Australia debates banning debit card surcharges impact

The Australian Government's decision to ban surcharges on debit card purchases has elicited various responses from fintech organisations and retail businesses following the announcement set to take effect from January 1, 2026.

FinTech Australia has voiced its concerns regarding the implications of this policy. Katie Wilson, Head of Policy at FinTech Australia, stated that while the organisation supports legislation to improve consumer outcomes, it remains cautious about the complete elimination of debit card surcharges. She emphasised the need for reforms to foster competition and innovation within the payments industry. "Without this," Wilson warned, "small businesses could lose the right to decide on cost allocation, jeopardising jobs and innovation within the fintech sector to the detriment of consumers."

Wilson also pointed out that merchant service charges are complex and involve multiple entities sharing transaction fees, not just financial institutions. She argues that removing surcharges will not necessarily reduce merchant acceptance costs, which may impose additional burdens on small businesses.

In contrast, Brendan Straw, ShopFully's Country Manager for Australia, applauds the Government's plan, viewing it as a significant advancement for the retail sector. He believes banning debit card surcharges will relieve shoppers of "hidden fees," enhancing their overall in-store experience.

With data showing that 90% of Australians prefer shopping in physical stores, Straw asserts that the new policy aligns with the omnichannel shopping trend, where consumers often research products online before making in-store purchases. He predicts that this change will lead to smoother transactions and increased foot traffic for retailers, bolstering the value of physical retail.

Straw argues that in-store shopping will become more attractive to consumers by offering greater financial flexibility and eliminating unexpected fees. He anticipates that retailers will experience higher engagement levels as transactional frictions are removed, allowing shoppers to enjoy offers and experiences without worrying about overspending. From his perspective, the initiative is poised to strengthen the retail ecosystem by supporting consumers and businesses.

As the discourse around this policy continues, FinTech Australia plans to consult its members to gather a range of opinions and present a unified stance to policymakers in Canberra. Wilson has expressed a willingness to engage in ongoing dialogue with policymakers, highlighting the importance of addressing the concerns of the fintech industry.

The announcement of the ban on debit card surcharges has sparked a conversation that reflects divergent views on its potential impact—while fintech advocates remain cautious about the challenges for small businesses, the retail sector anticipates positive outcomes for consumers and an enhanced shopping experience.