Speaker 1: Already and this is the daily this is the daily ours.
Speaker 2: Oh now it makes sense.
Speaker 1: Good morning and welcome to the Daily OS. It's Wednesday,
Speaker 1: the sixteenth of October. I'm sam, I'm emma. Three of
Speaker 1: Australia's major economic forces, the RBA, the arible C and
Speaker 1: the federal government are coming together to crack down on
Speaker 1: card surcharges. This week, the Albaneze government said it was
Speaker 1: sending a message to payment providers like Visa, MasterCard and
Speaker 1: American Express that the days of unfair or excessive surcharges
Speaker 1: on credit and debit card payments by consumers by US
Speaker 1: were numbered. On today's podcast, we're going to explain how
Speaker 1: these charges currently work, why it's a problem, and what
Speaker 1: the government is suggesting that we do about it. But first,
Speaker 1: m what is making headlines.
Speaker 3: The Federal government has updated its travel advice for Israel
Speaker 3: and the occupied Palestinian territories amid concerns the security situation
Speaker 3: there could deteriorate rapidly. Foreign Affairs Minister Penny Wong has
Speaker 3: urged anyone in the region to leave now if it
Speaker 3: is safe to do so, and mid concerns commercial flights
Speaker 3: could be suspended. The official advice, per the Department of
Speaker 3: Foreign Affairs Smart Traveler website, is do not travel to
Speaker 3: the region due to the quote volatile security situation, armed conflict,
Speaker 3: civil unrest and terrorism. The latest advice warned there was
Speaker 3: an ongoing threat of missile and rocket attacks in Israel
Speaker 3: and stressed quote terrorist attacks can occur anywhere at any time.
Speaker 3: It follows days of escalations between the Israeli military and
Speaker 3: Hesbala forces in Lebanon.
Speaker 1: Melbourne's crownd Casino has been fined two million dollars for
Speaker 1: allowing hundreds of Victorians who'd signed up to a self
Speaker 1: exclusion gambling register to place bets at the casino. National
Speaker 1: gambling harm prevention measures mean it's illegal for casinos to
Speaker 1: allow anyone who is self excluded to enter gambling venues.
Speaker 1: The Victorian Gambling Watchdog alleges Crown allowed almost two hundred
Speaker 1: and fifty people on an exclusion register to place bets
Speaker 1: at their venue between October of twenty twenty three and
Speaker 1: May this year. The state regulator said Crown Melbourne's actions
Speaker 1: were also in breach of their obligation quote to protect
Speaker 1: people at risk of gambling harm.
Speaker 3: US rapper Sean Diddy Combs is facing a new wave
Speaker 3: of lawsuits that accuse him of further sexual misconduct. At
Speaker 3: least six new lawsuits were filed this week in the
Speaker 3: Federal court in New York. The legal action has been
Speaker 3: launched by four anonymous men and two anonymous women who
Speaker 3: have detailed alleged incidents dating back as far as the nineties.
Speaker 3: In a statement to US news outlet CNN, Comb's lawyer
Speaker 3: said the US rapper and producer has quote never sexually
Speaker 3: assaulted anyone. Monday's legal action joins a growing list of
Speaker 3: lawsuits again it's the rapper, accusing him of a range
Speaker 3: of sexual misconduct and other illegal activity, which he has denied.
Speaker 3: Combs currently remains in custody after his arrest in New
Speaker 3: York last month on sex trafficking charges, to which he
Speaker 3: has pleaded not guilty.
Speaker 1: And Today's Good News, an environmental group has gathered in
Speaker 1: New South Wales to plant its one millionth tree. Since
Speaker 1: twenty twenty, members of the Foundation for National Parks and
Speaker 1: Wildlife have come together in Sydney's Northwest to continue what
Speaker 1: it calls its Landscape Resilience Program. It's a national project
Speaker 1: focused on maintaining the health of natural areas threatened by
Speaker 1: bushfires and floods. Since the twenty nineteen twenty twenty bushfires,
Speaker 1: the group has saved more than six hundred thousand hectares,
Speaker 1: two hundred and ninety six plant species, and twenty five
Speaker 1: threatened wildlife species. The group has lofty aims. They plan
Speaker 1: to plant eight million trees by twenty thirty.
Speaker 3: Okay, Sam, today talking about something that well and truly
Speaker 3: impacts each and every one of us. Card surcharges.
Speaker 1: I go as far as saying it impacts us all
Speaker 1: every day.
Speaker 2: Yeah, truly. You know what I'm talking about.
Speaker 3: If you've ever been at the checkout, you take your
Speaker 3: card out, you're about to pay for something, and all
Speaker 3: of a sudden, the price jumps up.
Speaker 1: Just because just a couple of cents.
Speaker 3: Yeah, well, a couple of cents depending where you are,
Speaker 3: maybe astronomically for reasons that you can't explain. So before
Speaker 3: we dive into what this all means, where it all
Speaker 3: comes from, let's start with what a surcharge actually is.
Speaker 3: Why do these little extra payments on top of our
Speaker 3: transactions exist.
Speaker 1: Well, basically, it's an amount or a percentage that a
Speaker 1: business adds to the price of a product or a service.
Speaker 1: So you're buying your coffee, it's four dollars. You get
Speaker 1: to the checkout, it's four dollars and seven cents. And
Speaker 1: that cost covers for the business, either partially or sometimes
Speaker 1: the entire cost the fee that the business has to
Speaker 1: pay to their payment facilitator. And when we say payment facilitator,
Speaker 1: we're talking about the master cards, the visas, the American Expresses,
Speaker 1: you know, the people who provide them with the payment
Speaker 1: gateways to collect payment from us and then funnel it
Speaker 1: back into a bank account.
Speaker 3: Got it. So we've got us the consumer, the bank,
Speaker 3: the business, and the provider exactly.
Speaker 1: And for a business to use Visa, let's say, to
Speaker 1: collect payments, Visa has to make money somehow, and so
Speaker 1: they make money on every transaction. Now, big businesses will
Speaker 1: cover that transaction because they kind of don't want to
Speaker 1: go through the routine that the checkout of you realizing
Speaker 1: there's a bit extra, so you go to let's say
Speaker 1: a department store or a big pharmacy chain. They'll actually
Speaker 1: just absorb that themselves. It's more the small businesses, say
Speaker 1: hospitality or small retail, that will add that on top. Now,
Speaker 1: the surcharge does vary based on if you've inserted your card,
Speaker 1: if you've tapped your card, it's generally more more expensive
Speaker 1: to tap your card, and who the payment facilitator is. Now,
Speaker 1: I'm sure you might recognize from kind of shop windows
Speaker 1: that American Express is always a bit more expensive for
Speaker 1: businesses to accept. They often pass that on to a consumer,
Speaker 1: and consumers like using American Express because there's rewards programs
Speaker 1: and extra incentives. Now, according to a recent article from
Speaker 1: the RBA, you can expect to be charged an extra
Speaker 1: point two percent on the average FPOs transaction, but an
Speaker 1: AMEX fee will normally be about an average of one
Speaker 1: point four percent, So it can be quite a range.
Speaker 3: And one thing that I've noticed more and more, especially
Speaker 3: with online purchasing, you might get to the checkout and
Speaker 3: you'll see, you know, a whole range of payment options,
Speaker 3: whether that's PayPal, a buy now, pay later, credit card,
Speaker 3: whatever it is. And I've appreciated and been surprised by
Speaker 3: the clarity of the specific surcharge amounts. You can really
Speaker 3: see that a couple of different options that might all
Speaker 3: kind of seem like they're coming from the same place
Speaker 3: or going to the same place can be charged between
Speaker 3: zero points something to two percent on those different options,
Speaker 3: and I think consumers a starting to get more savvy
Speaker 3: on okay, which payment option is going to screw me
Speaker 3: over the least.
Speaker 1: Here definitely, And I think for the RBA and the
Speaker 1: ahrip'll see, they are really closely regulating this space. So
Speaker 1: I think those examples online that you're talking about, that's
Speaker 1: probably not by the choice of the retailer. It's now
Speaker 1: a really important area of compliance. But before we go on,
Speaker 1: I just want to make one quick distinction, because you
Speaker 1: just mentioned it. It's really important to remember the difference
Speaker 1: between a credit card and a debit card, and credit
Speaker 1: card fees and debit card fees. So a debit card
Speaker 1: is a card that gives you access straight to your bank,
Speaker 1: and the big thing we're talking about today are the
Speaker 1: fees attached to that credit card fees when you're spending
Speaker 1: money that technically isn't yours and then you pay it
Speaker 1: back monthly or at an interval, those fees are kind
Speaker 1: of out of scope for this discussion.
Speaker 3: Yeah, and we're talking as well about transaction fees, so
Speaker 3: the cost of buying something in the moment using an
Speaker 3: electronic payment method for that, rather than a credit card
Speaker 3: fee that might be associated with just owning the credit
Speaker 3: card exactly.
Speaker 1: And I think if you really boil it down, and
Speaker 1: if you're feeling like you're getting a bit lost in
Speaker 1: all of this financial talk, the big question being asked
Speaker 1: by government is should you be charged a fee to
Speaker 1: access money that's already yours.
Speaker 3: So there is some regulation in this space that you've
Speaker 3: touched on a little bit. It's not just the wild West, right, Yeah.
Speaker 1: So the RBA sets the rules un surcharging. The HPLEC
Speaker 1: enforces those rules. Merchants, as you see online and in
Speaker 1: real life, they are allowed to surcharge, but it's only
Speaker 1: up to what's called the cost of acceptance for that
Speaker 1: particular type of card. This kind of benchmark set for
Speaker 1: a Visa versus an AMEX versus a master card. It's
Speaker 1: a really complex system. Some different cards have different costs.
Speaker 1: Sometimes those differences are communicated to consumers in different ways.
Speaker 1: Sometimes they are a flat sometimes there are a percentage.
Speaker 1: You know, I'll often see a cafe do a flat fee,
Speaker 1: and let's say that your flat fee is fifty cents
Speaker 1: for a transaction. They might say a minimum of ten
Speaker 1: dollars for an FPOs machine charge. You can go under that,
Speaker 1: but you have to pay fifty cents. If you're paying
Speaker 1: fifty cents on a four dollar coffee, then you're paying
Speaker 1: an extra twelve and a half percent on your coffee.
Speaker 1: So there's a lot of variability here, and I think
Speaker 1: that's kind of what the government wants to talk about.
Speaker 3: Okay, so it's not illegal for businesses to impose these
Speaker 3: card surcharges, But basically what you're saying is excessive payment
Speaker 3: surch charges are not allowed. The surcharge has to kind
Speaker 3: of be justifiable within reason that it's got to sort
Speaker 3: of reasonably cover the business's cost to run that transaction exactly.
Speaker 1: But as we're using cash less and less, I mean,
Speaker 1: the latest stats is that about thirteen percent of retail
Speaker 1: transactions are done by cash. The rest is all electronic payments.
Speaker 1: I think what's reason and what's not probably needs a
Speaker 1: little bit more exploring from the consumer perspective.
Speaker 3: Because it doesn't really feel optional for the consumer.
Speaker 2: If, like you say, you know, we're moving towards a
Speaker 2: cashless society.
Speaker 3: Most young people are not walking around with a spare
Speaker 3: twenty bucks in their pocket to pay for that coffee
Speaker 3: to avoid that twelve point five percent so charge example.
Speaker 3: But despite it being a couple of cents here and there,
Speaker 3: I'm sure that that adds up for the individual, for
Speaker 3: the economy. Do we know how much it adds up?
Speaker 1: Well, the RBA estimates it's between one billion dollars in
Speaker 1: search charges, and some estimates are putting it up to
Speaker 1: as high as four billion dollars. It's costing businesses, So
Speaker 1: the businesses that are absorbing those costs themselves. It's costing
Speaker 1: businesses two billion dollars a year to make those payments
Speaker 1: to payment company. So we're talking a lot of money here.
Speaker 1: I know it doesn't feel like a lot because it's
Speaker 1: in such tiny increments, but it really does add up.
Speaker 3: It certainly does add up. And it's interesting you mentioned
Speaker 3: they're the cost to businesses. I think us consumers can
Speaker 3: sometimes have a bit of a perspective that it's the
Speaker 3: businesses trying to roop us off, rather than there being
Speaker 3: a whole chain of transactional stakeholders I guess from your
Speaker 3: visas to the businesses. So either way you cut it,
Speaker 3: the consumer or the business ends up paying for these
Speaker 3: fees to the payment providers just to make the purchases
Speaker 3: in their everyday life, and even though it is five
Speaker 3: cents here or there, it does add up. So you
Speaker 3: said this week that the government has made big announcements
Speaker 3: about how to regulate this space.
Speaker 2: What have they suggested.
Speaker 1: Well, the governments come out strong this week about debit
Speaker 1: card transaction searcharges. They did allude to a closer look
Speaker 1: at credit card transaction search charges, but the big focus
Speaker 1: here is on debit cards and what they're proposing is
Speaker 1: to ban debit card search charges entirely from the first
Speaker 1: of January twenty twenty six. They're going to wait for
Speaker 1: a review currently underway by the Reserve Bank before that
Speaker 1: legislation would be tabled. The government does seem pretty keen
Speaker 1: to take steps before the review is delivered. So they've
Speaker 1: additionally committed two point one million dollars to the a
Speaker 1: Triple C to boost investigations into illegal and unfair search charging,
Speaker 1: and they said they want to increase consumer education as well.
Speaker 3: Yeah, that does seem like a big gap aside from
Speaker 3: the regulation space, you know, actually telling consumers what their
Speaker 3: rights are, what is reasonable, what is excessive when it
Speaker 3: comes to those fees. The big move though, is this
Speaker 3: potential ban on debit card seurch charges from twenty twenty six.
Speaker 3: But considering that these fees impact all of us every
Speaker 3: day into the billions of dollars every year, why does
Speaker 3: it need to.
Speaker 2: Take that long.
Speaker 1: It's an interesting one, isn't it, Because I mean we've
Speaker 1: got the federal election sometimes before May, and this kind
Speaker 1: of reform is traditionally pretty popular in Australia. I mean,
Speaker 1: we're going to make everything cheaper for you across the board.
Speaker 1: But the government knows they need to be careful with
Speaker 1: this and that's why they're waiting for the Reserve banks,
Speaker 1: because it could have adverse effects on businesses and they
Speaker 1: need to strike a balance between protecting consumers but also
Speaker 1: making sure that the businesses have access to payment services.
Speaker 1: I mean, the last thing that you would want if
Speaker 1: you owned a small business is the payment provider saying well,
Speaker 1: because we don't want to operate in this environment anymore,
Speaker 1: we're taking away our visa service or our MasterCard service.
Speaker 1: The government also wants to make sure that it's not
Speaker 1: businesses who are copying the fees and penalties themselves. And
Speaker 1: whilst there might be a law that means that consumers
Speaker 1: can't be charged unless they do it in a proper
Speaker 1: kind of financial modeling kind of way. They wouldn't want
Speaker 1: the businesses to be taking that cost on.
Speaker 3: Yeah, and part of this ties into a really interesting
Speaker 3: conversation that's happening in the US at the moment, where
Speaker 3: the government is suing Visa, accusing it of this debit
Speaker 3: card monopoly. Because when we consider those costs, you know,
Speaker 3: whether it's the consumer absorbing it or the business absorbing it,
Speaker 3: it's all ultimately two or three key players who set
Speaker 3: the agenda for these transactions. And this case in the
Speaker 3: US from the Department of Justice has essentially said that
Speaker 3: Visa has kind of taken advantage of its market dominance
Speaker 3: to control quote.
Speaker 2: The price of nearly everything.
Speaker 3: So that lawsuit is going to be a really interesting
Speaker 3: one to watch play out.
Speaker 1: Well. The US is a really interesting space in this
Speaker 1: regard because they don't have federal law about credit card
Speaker 1: or debit card search charges. There's these lawsuits that are
Speaker 1: popping up now more commonly, but it's state based, and
Speaker 1: so what you find in the US is that you
Speaker 1: might be buying something from an online company that's based
Speaker 1: in another state and you have to kind of understand
Speaker 1: what their surcharges are. But this is being discussed all
Speaker 1: over the world. I mean in the UK, they banned
Speaker 1: all surcharges on credit and debit card payments back in
Speaker 1: twenty eighteen, and that was part of this EU wide
Speaker 1: initiative to end excessive card charges. The UK's ban actually
Speaker 1: went further than the current proposal by the Australian government
Speaker 1: because it covered both debit and credit cards.
Speaker 3: Okay, interesting that I remember being kind of controversial at
Speaker 3: the time in the UK. When we think about the
Speaker 3: business community back here in Australia, how have they reacted
Speaker 3: to this.
Speaker 1: Well, it's a mixed bag. So small businesses have expressed
Speaker 1: those concerns. I mentioned earlier that a potential surcharge ban
Speaker 1: might mean that they would have to absorb the costs themselves.
Speaker 1: There are other businesses that are saying this is a
Speaker 1: really positive move and you know, it's about time the
Speaker 1: government stands up to, as you said before, these two
Speaker 1: or three major players in the payment space. It's been
Speaker 1: really interesting looking at some of the corresponding developments from
Speaker 1: the really big retailers. So I read a report in
Speaker 1: the Australian Financial Review this week about chemist Warehouse and
Speaker 1: they're introducing this new system where they're putting up stickers
Speaker 1: of QR codes at the counter. You can scan it
Speaker 1: and kind of bank transfer chemist Warehouse really and that's
Speaker 1: their attempt to get around paying the credit card surcharges
Speaker 1: and debit card surcharges themselves. They say they're spending about
Speaker 1: fifteen million dollars a year on payment search charges.
Speaker 3: That is really interesting the example of a chemist Warehouse
Speaker 3: kind of figuring out a workaround for customers.
Speaker 2: I also just heard about this other app.
Speaker 3: That's called Ping that consumers can use at the checkout
Speaker 3: to kind of work around these charges. And I do
Speaker 3: feel like it's a space that's waiting for a little
Speaker 3: bit more.
Speaker 1: Disruption, definitely. And the payments giants know that themselves, and
Speaker 1: I mean, in response to all of this, they've come
Speaker 1: out globally and said things along the lines of we're
Speaker 1: providing a really effective service to businesses big and small.
Speaker 1: We're ensuring that you can have clear reporting on how
Speaker 1: much money you're making. We are ensuring that it gets
Speaker 1: to your bank accounts fast, and just like any other
Speaker 1: business in the world, we need to make money by
Speaker 1: doing that. So there are many sides to this discussion,
Speaker 1: and I'm sure that they're not going to want to
Speaker 1: lose a major income stream as well, so they'll continue
Speaker 1: to kind of prove their case. But I think the
Speaker 1: consumer is going to be central to how the government
Speaker 1: plays this.
Speaker 3: These changes proposed in Australia do seem fairly moderate. I
Speaker 3: think it's worth mentioning, you know, we're not trying to
Speaker 3: completely reinvent the wheel. Some other more significant changes in
Speaker 3: overseas markets that you've touched on. So what's the response
Speaker 3: been like to the announcement here in Australia from a
Speaker 3: regulatory standpoint? To start with, have we heard from the
Speaker 3: A Triple C.
Speaker 1: Well, the A Triple C has welcomed the announcement. They
Speaker 1: described excessive card surcharging as a key concern for consumers
Speaker 1: and small businesses. They acknowledge that while businesses aren't banned
Speaker 1: from charging a surcharge for card payments, consumer and competition
Speaker 1: legislation means that the charge must not be more than
Speaker 1: what it costs a business to use that payment. They said,
Speaker 1: if a business charges a card payment surcharge, it must
Speaker 1: be able to prove the costs. It's based on and
Speaker 1: I think that's probably a good starting point for all
Speaker 1: of these investigations and deeper dives to go. Is our
Speaker 1: business is making a margin from these payments.
Speaker 3: Yeah, and of course Australian consumer law dictates that, you know,
Speaker 3: businesses can't be misleading customers on their pricing tactics. This
Speaker 3: is a government announcement. It's all kind of hypothetical at
Speaker 3: the moment while we await that review, have we heard
Speaker 3: anything from the opposition.
Speaker 1: The Opposition came out really strongly yesterday against the announcement.
Speaker 1: We've got a statement from Susan Lee, she's the Deputy
Speaker 1: Leader of the Opposition, and Angus Taylor, the Shadow Treasurer.
Speaker 1: They called the announcement quote another desperate attempt by the
Speaker 1: government to address a cost of living crisis that they'd
Speaker 1: say it has caused. And their core criticism of the
Speaker 1: announcement is that this is only a proposed change from
Speaker 1: twenty twenty six and that it didn't provide short term
Speaker 1: relief to Australians who are struggling financially.
Speaker 3: So it's not that the Coalition are necessarily saying they
Speaker 3: are against reform here. It's more that they think that
Speaker 3: this action doesn't go far enough quick enough.
Speaker 1: Well, in my surprise, you remembered to hear that politicians
Speaker 1: are politicking. But I think the real discussion that the
Speaker 1: moment for the opposition is what's the government doing short
Speaker 1: term to help Australians in this cost of living and
Speaker 1: housing crisis. We've got an election, as I said, sometime
Speaker 1: before May, economics and cost of living is going to
Speaker 1: be I dare say, probably the key topic for a
Speaker 1: lot of voters.
Speaker 2: So what happens from here then? In the meantime, so.
Speaker 1: The Reserve Bank is set to release a consultation paper soon,
Speaker 1: and that's not the final report from the Reserve Bank.
Speaker 1: It's kind of a status update on how they're going
Speaker 1: might foreshadow how they're thinking about implementing changes, what potential
Speaker 1: impacts on consumers and businesses could look like. From there though,
Speaker 1: we'll have to wait for that final report. Then we'll
Speaker 1: get proposed government legislation, then it will be discussed in
Speaker 1: Parliament and then we might see some change.
Speaker 2: So don't hold your breath.
Speaker 1: Don't hold your breath and keep tapping away.
Speaker 2: Brilliant.
Speaker 3: Thank you so much for breaking all of that down
Speaker 3: for us, Sam, really really helpful. And as we mentioned,
Speaker 3: this is obviously one of those stories that impacts everyone.
Speaker 2: We will keep you across.
Speaker 3: It as anything changes. Thank you so much for listening
Speaker 3: to today's episode of The Daily os. If you learned something,
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Speaker 3: be back with another one tomorrow, but until then, have
Speaker 3: a great day.
Speaker 1: My name is Lily Maddon and I'm a proud Arunda
Speaker 1: Bungelung Cargoton woman from Gadighl Country. The Daily oz acknowledges
Speaker 1: that this podcast is recorded on the lands of the
Speaker 1: Gadighl people and pays respect to all Aboriginal and Torres
Speaker 1: Strait Island and nations. We pay our respects to the
Speaker 1: first peoples of these countries, both past and present.