COSBOA warns against RBA's call to ban credit and debit card surcharges, arguing the change 'doesn't solve' underlying problem
The central bank on Tuesday revealed a three-tiered approach to tackling surcharges: Banning customer surcharges, capping interchange fees (which are paid by businesses to shoppers' banks) and provide greater transparency around the fees.
Businesses will be able to shop around for better deals if there is greater transparency, and removing interchange fees could save businesses $1.2b annually, the RBA estimates.
The call received a mixed response from the Council of Small Business Organisations Australia chair Matthew Addison, who warned the complexities of card surcharging meant simply removing the fees for consumers could be counterproductive.
'We have a very opaque system. A lot of the costs are buried in the detail,' Mr Addison said on Business Now.
'We look forward to this consultation of the Reserve Bank (and) surfacing some of the better options. Banning surcharges alone doesn't solve it.'
He also warned the 'surcharges aren't going anywhere' as the RBA promotes banning businesses from charging these additional costs to their customers.
'Hiding those costs by banning them simply puts them into the overheads or the operating costs of the small businesses,' Mr Addison said.
'Hiding the cost doesn't remove them.'
COSBOA supported reductions to the interchange fee as it could save many businesses and consumers money.
It also backed the RBA demanding further transparency over the costs and argued this could result in merchant service providers - which are companies that allow businesses to accept card payments - to pitch for businesses.
'If we can get more transparency and we can also get the merchant service providers actually pitching for the small business, (it gives) them a number of options,' Mr Addison said.
''Here's the plan you're on. Here's a plan that will actually save you some money'.'
The RBA's call also met backlash from the Australian Restaurant & Cafe Association (ARCA) which labelled it a 'short-sighted, anti-small business policy' and argued it would force establishments to pass costs onto consumers.
'Who the hell does the RBA think will bear the cost of this ridiculous decision?' ARCA chief executive Wes Lambert said.
'First, merchants and then customers, through higher menu prices in the middle of a cost of living crisis.
'No matter how low merchant fees go based on the RBA's intention to save businesses $1.2 billion dollars, with no surcharging, businesses who previously paid net $0 in merchant fees, will now be faced with the bill.'
The RBA will continue to seek feedback on the changes until late August before handing down a final proposal at the end of the year.
Changes will be introduced from the beginning of next year and enforced from July 1.
Major Australian banks and the Australian Banking Association have called for interchange fees not to be lowered as they help counteract fraud and cover chargeback rights – which allows banks to reverse certain payments.
It comes as Treasurer Jim Chalmers last year vowed to ban debit card surcharges to ease cost of living pressures, but does not extend to credit card purchases.
'This is all about getting a better deal for consumers, reducing costs for small businesses and promoting a more competitive payments system,' Mr Chalmers said in October.
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