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Budget plan tackles ‘unequal’ credit card fees
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FURTHER READING: Federal Budget 2025 live coverage: One group of Australians not benefiting from Albo’s spending spree
The Albanese government has indicated the cessation of debit card surcharges, though they have not gone as far as prohibiting the practice entirely.
The 2025 Federal Budget presented on Tuesday evening targeted the unjust fees imposed on Australians as a result of their preferred payment methods.
‘The Government is tackling unjustified high credit card fees to secure a better bargain for customers during transactions,’ as stated in the Budget summary.
‘The administration is ready to
ban debit card surcharges,
Subject to additional efforts by the Reserve Bank of Australia and measures to guarantee that both small enterprises and consumers can enjoy the advantages of reduced-cost transactions.
There was no indication provided about when these additional charges would be prohibited.
Good news continued for bank patrons as per the latest Budget, where the administration has implemented measures to curb the tendency of banks shutting down in rural regions, albeit on a temporary basis.
The announcement stated that they have obtained pledges from leading financial institutions to keep more than 800 of their outlets operational in rural and distant areas of Australia up till at least July 31, 2027.
The banking industry has also committed to increasing its investments in Australia Post’s Bank@Post service, thereby ‘offering more assurance and options for bank customers across approximately 1,800 rural and distant areas’.
Last month, an Australian fed up with paying bank card fees and weekend surcharges wrote a 55-page letter to the Albanese government, asserting that these charges are often unlawful.
This followed the Reserve Bank of Australia (RBA)
solicited inputs from the public last year as part of its examination into merchant card payment fees and surcharging
.
Over 100 entries were submitted — with 79 being disclosed publicly and 22 kept private — however, a missive penned by an individual named McLean Roche caught attention due to its extensive length, meticulous research, and intense indignation towards additional charges.
The Australian not only alleged that illegal and unfair practices were occurring repeatedly with tap-and-go fees; they also asserted that they possessed evidence of this through images of receipts and charge descriptions.
An instance that Roche provided within the filing was about ‘hosting a substantial family gathering during Sunday brunch, only to face an unexpected $101 additional charge – turning a $675 ‘fee’ into $776 because of such extra costs.’
This reflects the situation in Australia where there is rampant unchecked sur charging, a significant portion of which is unlawful.
inflationary
— this is what consumers encounter daily,” they asserted.
An additional element included in the submission was a
Qantas
receipt for airfare charges made with an eftpos card showed a supposed additional fee of $4.53, but Qantas actually levied a charge of $14.60 – representing a 69% hike.
Roche asserted that the airline insisted the booking was properly subjected to a 1.03 percent credit card surcharge, which covered their expenses related to handling the transaction. The company clarified that ‘least cost routing’ was not employed because this method does not apply when using credit cards.
Roche also highlighted numerous other occasions where they were enraged, such as ‘a sandwich with an additional 16.2 percent fee – which includes a 1.2 percent card processing charge for using a debit card, along with a 15 percent weekend surcharge.’
A different receipt included a caption stating that the ‘3.55 percent eCommerce payment surcharge is incorrect and unlawful.’
Other unspecified allegations of illegality involved a ’10 percent levy on takeaway orders,’ a ‘fixed charge of 1.5 percent,’ an additional payment surcharge coupled with a ‘daily fee,’ and a ‘2 percent retail surcharge.’
As stated by the RBA, ‘merchants possess the authority to impose a surcharge on card transactions; however, this charge must not exceed the cost incurred by the merchant for accepting that particular card during the transaction.’
Various payment options and distinct card issuers come with differing fees.
In 2023, the RBA stated that the average expense for a debit-card transaction stood at approximately 0.4 percent, whereas a credit card transaction came out to be roughly 0.8 percent, and a charge card transaction amounted to about 1.3 percent.
Roche’s assertion that the additional charges are unlawful seems to originate from the Competition and Consumer Act 2010, which prohibits stores from imposing overly high fees for credit card transactions.
The Australian Competition and Consumer Commission (ACCC) possesses the authority to probe into and implement enforcement measures in instances where excessive surcharging may be occurring.
Roche stated in the filing that ‘It’s a significant concern that both the RBA and ACCC have not measured the extent and financial impact of all surcharges, along with various forms of exorbitant fees.’
As per their claims, illegal extra fees have cost Australians over $2 billion in total.
This assertion is supported by a report from last November that discovered that
Australians have spent billions of dollars on unlawful charges for governmental services.
for at least twenty years.
The problem was revealed following the discovery by the NSW government that since 2016, approximately 92 million transactions incurred unlawful merchant fees totaling $144 million.
triggering a review by the Albanese Government of federal payments
.
Finance Minister Katy Gallagher stated that starting from January 1, 2025, the government will introduce legislation to prevent merchants from imposing debit card surcharges passed on by the Australian Taxation Office and Services Australia.
‘This new law will grant the finance minister authority to swiftly and effectively modify Commonwealth surcharging regulations, including preventing Commonwealth entities from imposing debit card surcharges,’ she stated.
Nevertheless, the controversial additional fees imposed during weekends and public holidays at numerous eateries fall under the purview of the ACCC to examine individually.
According to legal firm
Freedman and Gopalan
‘, adding an extra fee during weekends or public holidays is entirely permissible, provided the customer is informed’.”
There is no restriction on how high this additional charge can go. It needs to be clearly shown on the menu and should not be any smaller than the tiniest font used elsewhere on the menu.
The ACCC also tackled this concern, stating that ‘restaurants, cafes, and bistros which impose an additional fee on specific days are not required to present you with a distinct menu or pricing sheet, nor must they include the extra charge within a separate price column.’
Nevertheless, the menu should incorporate the phrase ‘a surcharge of [percentage] applies on [the specific day or days],’ with this statement being highlighted equally visibly as the highest-priced item on the menu.
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