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Surcharges for payments made by debit card could soon be dumped, but business groups have warned there might be unintended consequences for consumers.
The federal government said it was prepared to ban debit payment surcharges by 2026, pending a review carried out by the Reserve Bank.
The consumer watchdog has also been given $2.1 million to investigate fees for card purchases, which can increase the total cost of goods by several per cent.
Prime Minister Anthony Albanese said while the surcharges may not seem like much by themselves, the fees added up.
âThere shouldnât be hidden charges and surcharges there when people are using their own money,â he said in Brisbane on Tuesday.
âA debit card is taking money directly from peopleâs accounts.
âIt is their money and there shouldnât be surcharges on it.â
But Australian Restaurant and Cafe Association CEO Wes Lambert said removing surcharges altogether could lead to higher costs for consumers in the long run.
For instance, the banks and payment companies could impose a higher flat rate cost on businesses.
âIt would lead to higher surcharges and fixed fees that businesses would have to pass on to customers,â he told AAP.
âWhile we fully support lower costs overall for processing debit cards, what we donât want is too many unintended consequences.â
Consumer group Choiceâs head of policy Tom Abourizk welcomed the government move to scrap the surcharges.
âThe current rules surrounding surcharging arenât working for consumers,â he told AAP.
âThereâs definitely a lack of logic in having a majority of payments that have surcharges tacked on to the advertised price.â
Australian Banking Association CEO Anna Bligh believes any changes would be a win for consumers.
âThe (Reserve Bank of Australiaâs) rules allowing retailer surcharging are more than 20 years old,â she said.
âThey are no longer fit for purpose, given almost 90 per cent of payments are now made digitally.
âOur industry will work with the RBA, the government and retailers through this review process to get a better outcome for Australians.â
Australian Chamber of Commerce and Industry CEO Andrew McKellar said a ban on debit card surcharges would be a win for businesses and consumers.
âIn many cases, small businesses are facing these charges,â he said on Tuesday.
âItâs not necessarily linked to the costs of providing the service.
âIn many cases, of course, theyâve got to pass it through, so it can amount to a significant proportion of the cost in the cost of a good or service thatâs been provided.â
But shadow treasurer Angus Taylor said the move by the government was nothing but a distraction and wouldnât make a dent in broader cost-of-living concerns.
âThis is just a band aid on a bullet wound,â he said.
âLaborâs announcement on surcharging lacks details and wonât make a difference at the check out.â
Greens senator Sarah Hanson-Young said more needed to be done on the issue.
âWe need to make sure itâs the bank that covers the cost of this, not the consumer and not the small businesses,â she told ABC TV.
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Andrew Brown
(Australian Associated Press)
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