Call for ban on card surcharges
Banks are blamed for credit and debit card surcharging – so why does this bank want all surcharges banned?
How NSA has your back
National Seniors Australia supports people who want to continue to use cash. You can read about the Keep Cash campaign here.
If you are using digital transactions, in Australia or overseas, it’s important to keep your funds secure and avoid being scammed. Visit our Keep SAFE page for tips.
You can also view our RBA submission here
The Reserve Bank (RBA) is reviewing Australia’s card payments system following a backlash from consumers forced to pay extra when using cards.
Previously, retailers absorbed the cost of providing electronic payments as the cost of doing business.
While retailers blame banks and electronic payment providers, there is a growing suspicion that the global card networks, banks, payment and technology companies, and others have ramped up profiteering.
Canstar estimates point-of-sale surcharging is costing Australian consumers $4 billion a year, up from $1 billion post-pandemic.
The lack of transparency about who is paying fees and how large they are is also an issue. For example, Apple charges your bank every time you tap your phone at a point of sale.
It’s difficult for the everyday consumer to understand the reasons for the surcharging surge. Commentators believe even the RBA has struggled to get to the bottom of such arrangements and how the system’s complexity has evolved.
Surcharging has led many Australians to avoid using cards at retail outlets that impose a surcharge and are, instead, returning to cash.
National Seniors Australia (NSA) is supporting the need to retain cash as an instrumental part of the payment economy. You can find out more about our Keep Cash campaign here.
Politicians have jumped on the surcharge issue, criticising retailers, banks, and card providers for adding to the cost of living during inflationary times.
Even the Treasurer, Jim Chalmers, has jumped aboard but pulled up short of calling for an end to all surcharges, preferring a ban of surcharges on debit payments only.
That makes the recent policy call by Australia’s biggest bank, the Commonwealth Bank of Australia (CBA) all the more surprising, attracting both support and claims that it has prioritised reputational management, following a recent disastrous attempt to charge more customers for making cash withdrawals.
In its submission to the RBA review, CBA has urged the scrapping of surcharges on debit and credit card payments.
Other banks have also made submissions. Westpac has supported a ban on debit-card surcharges but has not suggested it should extend to credit cards. Instead, it argued for an unwinding of “blended” pricing schemes that do not distinguish between debit or credit and charge retailers a flat fee.
CBA argues that banning only debit surcharges will leave credit card users facing the same issues around fee transparency and enforcement. It also potentially leaves these customers on the hook for higher transaction fees as merchants seek to recover debit fees from credit card users.
The Australian Financial Review reported that global payments giants Mastercard and Visa took the same position as CBA in their submissions to the RBA.
Mastercard warned a partial ban on debit but not credit payments would only “disadvantage particularly less affluent consumers who are using credit as a cash flow management tool to manage their budget.”
It said the current settings were not working as intended and led to “perverse outcomes”.
Visa, in its submission, said it “supports revising the RBA’s surcharging framework, given the increased public concern about surcharging, especially excessive surcharging, among other factors”.
“Visa is of the view that if a ban on surcharging is to be introduced, then it should apply to both debit and credit products.”
Indicative of the complexity of today’s electronic payments system, the Westpac submission was also critical of scheme fees charged to businesses by payment service providers (PSPs) such as Visa and Mastercard, and said they were “too complex” and had led to higher costs.
“New categories of scheme fees are periodically added to the card scheme billing structures and PSPs without any ability to opt out. It’s unclear what purpose or value many of these billing items and new fees provide, and they are adding unnecessary cost into Australia’s payments system,” it said.
Related reading: RBA, AFR, CBA, CBA submission
