The government’s plan to outlaw surcharges on debit card transactions threatens to squeeze small businesses unless it acts to limit fees payment giants and banks levy on outlets.
Rob Anderson, the director of the Geelong-based and family-owned service station chain APCO, said payment processing costs jumped “exponentially” over the past few years, with around 80 per cent of his customers now using some form of card and digital payment.
While APCO has not implemented a surcharge in its stores, Mr Anderson has considered it to offset the cost of processing payments.
Now, he fears the Albanese government’s plan to ban debit surcharges from 2026, pending a Reserve Bank review, will put outlets like his at a disadvantage.
“I don’t think it is reasonable to ban surcharges when the retailer is actually getting charged for accepting payment,” he said.
“We are even getting charged on eftpos payments, and they will be discriminating against small businesses if they stop retailers from offsetting a cost that is still growing.”
It demonstrates the delicate path ahead for the RBA, which brought forward a review into payment processing fees amid intense political scrutiny on the ubiquitous, if often hidden, surcharge fees that irritate consumers.
Under decades-old laws, merchants can charge consumers at the point of sale to cover the cost of accepting a payment.
The legislation was designed to wean consumers off high-fee credit cards in the early 2000s, but the rapid decline of cash means consumers are hit with surcharge fees on card payments for anything from a coffee to home goods.
Treasurer Jim Chalmers last week announced Labor was ready to outlaw debit card surcharges in a broad crackdown on consumer fees as the government tries to ease household financial strains before a federal election next year.
It followed parliamentary hearings where surcharging was notably criticised by National Australia Bank boss Andrew Irvine.
“Consumers shouldn’t be punished for using cards or digital payments, and at the same time, small businesses shouldn’t have to pay hefty fees just to get paid themselves,” Dr Chalmers said last week.
Small business lobby groups have warned there must be action on the fees the payment giants like Visa, Mastercard, Square and the banks levy on independent outlets to get them onside.
The RBA has flagged they would consider restricting the fees that payments providers charge for debit transactions, but Mastercard and Visa have threatened to stop providing refunds to defrauded customers in response.
Australian Association of Convenience Stores boss Theo Foukkare said small retailers had seen their merchant costs “explode” in recent years.
“While major retailers like Coles and Woolworths don’t apply surcharges because they are on strategic rates with the banks, small businesses are often forced to pass on the cost of the electronic payment system to shoppers just to keep their head above water,” Mr Foukkare said.
Mr Anderson said small operators like himself did not have the market power required to negotiate better deals with the banks or payment giants.
“Smaller retailers are being taken advantage of, and we are subsidising the larger organisations and monopolies,” he said.
“I don’t think it is fair, I think it is unreasonable.”
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