Albo celebrating getting rid of card surcharges with a cutesy video. Now the law of unintended consequences (and pure incompetence) has bitten him and Jim Chalmers on the bum: PETER VAN ONSELEN
The Australian Taxation Office planned to stop accepting credit cards for tax payments from 1 December, prompting concern from small businesses that rely on cards to manage cash flow when customers pay late. The article argues the move followed Labor’s ban on card surcharges and exposed poor planning, while ministers gave conflicting explanations and shifted responsibility to the ATO.
The ATO said accepting cards without passing on surcharges would cost it about A$200 million, and the government had not initially provided extra funding to cover that amount. Treasurer Jim Chalmers later found funding to delay the change after the backlash. The article also notes that removing surcharges does not remove payment processing costs: organisations may raise prices or stop accepting cards, potentially reducing choice and leaving customers with similar costs.
- The ATO planned to stop taking credit cards for tax payments.
- The change could have cost the ATO about A$200 million.
- The government delayed it after small businesses raised concerns.
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Australia's Labor government banned retailers from charging customers fees when paying by credit card, a practice known as surcharging. The policy aimed to protect consumers from additional costs.
The Australian Taxation Office, which collects tax payments, faced a problem: accepting credit cards without charging surcharges would cost approximately A$200 million annually. The ATO indicated it would stop accepting cards, prompting concern from small businesses that rely on paying tax by card when customer payments are delayed.
Removing surcharges does not eliminate the underlying costs of processing card payments. Organisations typically respond by raising prices, restricting payment methods, or absorbing the cost, which means consumers may end up paying more overall or having fewer options.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
The ban on credit card surcharges protects consumers, particularly those with limited payment options, from hidden fees that merchants exploit without proportionate justification. Payment processing costs are routine business expenses that should be absorbed fairly rather than passed to individual customers through surcharges. The implementation problems—inadequate government funding for the ATO and inconsistent ministerial communication—reflect poor planning rather than fundamental policy flaws; proper coordination and adequate funding can resolve these administrative failures.
The case against
Banning credit card surcharges does not eliminate real processing costs; it merely shifts them elsewhere, typically resulting in higher prices for all customers (including those paying cash), reduced service quality, or withdrawn card acceptance entirely. For small businesses and individuals dependent on credit cards for cash flow management, particularly when customers pay late, this creates genuine hardship. The government's failure to adequately fund essential services before implementing the ban demonstrates incompetent policy design, and the subsequent funding adjustment merely defers rather than solves the fundamental problem that organisations cannot sustainably absorb payment costs without adverse consequences.