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“This rort has gone on for too long. 2025 is the year the RBA needs to shake this up.”
In a world where every penny counts, the debate over debit card surcharges has reached a fever pitch. The federal government’s promise to eliminate surcharges on debit card payments was seen as progress, but for some, it wasn’t enough.
Six passionate Labor MPs have stepped into the ring, urging the Reserve Bank to take a more drastic approach by banning all surcharges for every single debit transaction. Led by Jerome Laxale, these MPs are not just calling for an end to additional charges; they are demanding a significant reduction in merchant fees as well.
Laxale minced no words when he labeled the extra fees associated with using one’s own money as a “rort,” emphasizing that it’s time for the Reserve Bank of Australia (RBA) to intervene and level the playing field. Their submission to the RBA highlighted how current costs are unjustifiable and underscored the urgent need for systemic reforms.
The Prime Minister and Treasurer had previously announced plans to address excessive card surcharging in response to mounting consumer concerns about rising living costs. While their intention was commendable, Laxale believed that more comprehensive action was necessary given the evolving landscape of digital payments and dwindling cash usage.
“The declining use of cash and the rise of electronic payments means that more Australians are getting slugged by surcharges, even when they use their own money.”
Debit cards were once heralded as a convenient alternative to traditional cash transactions. However, hidden behind this convenience lies a complex web of opaque charges that have become a lucrative revenue stream for various players in the payment industry including banks, card networks, and platforms.
It’s perplexing that consumers often find themselves paying identical fees for both debit and credit card transactions despite significant differences between these two forms of payment. This discrepancy has prompted calls for fairer pricing models that accurately reflect transaction costs.
“We believe that no debit-style payment method should cost consumers more when using digital payments than they would with the non-digital alternative.”
The submission from Laxale and his fellow Labor colleagues underscored their vision for a future where all debit payments – whether through mobile wallets or account transfers – should be free of any additional fees at checkout. This bold stance reflects their belief that digital payment methods should align with traditional cash transactions in terms of affordability.
Bradford Kelly, co-founder of Independent Payments Forum, shed light on how seemingly minor fees associated with debit transactions could disproportionately impact consumers due to indiscriminate pricing structures affecting both credit and debit interactions.
While advocating for an outright ban on debit surcharges is crucial according to Kelly, he stressed that reducing underlying merchant fees is equally vital especially for small businesses who bear the brunt of transaction costs without reaping substantial benefits.
As pressure mounts on regulators like RBA to address these pressing issues surrounding payment practices in Australia, one thing remains clear – change is inevitable. With advocates like Labor MPs pushing boundaries and challenging existing norms within the banking sector, there may be hope yet for fairer and transparent financial systems designed to benefit all Australians.
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