Push to axe sneaky fee costing Aussies $4billion

A Sydney MP has called on the Reserve Bank to end surcharges on card transactions and tap-and-go phone payments, launching a petition to review the pesky fee that costs Australians $4 billion a year .

Jerome Laxale, who represents Bennelong, has launched a campaign to change 20-year-old provisions that charge companies for using card technology, then passing these costs on to customers.

Mr Laxale said it was time the rules were reviewed and called on the Commonwealth Bank and Westpac to do something about it.

“We are in the middle of a cost of living crisis. Consumers are charged mixed rates, 1.1 percent to 1.6 percent, and that all adds up. For consumers, that’s about $140 a year,” he told NewsWire.

‘Cash has dropped to 30 percent, debit card is the new cash. Why is it that we continue to pay increasingly exorbitant rates every time we swipe or swipe our card.”

His petition comes ahead of the RBA’s “holistic review” of payments regulations, including greater transparency around charges and how they are passed on to consumers.

The central bank’s Payments Systems Board will receive submissions in the coming weeks and begin consultations in December.

While Mr Laxale said his preference was for the RBA to address the issues, he plans to push for further government action if an agreement cannot be reached.

“I want the RBA to do what other Reserve Banks around the world have done and legislate in favor of small businesses and consumers because the inequality here no longer makes sense,” he said.

“I think the good times have to come to an end for these banks and card issuers.”

Earlier this year, research from Canstar found Australians were paying $4 billion a year in card surcharges.

Year-over-year, the amount increased by 6.4 percent, or $400 million, due to the rising cost of transaction totals due to inflation.

Earlier this year, Laxale questioned the bosses of the big four banks at a parliamentary inquiry, asking why a $5 cup of coffee costs him $5.08 if paid by debit card.

While debit cards have a payment fee of less than 0.5 percent for merchants, the fee can be as high as 1 to 1.5 percent for Visa and MasterCard credit cards, according to the RBA.

Bennelong MP Jerome Laxale said regulations around card surcharges are outdated

Westpac boss Peter King acknowledged the rules were ‘confusing’ for customers and said customer surcharge rates should be reviewed.

“We really need to think about whether surcharges are worth it because I’m not sure that drives policy intent,” he said.

“There are no other costs in a business that people can add a surcharge to.”

Commonwealth Bank CEO Matt Comyn said he believed the $4 billion figure was exaggerated, saying Australia had some of the lowest interchange fees in the world.

“In general, there’s never anything that’s free,” he said.

“Businesses pay less with electronic payments than with cash… In this case, what really comes down to is whether the lower costs of those inputs are passed on to consumers.”