MATTHEW PANTELIS:
It is quarter to 10 on 5AA. The federal government’s promising to crack down on card surcharges over the next couple of years and these changes proposed won’t take effect until January 1st, 2026. So, in about 15 or so months. We’ve been losing nearly a billion dollars in surcharges a year as we increasingly pay with tap and go. Some suggest the figure could be as high in surcharges as $4 billion raked in through the use of cards.
Well, that needs to stop. The competition, charities, treasury assistant minister is Dr Andrew Leigh, and he joins me now. Andrew, good morning.
ANDREW LEIGH:
Good morning, Matthew. Great to be with you.
PANTELIS:
So, this is important to tackle, isn’t it? I mean, it’s basically just the icing on the cake that you don’t necessarily notice in a transaction where you’re told this will be $5.80 for that cup of coffee – check the credit card receipt later – it turns out it was $5.87 because it’s a surcharge.
LEIGH:
Card surcharges are sand in the gears of the modern economy. We all just find it annoying when we think we know what the price is and then suddenly find a surcharge being slapped on top of it. And small businesses hate them because they find themselves paying a bigger surcharge often than the big companies. So, it’s putting small businesses at a competitive disadvantage.
So subject to our conversations with the Reserve Bank, we will be looking to ban debit card surcharging from the beginning of 2026 and also to give the ACCC the resources it needs to crack down on excessive credit card charging.
PANTELIS:
The ABA, the banking association says these surcharges have been coming down. I hate to think what we were paying for it, but clearly there’s been another hand in the pocket along with our own.
LEIGH:
Well, coming down doesn’t mean getting to the right level and what we want to do is make sure that consumers get a fair deal. You’ve heard us talking a lot about what the Albanese government is doing around competition and consumer issues: the ban on unfair contract terms, giving CHOICE funding to do quarterly grocery price monitoring, providing the ACCC additional resources to monitor the supermarkets. All of that is focused on ensuring that families get a fair deal at a time when many Australians are under cost‑of‑living pressure.
PANTELIS:
Okay. And should a business advertise that surcharge? So, I think if they do so, I’ll give you $5.80 for the coffee, for instance, and you find out later it was $5.87. Should they’ve told you about that extra 7 cents?
LEIGH:
At the moment they’re not required to, but certainly that’ll be part of what we’ll be looking at, making sure that consumers actually know the price they’re going to pay. The work that we are doing is all about providing greater transparency. And ultimately, Matthew, that transparency in the service of trying to get prices down.
PANTELIS:
Why is there even a surcharge in the first place, you know, you’re paying for the product. It doesn’t it shouldn’t matter whether you’re using cash or putting it on a card.
LEIGH:
Businesses would say that they have to pay a fee to the credit card company and that therefore they’re going to put that on top. But there is also a fee for collection of cash. So, it’s not as though any way of paying for things is cost-free for the business. I think ultimately these are just really annoying for consumers and really adding up for families who find themselves under financial pressure.
PANTELIS:
It seems rather obsolete that if you tap and go using the credit card, for instance, on your phone or the credit card itself, tap and go, you slugged the surcharge. But as I understand it, Minister, if you put the card through the machine, inserting it or swiping it through, there’s no surcharge. How does that happen?
LEIGH:
Well, there are different approaches to it. You can’t always get away from the surcharge just by using the tap and go payment system. If you use tap and go, it will often be going through Apple Pay. If you’re physically putting the card in, it will be going through the banks’ credit card system. In each case, there’s a potential for surcharges to hit. We’re looking at the whole box and dice. The work that Stephen Jones and Jim Chalmers are doing is really making sure we take a holistic look at the payment system. It follows the announcement last year by the government of the Strategic Payments Review, which is about ensuring that we have a world class payment system. Australia is one of the world’s leaders in terms of using electronic payments. We do need to make sure that that’s not coming at the cost to Australian households.
PANTELIS:
Well, especially given that most of us, so many more people, I should say, stop using cash, particularly through COVID, haven’t returned to it. There’s just over 10 per cent of the population now who are using cash and therefore think of the money being ripped through the surcharges. It must be in the absolute – the estimate – of one billion; probably it’s closer to 4.
LEIGH:
It’s a huge cost to the Australian economy and that’s why we’re talking billions rather than millions this is a substantial part of what we’re doing. And as digital infrastructure gets better, you should expect those costs to be coming down – just technology work and productivity working its way through the system. There shouldn’t be a big chunk of the Australian economy that’s going off to the people simply processing the payments. That ought to be a process, which is not only quick and simple but also with minimal cost.
PANTELIS:
Absolutely – are big businesses any better with this? I don’t want to use the word bearer necessarily, but would you pay a lower surcharge if you’re at a Coles or Woolies as opposed to a little corner deli shop?
LEIGH:
Larger firms will often get a better deal with the credit card companies. They’ll have more bargaining power in striking a deal and getting cheaper surcharge costs. So that’s a hard pill to swallow for a small business to find themselves up against a big firm who’s got lower credit card surcharges as well as the other economies of scale that a big business will often – as a small business just doesn’t get.
PANTELIS:
All right. So, 1st of January 2026 and the possibility, the probability you’d say of this ban on debit card surcharges coming into effect.
LEIGH:
That’s what we’re moving towards. Absolutely.
PANTELIS:
Appreciate your time. Thank you.
LEIGH:
Thanks Matthew.