Banning debit card fees: A win for consumers or a blow to businesses?
One in five Aussies (21%) say debit card surcharges are their most hated fee, according to a new survey commissioned by Money.com.au. This refers to the surcharge consumers pay on card payments in-store or online.
It comes amidst the federal government’s plan to ban surcharges on debit transactions by 2026.
It’s Gen Z — despite being more familiar with cashless payments — who are most frustrated by card surcharges, with a quarter (25%) listing them as the fee they resent most. Following closely are Gen X (22%), Millennials (20%), and Boomers (19%).
“Younger generations use debit cards more than any other payment method, so it makes sense that the fees associated with them would be a bigger issue for what they use most,” according to Peter Drennan, Money.com.au's Research & Data Expert.
“At last count, the RBA found that 7.5% of payments had a surcharge, but it has grown significantly since then. It’s likely much higher now as more and more retailers adopt surcharging. So, surcharges are more present and more of a concern than ever before,” he
says.
Credit card fees second biggest ‘grudge fees’
Second on the list of ‘grudge fees’ are credit card fees (18%), including annual fees and foreign transaction fees, according to Money.com.au’s survey. Boomers were the most likely to list credit card fees as their top annoyance, followed by Gen X (18%), Millennials (18%), and Gen Z (12%).
“Boomers tend to use credit cards more than debit cards, which is potentially why credit card fees are a bigger issue for them compared to younger generations, even though they may be more experienced in using credit cards to stack rewards and get their money’s worth,”
says Peter.
Other commonly disliked fees include public holiday surcharges (15%), ATM withdrawal fees (14%), delivery fees for online shopping (11%) and booking fees (9%), like those charged for events or flights.
Banning debit card fees: A win for consumers or a blow to businesses?
The Australian government’s plan to ban debit card surcharges is still pending a review by the RBA, but it’s estimated it could save Australians up to $140 annually per cardholder. Money.com.au’s Finance Expert, Sean Callery, says Aussies don’t want to be charged extra fees for the privilege of using their money.
“At a time when every dollar counts, it’s no surprise that card surcharges are pretty unpopular with consumers. With more businesses moving away from accepting cash, it’s becoming harder and harder to avoid these card surcharges altogether,” he says.
However, reactions from businesses have been mixed. CEO of the Australian Restaurant and Café Association, Wes Lambert, says the ban could backfire on consumers.
“Consumers may be in for a shock if the government bans debit surcharges, as businesses will have no choice but to recover the cost of processing payments by raising their prices across the board,” he says.
“But they're unlikely to increase the price of that cup of coffee to $5.08. Instead, they might round it up to $5.25. Rather than paying a percentage of the transaction, customers may face a jolt if cafes, restaurants, and shops are forced to pay fixed monthly merchant fees for debit transactions, which could result in higher overall prices and paying more for goods and services.”
CEO of the Small Business Association of Australia, Anne Nalder, says the government seems oblivious to the difficult financial situation small businesses face.
“While it's crucial to address the high cost of living for families, attention must also be given to the plight of small business owners, especially in the current economic climate, which is the worst in 30 years for many of them,” she says.
Kerry Gates from the Gold Coast says she doesn’t mind debit card surcharges but that there should be more transparency before the transaction around how the fees are calculated and what they are used for.
“I accept there is a fee required to process any transaction. I understand that with the increased use of cards, we’re seeing more of these fees, and I have no doubt they are contributing to the cost of living crisis affecting Australians. Perhaps if there was more education about why these fees are necessary — for example, what’s involved in processing the transaction — people would be more tolerant,” she says.
Money.com.au, 23rd October 2024
