RBA ban just weeks away to usher in new payment era for Aussie consumers: ‘Pressure on cash’

The days are numbered for Aussies who proactively seek out credit card reward points and trade between banks to get the best deal on everything from international transaction fees to travel insurance. It’s those consumers who will arguably be the biggest losers as a new RBA-led crackdown on card surcharges comes into effect.

Major banks are changing their fees and the perks they offer customers this month, effectively dishing out “a bit of punishment to those people who are heavy users of credit cards,” Swinburne University’s Professor Steve Worthington told Yahoo Finance.

“The people who enjoyed the luxury of bonuses, because they were using their credit cards extensively, they will lose out,” he said.

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The appeal of credit cards will take a hit as part of the RBA reforms commencing at the start of next month, but cash will also lose some of its shine.

Avoiding surcharges has been one major reason cash advocates have clung to hard currency. While the federal government and the RBA move to ensure the viability of the cash in transit system, the removal of card surcharges could further dampen demand for cash.

“I myself use cash to avoid paying a surcharge. Now, if there’s no surcharging there’s less need for me to get cash, so there’s even another pressure on the decline of cash.”

Professor Worthington, who specialises in the distribution of financial services particularly by electronic channels, said the ban from October 1 will usher in a new era for consumers.

“We could be seeing the beginning of the demise of credit cards,” he said, as the perks “get squeezed out” of the system.

No more hidden payment fees to tap or swipe

The RBA’s effective surcharge ban from October 1 means consumers paying by card won’t see an additional, often hidden fee, simply because they paid by credit card, debit card or eftpos.

“Originally the idea was that the surcharge was a different one for debit and for credit cards,” Prof Worthington explained, to incentivise people away from using riskier credit cards.

“But most merchants just rolled it together into one thing, and no matter which card you paid with, you paid a surcharge.
And some surcharges are much higher than the cost of doing that transaction.”

While leaning on the card payment network providers such as Visa and Mastercard to disallow surcharges, the reforms will also reduce the cap on interchange fees that banks receive from businesses each time a card transaction is processed. That will be lowered from 0.8 per cent to 0.3 per cent of the value of the transaction, which the RBA estimates could cost banks more than $660 million annually.