The RBA is also slashing interchange fees by about $910 million per year, a move experts warn will likely shrink credit card rewards such as frequent flyer points and cashback. According to Daily Mail - News, financial adviser Ben Nash described that the RBA is cutting interchange fees by roughly $910 million annually, which funds these rewards, and banks have already flagged they will need to make changes. Experts caution that businesses may roll the cost of card payments into general prices for goods, meaning shoppers could still pay indirectly. According to Daily Mail - News, Ben Nash described that these costs do not vanish and will likely be rolled into the price of items like coffee or lunch, so consumers are still paying without seeing it.
Transparency measures to help small businesses shop for better payment deals will not take effect until April next year, creating a six-month gap after the surcharge ban. According to Daily Mail - News, Ben Nash described that smaller operators may face higher costs during this period without tools to push back. Cash users may no longer receive minor discounts at small businesses due to the surcharge ban, as cash campaigner Jason Bryce noted. According to Daily Mail - News, Jason Bryce described that small businesses offering discounts to cash users may no longer be able to do so, lumping cash users with card consumers who enjoy extra benefits.
Nobody's going to miss getting hit with a surprise surcharge at the register.
It remains unclear how many small businesses currently offer cash discounts or what specific changes banks will make to rewards programs. Additionally, whether the forecasted $1.6 billion in annual savings will be offset by higher general prices is unknown, as is how the transparency measures starting in April will practically assist small businesses in shopping for better deals.
The bit that's getting glossed over is that these costs don't just vanish. Businesses still pay to accept card payments, and that cost has to go somewhere.
It'll just get rolled into the price of your coffee or your lunch instead. So you're still paying for it, you just can't see it anymore.
These days (cash users) might have already paid a fee to withdraw their money. Now they will be lumped in with the consumers using the convenience and enjoying the extra benefits of using a credit card.
Small businesses around the country have been asking consumers to use cash if they can for years because of high card costs. There are signs at many checkouts explaining how high card costs hurt small businesses. Those that offer small discounts to cash users may no longer be able to do that.
The surcharge ban kicks in in October, but the transparency measures that are supposed to help small businesses shop around for better payment deals don't land until April next year. That's six months where smaller operators are wearing higher costs without any real tools to push back on them.
The RBA is slashing interchange fees by about $910million a year, and that's basically the money that funds frequent flyer points, cashback, all of that. Banks have already flagged they'll need to make changes.