Australian Minister Calls for Ban on Bank Card Transaction Fees

An Australian government minister has proposed a new ban on banks' point-of-sale transaction fees, an idea that follows a recent ban on card surcharges that has drawn significant criticism. The surcharge ban, which took effect on October 1, aimed to stop businesses from passing card payment costs directly to consumers, with an estimated annual saving of $1.6 billion for consumers.

However, the change has led some businesses, including cafes, to increase their prices. The Australian Taxation Office (ATO) also postponed its plans to stop accepting credit card payments until June 2027 after facing strong opposition from small businesses.

Emergency Services Minister Kristy McBain stated on Monday that the Reserve Bank should go further and prevent banks from charging small businesses transaction fees at the point of sale. "We know already that the RBA made the right decision to ban surcharging on consumers," McBain said. "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."

Her comments come as the Labor government faces mounting backlash over the surcharge ban. Last week, the government compelled the ATO to reverse its decision to prohibit credit card payments for tax bills from December this year until the end of the financial year.

These changes have also prompted some lenders to raise interest rates on credit card products and reduce customer benefits, such as complimentary travel insurance and frequent flyer rewards. The Australian Competition and Consumer Commission had previously warned that businesses absorbing card processing costs would likely pass them on through higher prices.

While McBain advocates for banks to absorb more costs, she indicated that legislative intervention is not necessary, suggesting the Reserve Bank should utilize its existing powers. "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 remarked.

Opposition Leader Angus Taylor criticized the government, accusing Labor of hypocrisy and arguing that the government had sent conflicting messages to small businesses. "Last week, the Prime Minister said that small businesses needed to absorb it, and then we found out the Tax Office is not going to absorb it," Taylor stated. "She can say whatever she likes, but in the end, what we really need is this government to quit the hypocrisy, to scrap the ban on credit cards for small businesses by the ATO. Not delay it. A delay doesn't cut it. Scrap it. And then we know you're serious about actually having a real discussion about this. That's what they need to do."

On Monday, business owners launched a billboard campaign in Canberra, accusing the government of increasing the cost of running a small business. The campaign, supported by Sydney mortgage broker Joseph Daoud and accountant Belinda Raso, founder of TaxInvest Accounting, operates under the banner "Stop the Ambition Tax." Billboards were placed at Canberra Airport as politicians returned to the capital, bearing the message that the government should "stop putting a surcharge on running a small business." The advertising campaign also includes a television component featuring over 30 small business owners, including cafe operators, pharmacists, and newsagents.