Debit Card Surcharges Likely to Be Banned By 2026

[levelnine]

There is an end in sight for consumers getting hit with sneaky surcharges when they pay on card, with the federal government prepared to ban the practice by 2026, promising to give consumers and small businesses "a fair go."

However, any changes will not take effect until January 1, 2026 and are subject to further reviews by the Reserve Bank of Australia (RBA).

Debit card surcharges to be scrapped by 2026, government promises

There is an end in sight for consumers getting hit with sneaky surcharges when they pay on card, with the federal government prepared to ban the practice by 2026, promising to give consumers and small businesses "a fair go."

www.abc.net.au

 

[levelnine]

This strikes me as potentially quite significant for the points space in Australia.

It is going to put pressure on points issuers to justify the surcharges that credit card transactions will attract if debit cards become fee free.

 

[lovestotravel]

This strikes me as potentially quite significant for the points space in Australia.

It is going to put pressure on points issuers to justify the surcharges that credit card transactions will attract if debit cards become fee free.

Agree

Surcharges will be lowered as will points earn

 

[NoName]

Won’t surcharges just be incorporated into the advertised price? Which of course is how it should be. Every other business cost is included in the price.

 

[levelnine]

Won’t surcharges just be incorporated into the advertised price? Which of course is how it should be. Every other business cost is included in the price.

Prices will presumably go up to incorporate the surcharge from debit card fees, but there will still be additional surcharges for credit cards.

 

[muppet]

Cash has high costs of acceptance which are an excepted business cost. Honestly, for most businesses the 1% or so would be much easier and cheaper than managing cash, change, security and depositing cash.

 

[lovestotravel]

Cash has high costs of acceptance which are an excepted business cost. Honestly, for most businesses the 1% or so would be much easier and cheaper than managing cash, change, security and depositing cash.

Not if you believe the "Cash is King" crew.............

 

[NoName]

Prices will presumably go up to incorporate the surcharge from debit card fees, but there will still be additional surcharges for credit cards.

Surely this will just be a first step though? CC surcharges will also presumably be banned at some point after this.

 

[moa999]

If debit cards are broken out, then the blended remainder will likely increase.
So I'd suspect that surcharges will rise.

This might prompt some shift in behaviour - eg. People using debit over credit.

 

[hwy]

It will impact my paying habits. I resent the 1.5% charge to tap and go.
What other developed nation charges to use a credit card? I cannot think of any, but am sure there must be some.

 

[SeaWolf]

For those interested, the discussion/green paper has now been released by the RBA:

Contents | Merchant Card Payment Costs and Surcharging – Issues Paper

Merchant Card Payment Costs and Surcharging – Issues Paper

www.rba.gov.au

There's a lot in it...

Post automatically merged: Today at 12:26 PM

For those interested, the discussion/green paper has now been released by the RBA:

Contents | Merchant Card Payment Costs and Surcharging – Issues Paper

Merchant Card Payment Costs and Surcharging – Issues Paper

www.rba.gov.au

There's a lot in it...

 

[oz_mark]

Cash has high costs of acceptance which are an excepted business cost. Honestly, for most businesses the 1% or so would be much easier and cheaper than managing cash, change, security and depositing cash.

Surcharge - how to raise prices without raising prices.

 

[p--and--t]

Potentially as a side effect, gov revenue may increase as a result. I believe many businesses are charging the debit card fee to subtly encourage the purchaser to use cash resulting in no electronic record of sale so they can “forget” to include in their annual tax return.

 

[SeaWolf]

Having a look through, of particular interest is page 9 where it lists some of the current issues with the surcharging rules at the moment, the ones that jumped out to me were, 'stealth' charging, excessive charging, and additional services being bundled into the charge:

• Consumers sometimes do not know whether a surcharge will be applied, or how much it will be. This may be because some merchants do not disclose their surcharge rates as they are required to.
• Some merchants may be charging excessive surcharges.
• PSPs are increasingly bundling a range of services with their card acceptance services

There's other issues listed in the paper as well.
Pages 19/20 list several potential remedies, some quite complex, and their various pros and cons:

• Banning surcharges on debit transactions.
• Banning card surcharges more broadly.
• Capping surcharges.
• Tightening the definition of the cost of acceptance.
• Mandating differentiated pricing for transactions processed across different networks.
• Mandating monitoring of surcharging by networks and aquirers.

The meat of the paper is only about 20 pages long, though there's extensive additional background material included as well such as a detailed description (complete with diagrams) of how all the various interchange and scheme fees work.

 

[Doctore1003]

Mods could you please merge this thread

Thread 'RBA Review of Retail Payments - effect on credit card points'

Yesterday at 9:00 PM

There's an interesting article in the AFR today about some crazy credit card surcharging practices.

Live Payments, which leases payment terminals to small businesses, is incentivizing those businesses to cop a very high 2.6% processing fee in exchange for earning 1 Qantas Point per $1 processed. That fee can be passed on in full to customers under current regulations, which means the business can earn Qantas Points for free, essentially - and some are doing just that...

• Doctore1003
• Replies: 2
• Forum: Other Finance Discussion