Australia has announced plans to prohibit debit card surcharges, which the central bank estimates cost consumers nearly 1 billion Australian dollars ($671 million) annually.
The centre-left government stated on Tuesday that it aims to eliminate these “unfair and excessive” charges starting in 2026, pending a review by the Reserve Bank of Australia (RBA). Prime Minister Anthony Albanese emphasized that the primary goal is to alleviate living expenses for households, and this proposed ban would be “another step to protect Australians.”
Treasurer Jim Chalmers added that the initiative would offer a “better deal” for consumers while reducing costs for small businesses. “Consumers shouldn’t be penalized for using cards or digital payments, and small businesses shouldn’t face hefty fees just to receive payments,” Chalmers said.
The ban would align Australia with other regions, such as the European Union, which prohibited debit card surcharges in 2018. According to the RBA, Australians are currently losing 960.26 million Australian dollars ($645 million) annually due to these surcharges, as card payments become increasingly popular over cash.
The shift to cashless transactions accelerated during the COVID-19 pandemic, with cash payments declining from 32% of transactions in 2019 to 16% by 2022, based on RBA data.
The move to ban debit card surcharges is seen as part of a broader strategy to modernize Australia’s payment systems and ensure fairness in the digital economy. The government is working closely with the Reserve Bank of Australia (RBA) to finalize the details and establish the necessary regulatory framework. A review of the card payment system by the RBA will help determine the exact mechanisms for implementing the ban and ensure that it effectively addresses consumer concerns.
Businesses have expressed mixed reactions to the proposal. While some small business owners welcome the prospect of lower transaction costs, others worry that they will still face fees from banks or payment service providers, which may then be passed on to consumers in different forms. The government has pledged to monitor the situation closely to ensure the benefits of the ban are not undermined by other hidden charges.
The push to ban surcharges also reflects a global trend toward protecting consumers in an increasingly cashless society. The surge in digital payments during the pandemic has highlighted the need for regulations that adapt to changing financial behaviors, prompting Australia to follow the footsteps of countries like the United Kingdom and Canada, which have already enacted similar measures to curb excessive payment fees.
The government expects that by banning these surcharges, it will encourage more Australians to use digital payment methods without the concern of added costs. This transition is also anticipated to benefit small businesses by potentially boosting sales and reducing the cash-handling costs associated with traditional payment methods.
Overall, the plan to eliminate debit card surcharges is a step toward making the payment landscape more equitable and reducing financial burdens on Australian consumers, aligning the country’s practices with global standards.
