A ban on card surcharges will come into effect within days, and cash discounts are likely to follow.
Businesses will not be allowed to charge customers more for paying with a debit card or credit card from October 1, but will be forced to absorb the costs incurred by card payments nonetheless.
“Those costs can be reflected in a business’s overall pricing, rather than charged as a separate surcharge,” according to the Reserve Bank of Australia.
“This is in line with consumer preferences for sticker prices to be all-inclusive.”
ING Head of Consumer and Market Insights Matt Bowen told Sunrise earlier this month that the win for customers will require many businesses to shake things up.
“Just because the (surcharge) fee disappears, it doesn’t mean the payment processing becomes free for small businesses,” Bowen said.
The RBA website lists cash discount offers as one way to mitigate card costs.
“Businesses that wish to steer consumers towards other payment methods can do so by providing discounts instead of using surcharges,” the RBA says.
“Removing the RBA’s prohibition on ‘no-surcharge’ rules is not intended to prevent discounts being offered to consumers for using certain payment methods.”
Cash Welcome spokesperson Jason Bryce said on Friday “most small retailers” will start steering customers towards cash.
“More small businesses will offer discounts for cash and many small businesses will reject card payments altogether and go cash-only,” he said.
These incentives are all above board, according to the RBA, which said businesses can decide the type of tender they take, “although there are some businesses which must accept cash.”
About 16 per cent of Australian businesses collect card surcharges, Treasurer Jim Chalmers said when the card surcharge ban was announced in March.
“The card surcharge ban will push Australia to a new all-time record for the total value of cash on issue,” Bryce said.
The ban will apply to any payments made with prepaid, debit and credit cards.
It does not apply to weekend surcharges, public holiday surcharges, or booking fees or service fees — only surcharges related to the costs incurred by a business accepting card payments.
Any discounts offered for cash payments will need to be outlined before customer transactions go ahead.
“Payment method discounts should be clearly disclosed before consumers choose to book, order or pay,” the RBA states.
Bryce said businesses are already preparing for this transition.
“Many small businesses are preparing to replace card surcharge signage with ‘cash preferred’ or ‘discounts for cash’ signage,” he said.
The surcharge framework itself was brought in two decades ago to steer customers toward more efficient payment methods.
The Payments System Board (PSB) found it was “no longer achieving its intended purpose”.
Businesses surcharged all cards at the same rate, while consumers used less cash, were some of the factors that led to the PSB citing a reduction in the effectiveness of the surcharging government.
“Removing surcharging would make card payments simpler, more transparent and increase competition among payment service providers,” RBA said.