Minister calls for banks to absorb card surcharge pain

A Labor frontbencher has urged the Reserve Bank of Australia to pressure banks to absorb the cost of the government’s card surcharge ban as it once again attempts to clean up the political mess caused by the change.

The ban, which was touted to save Australians about $1.6 billion a year, came into effect on October 1.

But despite the overhaul including a new cap on interchange fees in an attempt to prevent sellers from being left worse off by the changes, many businesses and other organisations have either increased customer prices or banned credit card payments to cover higher costs associated with the new system.

The Australian Tax Office’s announcement it was cancelling credit card payments caused an uproar within the business community, causing the federal government to step in and negotiate a delay until June 2027.

On Monday, Labor Minister Kristy McBain called for the RBA to do more to crack down on banks and ban the surcharge on point of sale machines.

“We know already that the RBA made the right decision to ban surcharging on consumers,” she told reporters in Canberra.

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“But the RBA should have taken the next step, and that is to ban the on-charging of those point of sale machines and the fees associated with that for small businesses and for organisations that use them.”

Major banks responded to the surcharge ban and lower interchange fees they can charge vendors by lifting interest rates and scaling back rewards programs, like complimentary travel insurance and frequent flyer points.

The Australian Competition and Consumer Commission warned that businesses forced to absorb the cost would likely pass them onto customers via higher prices.

Greens leader David Shoebridge last week called on the federal government to force banks not to pass on the costs associated with the surcharge ban to customers.

But McBain ruled out introducing legislation and said the RBA should look at what it can do within its scope of power.

“If we are, as a community, as a society, as governments, ready to stand up and advocate against those big banks, then there should be no reason that legislation is required,” she said.

“I think we have a level of expectation in this country.”

Meanwhile, Opposition Leader Angus Taylor was at a popular cafe in Canberra to criticise the surcharge ban, and called for it to be scrapped entirely.

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“Small businesses run on tiny margins, and it only takes a bad bit of government policy, and the margin’s gone,” he told reporters on Monday.

A national campaign representing small businesses has launched in Canberra in line with parliament sitting week, urging politicians to “stop putting a surcharge on running a small business”.

It is the latest policy that has caused Labor a political headache from the small business community, after it rallied against the changes to the capital gains tax discount and trusts in the May federal budget.