Tap and gone? Debit card surcharges to end (maybe) in 2026

The Federal Government wants to crack down on debit card fees to save shoppers and small businesses money, and it has launched a consultation to that end.

Anthony Albanese said he was prepared to ban surcharges from January 2026, subject to a review being undertaken by the Reserve Bank of Australia (RBA).

The Prime Minister said safeguards would have to be in place to ensure both small businesses and consumers could benefit from lower costs.

He has committed $2.1 million of new funding for the Australian Competition and Consumer Commission (ACCC) to tackle excessive surcharges, adding that further work is underway to reduce payment fees.

“My government’s number one priority is to ease the cost of living for households and businesses, and this is another step to protect Australians,” Mr Albanese said on Tuesday (15 October).

“That’s why we have announced this additional funding for the ACCC while we wait for further work by the Reserve Bank of Australia.”

Opposition Leader Peter Dutton said there was no substance to the government’s announcement at all.

“I note what the Prime Minister’s had to say on this, but this is actually a plan for a plan,” Mr Dutton said.

“I mean, this Prime Minister always promises but never delivers.

“We’re very happy to look at anything the government’s going to propose, but it’s not an announcement.

“It’s just that they’re looking at it and it could come in in 2026. Australian families need help now from this government, and instead of making good decisions, the government’s made bad decisions.

“The government promised to introduce reforms to online gambling – nothing’s happened. They promised to introduce age verification, but nothing has happened.

“The government makes all of these announcements but never delivers anything, and I think this is just the latest example.”

Under the proposal, the RBA would continue to undertake a thorough review of Australia’s current payments and surcharging regime, which the PM described as “incredibly complex”.

While that review is underway, more immediate action on excessive surcharging involves the consumer watchdog cracking down on illegal and unfair surcharging practices.

The extra funding will help boost education and increase compliance activities.

Treasurer Jim Chalmers said the government wanted to ease costs for consumers without added costs for small businesses, or unintended consequences for the broader economy.

“This is all about getting a better deal for consumers, reducing costs for small businesses and promoting a more competitive payments system,” Dr Chalmers said.

“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.

“We’re prepared to ban debit card surcharges, subject to further work by the Reserve Bank and safeguards to ensure small businesses and consumers can both benefit from lower costs.”

The declining use of cash and the rise of electronic payments means more Australians are getting slugged by surcharges, even when they use their own money.

The RBA has released its first consultation paper.

It forms part of the government’s Strategic Plan for Australia’s Payments System.

Financial Services Minister Stephen Jones said the move was all about giving small businesses and consumers a fairer go.

“The surcharges pile up and punch a big hole in the wallets of customers and the takings of small business owners,” he said.

“This is good news for consumers and for small business owners and will help our payment systems keep up with the digital economy.”

The news was welcomed by COTA Australia (formerly Council on the Ageing), who said many older consumers felt the impact of card surcharges quite severely.

Chief executive officer Patricia Sparrow said giving Australians access to a “digital cash” solution that isn’t eaten up by fees is crucial.

“Being charged additional fees is a bugbear of many older people who are concerned about the increasing removal of cash as a payment option,” Ms Sparrow said.

“Removing fees attached to debit cards is a long overdue reform that would be very welcomed by many Australians, including older Australians.

“While it’s still important that steps are taken to ensure people, including older people, are able to pay cash, there’s no doubt that consumers should have access to another fee-free payment solution into the future.”