A ban on debit surcharges is a win for big banks, not consumers
A ban on debit card surcharges may sound consumer-friendly, but it risks stifling competition, hurting small business and handing power to the big banks.
You’d be hard pressed to find someone in Australia right now without an opinion about paying $5.10 for a $5 coffee.
Once an invisible layer of commerce infrastructure, payments have been dragged into focus by the rise of digital transactions and increased scrutiny of card payment costs. At the centre of the debate is surcharging — a decades-old practice that allows businesses to pass on card acceptance fees to consumers.
Surcharges were introduced by the Reserve Bank of Australia (RBA) more than 20 years ago, when cash was still king and digital payments were just emerging. The rationale seemed solid — to encourage consumers to choose lower-cost payment methods by allowing businesses to pass on the cost of accepting card payments.
But the landscape has changed. Digital payments are now effortless and ubiquitous. Many businesses are facing cost pressures and passing acceptance costs along to customers. And consumers, now largely immune to surcharges, rarely change their payment behaviour.
