the Budget overview said.
‘The government is prepared to ban debit card surcharges, subject to further work by the RBA (Reserve Bank of Australia) and safeguards to ensure both small businesses and consumers can benefit from lower cost payments.’
It did not give an indication of when the surcharges would be banned.
There was more good news for bank customers in the Budget, with the government taking steps to slow the trend of bank closures in regional areas, at least temporarily.
It announced it had secured commitments from the major banks to continue operating ‘over 800 of their branches in regional and remote Australia until at least 31 July 2027’.
The banking sector had also agreed to boost its investment in Australia Post’s Bank@Post service, ‘providing greater certainty and choice for bank customers in around 1,800 regional and remote communities’.
The Albanese government has signalled the end of debit card surcharges in their Tuesday night budget pitch
The government is addressing unfair excessive card surcharges to get a better deal for consumers at the checkout, the budget overview said, as the nation becomes and increasingly cashless economy
Last month, an Aussie who was sick and tired of having to pay bank card fees and weekend surcharges penned a 55-page letter to the Albanese government, claiming many are illegal.
It came after the Reserve Bank of Australia (RBA) asked for submissions from the public to include in its review of merchant card payment costs and surcharging last year.
More than 100 submissions were received – 79 made public and 22 confidential – but one letter from a person called McLean Roche stood out because of its huge length, in-depth research and furious outrage at surcharges.
Not only did the Aussie allege that illegality and unfairness was happening with tap-and-go charges ‘over and over again’, they claimed they had proof of it with pictures of receipts and details of charges.
One example Roche included in the submission was ‘a large family brunch on Sunday, only to be confronted with a $101 surcharge – a $675 ‘bill’ quickly becomes $776 due to surcharges’.
‘This is the reality in Australia with excessive uncontrolled surcharging much of it illegal and inflationary – this is what consumers face every day,’ they claimed.
Another inclusion in the submission was a Qantas receipt for airfares charged on eftpos card which they claimed incurred a $4.53 surcharge, yet Qantas billed $14.60 – a 69 per cent increase.
Roche claimed the airline maintained that the booking was correctly charged a 1.03 per cent credit card surcharge – the cost it incurred from processing the payment – and it did not use ‘least cost routing’ as it was not applicable for credit cards.
The Reserve Bank of Australia asked for submissions from the public to include in its review of merchant card payment costs and surcharging
Hospitality venues say they are merely passing on charges that card providers demand
Roche also detailed several other instances they were furious about, including ‘a sandwich with 16.2 per cent surcharge – a card surcharge of 1.2 per cent on debit card, plus a 15 per cent weekend charge’.
Another receipt had a caption that alleged ‘eCommerce payment surcharge 3.55 per cent is wrong and illegal’.
Others vague charges they alleged were illegal included a ’10 per cent surcharge on a take-out bill’, a ‘flat fee of 1.5 per cent’, a payment surcharge along with a ‘daily surcharge’, and a ‘retail surcharge of 2 per cent’.
According to the RBA, ‘merchants have the right to apply a surcharge on card payments, but this is limited to the amount it costs the merchant to accept that type of card for that transaction’.
Different payment methods and different card providers have varying costs.
For example, in 2023 the RBA said the ‘average cost of a debit-card transaction was around 0.4 per cent, a credit card transaction was around 0.8 per cent, and a charge card transaction was around 1.3 per cent’.
Roche’s claim the surcharges are illegal appears to stem from the Competition and Consumer Act 2010, which bans retailers from applying excessive card payment surcharges.
The Australian Competition and Consumer Commission (ACCC) has powers to investigate and take enforcement action in any case of possible excessive surcharging.
An Aussie who is sick and tired of having to pay bank card fees and public holiday surcharges has made an angry, 55-page submission to a the Reserve Bank (stock image)
A submission from a McLean Roche claimed ‘Qantas receipt (pictured) for airfare charged on eftpos card which (the surcharge) cost $4.53, yet Qantas bill $14.60 – a 69 per cent increase to the airline’. The airline argued the charge was legitimate
According to the RBA, ‘merchants have the right to apply a surcharge on card payments, but it is limited to the amount it costs the merchant to accept that type of card for that transaction’. It could be alleged that this charge (pictured) of 10 per cent for using a bank card is illegal
Roche said in the submission that ‘It’s a major issue that the RBA and ACCC has never quantified the scale and dollars involved in all surcharging, as well as excessive types of gouging.’
According to them, illegal excessive surcharges have collectively costs Aussies more than $2billion.
This is backed up by a report last November which found that Australians have paid billions of dollars in illegal merchant fees for federal government services over at least two decades.
The issue came to light after the NSW government discovered that 92million transactions had attracted $144million in illegal merchant fees since 2016, prompting a review by the Albanese Government into federal payments.
Finance Minister Katy Gallagher said the Government would legislate to stop passing on debit surcharges from the ATO and Services Australia from January 1, 2025.
‘This new legislation will provide the finance minister with the power to quickly and efficiently amend Commonwealth surcharging policies, including to stop Commonwealth agencies passing on debit card surcharges,’ she said.
However, the contentious weekend and public holiday surcharges added in many restaurants and cafes are a matter for the ACCC to investigate on a case by case basis.
According to legal firm Freedman and Gopalan, ‘adding a surcharge on the weekends or holidays is completely legal, so long as the customer is aware’.
‘There is no limit as to what this extra cost can be. The surcharge must be prominently displayed on the menu and must be no smaller than the smallest text on the menu.’
The ACCC also addressed the issue, saying ‘restaurants, cafes and bistros that charge a surcharge on certain days do not need to provide you a separate menu or price list or have a separate price column with the surcharge included.
‘However, the menu must include the words ‘a surcharge of [percentage] applies on [the specified day or days]’ and these words must be displayed at least as prominently as the most prominent price on the menu.’
