Australians calling for ban on debit card surcharges

A new survey conducted by Money.com.au has revealed that one in five Australians regard debit card surcharges as their most disliked fee.

The survey, which asked respondents about the fees they find most burdensome, highlights that 21% of Australians list debit card surcharges as their primary annoyance. This fee, which is incurred when making card payments either in-store or online, is under scrutiny with the Australian government's plan to eliminate such surcharges by 2026.

Among different age groups, Generation Z appears to be the most frustrated, with 25% indicating debit card surcharges as their most hated charge. This is followed by Generation X at 22%, Millennials at 20%, and Boomers at 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," said Peter Drennan, Research & Data Expert at Money.com.au.

According to Peter Drennan, the prevalence of surcharges has increased. "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 added.

Following debit card fees, credit card charges were the second most disliked, with 18% of respondents naming them "grudge fees." Boomers were notably the most likely to cite credit card fees as their top grievance, followed by Gen X and Millennials equally at 18%, and Gen Z at 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," explained Peter Drennan.

The survey also pointed to public holiday surcharges (15%), ATM withdrawal fees (14%), delivery fees for online shopping (11%), and booking fees for events or flights (9%) as other common annoyances.

The potential federal ban on debit card fees is currently under assessment by the Reserve Bank of Australia and could result in savings of approximately AUD $140 yearly per cardholder. Money.com.au's Finance Expert, Sean Callery, shared insights into consumer attitudes towards such charges, saying, "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."

The proposed ban has garnered mixed reactions from the business community. Wes Lambert, CEO of the Australian Restaurant and Café Association, warned that eliminating debit surcharges may lead to price increases elsewhere.

"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 stated, adding that customers may face higher charges if businesses switch to fixed monthly merchant fees.

Anne Nalder, CEO of the Small Business Association of Australia, emphasized the financial challenges faced by small business owners. "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 noted.

Kerry Gates from the Gold Coast expressed that transparency surrounding the fees could improve consumer acceptance. "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," she said. "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."