General News
18 October, 2024
Get rid of those irritating extra charges on cards
As pre-election pitches go, Labor's intention to ban payment card surcharges from the start of 2026 takes some beating.
As pre-election pitches go, Labor's intention to ban payment card surcharges from the start of 2026 takes some beating.
Is there any voter who has not been irritated when the cost of a cup of coffee suddenly turns out to be a few cents more than the price they thought they were paying?
The excess may only be small but it's still cents going into the bank's account rather than staying in the customer's. And the people's cents adds up to millions for the banks over a year.
On top of that, the customer's irritation may be directed at the shop assistant - and he or she is an unfair target. They are usually poorly paid and simply doing what they've been told to do.
But you might get irritated at the banks and the retailers, particularly the restaurants and bars which seem to be most prone to add the surcharge.
A survey last year found that about 40 per cent of hospitality venues slapped the surcharge on.
There may, no doubt, be a notice somewhere warning the customer but in a noisy venue, it is usually hard to see.
The Reserve Bank of Australia permitted the charges back in 2003. Its reasoning was that customers would be aware of the different costs of a transaction. But as cards have become ubiquitous, the system seems to have backfired.
Under its rules, businesses shouldn't add a surcharge that's more than the cost it actually pays the bank - but there is a widespread suspicion that some businesses bump a little extra on.
There are ways around paying the fee but they are inconvenient in our increasingly cashless age. We could all carry notes and coins again but the pandemic got us out of the habit.
We could use charge-free EFTPOS but this involves a slightly more complicated transaction at the check-out, and not one to be undertaken calmly with a line of irritated shoppers behind you.
On top of that, some retailers don't offer the option but only offer a tap-on payment.
There may once have been a justification for the banks to charge for using their cards but technology has moved on.
Money moves between accounts seamlessly so the charge looks increasingly like an abuse of market power - the banks charge because they can get away with it.
And they may even recognise quietly that the charges have had their day.
In August, the chief executive of NAB was explicit about what other banks may be thinking behind their doors. "It's possible that surcharging was warranted 20 years ago, but I think it behooves us to ask whether it still serves its purpose," Andrew Irvine told a parliamentary committee.
"It's in my view that it just adds to confusion. It means I don't know what the price of a good is that I'm buying, and I don't like it."
If the head of one of Australia's biggest banks thinks charges are outdated, who are we to disagree?
They do not happen in the United Kingdom - so it's hard to see why they should continue in Australia.
Because most of us are now wedded to card payments (whether as actual cards or as cards in "wallets" on phones), Labor's promise to do something about surcharges is welcome.
It is politically astute but it may also be the right thing to do - and the two are not always the same.
A word of warning, though: for the politics of this to work, any ban on surcharges must not simply push the price on the tag up.
The issue is the fairness of the fee charged by the banks, and that should not simply be absorbed in the price at the check-out.