Australia to Reduce Bank Card Surcharges

SYDNEY (Reuters) – Australia is planning to reduce bank card surcharges, including eliminating transaction fees on debit cards, as cash usage declines.

In a media release, the government announced that the central bank is reviewing merchant card payment costs and surcharging, with a potential ban on debit card surcharging from 2026.

Additionally, A$2.1 million ($1.4 million) in funding will be provided to the competition regulator to address excessive surcharges.

Treasurer Jim Chalmers stated, "This is all about getting a better deal for consumers, reducing costs for small businesses, and promoting a more competitive payments system." He emphasized that consumers should not be penalized for using cards or digital payments, and small businesses shouldn't bear high fees just to receive payments.

The Reserve Bank of Australia concluded in 2021 that merchant surcharging supports a more efficient and competitive payments system. However, the issue has gained attention as consumers face rising living costs. In August, National Australia Bank CEO Andrew Irvine criticized paying a 10% surcharge for a coffee as "outrageous."

In 2022, only 13% of payments were made using cash, a steep decline from 70% in 2007, with forecasts suggesting it could drop to just 4% by 2030, according to the Australian Banking Association. ($1 = 1.4843 Australian dollars)