Card payment sucharges banned in Australia from 2026

[Happy Dude]

I've been told that its "GST on the surcharge" before which I found quite comedic

yes, funny ironical! And here I was thinking the surcharges were no laughing matter!

 

[ayebee]

we manage an accommodation business where after receiving a booking we send an online invoice with the option to pay either via direct bank transfer, or via an online payments provider that charges us 1.5%.
On our invoice we make it clear that payment can be made via direct bank transfer without extra cost, or via credit card which attracts a 1.5% charge to cover our costs.

About half the customers choose the credit card option including the 1.5% surcharge. Their choice.
With the new rules, will we be forced to absorb the credit card fee even though this was a clear customer choice ?
If we have to remove the surcharge but retain the card facility, then it becomes our choice.
For convenience it will be better to retain the payment flexibility.
However, those who pay direct will be subsidising those who pay via card and maybe getting whatever benefits they see for using their cards.
I suspect the proportion of those using cards will then increase, so most likely result will be that we simply increase all prices to cover that assumption.

 

[Mr_Orange]

an online payments provider that charges us 1.5%.

So you knew about this when you chose to offer an online card payment portal. That's your cost of doing of business. Customers pay annual fees for credit cards, why should they pay for your choice to offer card payments as well?

 

[dajop]

However, those who pay direct will be subsidising those who pay via card and maybe getting whatever benefits they see for using their cards.

The other option to prevent this cross subsidisation is to put the price up by 1.5% and offer a 1.5% discount for direct payment.

Unless you have highly elastic demand, most people won’t blink at a 1.5% price increase., its nice to see a price and know that is what you will pay - or that is the most you pay however you choose to pay for it.

 

[aspro2]

The other option to prevent this cross subsidisation is to put the price up by 1.5% and offer a 1.5% discount for direct payment.

This. However, in some very competitive environments, I guess that price rise could mean a little stress initially (which is why businesses so often lead with their "best case" price, like "monthly rate if you pay annually" vs actual monthly payments), but if the difference is small the consumer will indeed usually swallow it in the end.

But conversely, for some the "win" of getting a little direct payment discount can act as a minor feelgood vibe for the relationship too. (And it gets around the surcharging rules neatly.)

 

[Berlin]

With the new rules, will we be forced to absorb the credit card fee

Yep finally! Just like any other accommodation business outside Australia and NZ has been doing for decades.

Imho-if a business is THAT fragile that it has to throw a tantrum about a meagre 1.5% surcharge, then maybe it shouldn’t be in business to begin with. Just my personal thoughts on this

 

[ayebee]

So you knew about this when you chose to offer an online card payment portal. That's your cost of doing of business. Customers pay annual fees for credit cards, why should they pay for your choice to offer card payments as well?

We have been doing this for many years.
There is no benefit to us whether they pay high or zero annual fees on their card, as that will be determined by the benefits they get. Nothing to do with us.
At present they have the option of a zero cost bank transfer but they still choose to pay the surcharge.

..., most people won’t blink at a 1.5% price increase., its nice to see a price and know that is what you will pay - or that is the most you pay however you choose to pay for it.

I suspect this is what will happen, ie the price will go up by the usual inflationary increase plus an extra 1.5%

 

[kelvedon]

Pretty miffed that they surcharge the tip too.

 

[ayebee]

Yep finally! Just like any other accommodation business outside Australia and NZ has been doing for decades.

Imho-if a business is THAT fragile that it has to throw a tantrum about a meagre 1.5% surcharge, then maybe it shouldn’t be in business to begin with. Just my personal thoughts on this

Always interesting to hear opinions. We aren't throwing a tantrum, but I was interested to get opinions on the method we use, where the customer chooses the payment method.
Around $30 surcharge is fairly typical, and we do get grizzles for this meagre amount, when we point out the zero costs option.

 

[RealtimeY]

Businesses are predominantly in favour of surcharging for the reasons you've mentioned, but the RBA decided that the less bad option overall was to ban surcharging altogether so that consumers can realistically expect to pay the prices that are shown to them. As mentioned above, cash discounts can be offered to those who would prefer that.

 

[MEL_Traveller]

We have been doing this for many years.
There is no benefit to us whether they pay high or zero annual fees on their card, as that will be determined by the benefits they get. Nothing to do with us.
At present they have the option of a zero cost bank transfer but they still choose to pay the surcharge.


I suspect this is what will happen, ie the price will go up by the usual inflationary increase plus an extra 1.5%

Part of paying the surcharge is for insurance. We can do chargebacks or get a refund easily if the service isn’t provided or the provider goes insolvent, etc.

But as for merchants, isn’t the bank cost being reduced? So it won’t be 1.5%, it’ll be something less?

 

[ayebee]

Businesses are predominantly in favour of surcharging for the reasons you've mentioned, but the RBA decided that the less bad option overall was to ban surcharging altogether so that consumers can realistically expect to pay the prices that are shown to them. As mentioned above, cash discounts can be offered to those who would prefer that.

Assuming you are replying to me. Also noting the earlier mention of cash discounts.
We don't actually handle cash.
Maybe somewhat paradoxical, but offering a discount for the no cost payment method would actually increase work processing invoices to differentiate and adjust. So not worth the extra time and effort, at least using current accounting software.

 

[Mr_Orange]

We don't actually handle cash.

But if you did, there would be a cost associated with it that is probably more than 1.5%.

 

[clifford]

Why would I pay by bank transfer when that negates the protections afforded by credit card payment? The only people I pay by bank transfer are medical professionals, as they don't give me the credit card option (!).