For many business owners, the surcharges on customer debit card transactions represent an operational expense they would gladly eliminate. The Australian Government has signalled its intent to address this issue, announcing plans in October 2024 to ban debit card surcharges from 1 January 2026. This proposal is subject to consultation led by the Reserve Bank of Australia (RBA).
The initiative aims to:
- Reduce costs for consumers in an economy that is increasingly cashless, and
- Ease the financial burden on smaller, consumer-facing businesses that rely on EFTPOS for debit card transactions.
Benefits of a Surcharge Ban:
- Enhanced Customer Satisfaction
Removing surcharges would create a more positive customer experience by eliminating unexpected costs at the point of sale, fostering trust and improving transparency. - Simplified Pricing Models
Businesses would be able to offer straightforward pricing, where the displayed price is the total amount payable. This would minimise confusion and improve pricing clarity for customers. - Reduced Administrative Complexity
The removal of surcharges would eliminate the need to calculate and remit these fees to banks or service providers, potentially lowering administrative costs and simplifying payment processes.
Challenges and Considerations:
While the proposal has clear advantages, potential challenges remain:
- Redistribution of Costs
Although surcharges would be abolished, the underlying administrative costs borne by banks and EFTPOS providers are unlikely to disappear. These costs may instead be transferred to businesses in the form of increased fees or charges.
Treasurer Jim Chalmers addressed this issue, stating:
“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. 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.”
Looking Ahead:
Further details will emerge as the RBA consultation progresses and feedback from businesses is gathered. The proposed surcharge ban is expected to take effect on 1 January 2026, following the consultation’s findings.
If your business currently incurs debit card surcharges, we can help you assess the potential impact of this proposal. Our services include:
- Analysing the cost savings associated with the removal of surcharges,
- Evaluating the implications for your operating expenses, profit margins, and cash flow, and
- Preparing strategies to manage any changes to your payment processing costs.
We also encourage businesses to contribute to the RBA consultation, which is accepting submissions until 3 December 2024.
For tailored advice on how this proposed ban may affect your business, please contact us. We’re here to help you navigate this transition and maximise the opportunities it presents.
