By Tina Zawila
Recently, the Commonwealth Bank of Australia (CBA) has urged the Reserve Bank of Australia (RBA) to eliminate surcharge fees on debit and credit card payments. The CBA argues that these surcharges cost Australian consumers nearly $1 billion annually and are inconsistent and challenging to regulate, leading to transparency issues. They propose that banning these surcharges would simplify the payment process, benefiting both merchants and customers.

Merchant fees, ranging from 0.3% to 1.7% per transaction, are charges that businesses incur when processing card payments. Some businesses offset these costs by applying surcharges to customers. If surcharges are prohibited, businesses will need to absorb these fees, making it even more critical to monitor and manage them effectively.
While a single transaction fee might seem negligible, the cumulative effect over a year can be substantial. For instance, a business processing $500,000 in card transactions annually with an average merchant fee of 1% would incur $5,000 in fees. This is a significant overhead that must be recovered from customers either as a surcharge or through product pricing.
As a customer, we often overlook the costs businesses incur every time we tap our credit card. However, those costs are ultimately being paid by us through additional charges or product prices.
Therefore, it is beneficial to all of us, for business owners to take the following steps:
Negotiate with Payment Processors for the most favourable rates for your business.
Encourage Alternative Payment Methods with lower fees, such as direct bank transfers or cash.
Regularly Review Merchant Statements to identify any unexpected fees or rate increases, and address issues promptly.
Small savings can add up to big results. By proactively managing and optimizing your payment processing expenses, you can keep your prices competitive, reduce overhead costs, and improve your business's bottom line.
If you need help analysing your business financial performance and are looking for strategies for growth and profitability, call the professional business advisors at UHY Haines Norton on 07 4972 1300.
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