Last week’s announcement by the Albanese government that it plans to ban debit card surcharging from 2026 is about to hit Australian merchants like a freight train, including most retailers.

An end to surcharging would be a positive change for Australian consumers, one that will bring us into line with most other developed economies. Bets are on that all surcharging, including credit cards, will eventually be banned too.

While we await the detail on whether fixed, blended and bundled pricing should be scrapped, we expect the payment service providers will be lobbying to ensure ongoing loopholes that allow them to continue imposing blanket ‘payment service fees’.

This means retailers may continue to wear high card scheme fee costs without any avenue to recoup them. Needless to say, the clock is ticking for already stretched retailers to review what payments they offer and how much it’s costing them.

Local retailers should consider the following tips to get ahead of the legislation and avoid a rude shock in 18 months’ time.

Examine the numbers

With so much commerce occurring online, payments are increasingly becoming the fifth pillar of marketing. And any good marketing strategy is built on data. Retailers need to thoroughly review their payments data, looking at the cost of each service versus the return on traffic, abandoned carts, failed transactions, chargeback costs and time, integration and service efficiency, security and customer satisfaction.

This data often sits in a silo as part of the IT team, but should be a core part of C-suite decisions given how much payments are costing Aussie businesses. A review will help to provide clarity on which payment types are worth the fees, and which might be replaced or retired. While consumer choice is vital, customers typically are satisfied with fewer options provided those available offer a seamless and secure experience.

Negotiate with providers

Payments are really no different to a personal utility bill; unless you are constantly reviewing it, fees can change without notice. It is very easy for a retailer to become entrenched with one bank, but this can lead to fee complacence. Retailers should be renegotiating rates on payments with their main providers and bank every year, and don’t be afraid to switch if you’re not getting a good deal. An annual cost health check could save thousands – even millions for large retailers.

The Account-to-Account switch

Retailers are feeling increased pressure from consumers to offer a great payment experience as well multiple payment choices – and increased security. It requires merchants to tick a lot of boxes. As surcharging diminishes, cost will become the main battleground for payments, and the turning point in our payments innovation curve.

The ban on debit card surcharging will see Australia follow the global trend of Account-to-Account payments.

Australia’s modern PayTo payment rails have been in existence for a couple of years, but uptake has been subdued. Whether merchants need to cut payment costs to survive the surcharging ban or improve their payments user experience and security, Pay by Bank (powered by PayTo) is currently the only alternative that achieves these outcomes. A Pay by Bank option can completely replace a debit card option at a lower cost to the merchant, removing the need to surcharge, while offering a faster and simpler payment experience that eliminates the need for cards and passwords.

Major household retailers in Australia are already leading the way on this shift, including Chemist Warehouse, Harris Farm Markets, Princess Polly, Baby Bunting, Eva Mattresses, and Oz Hair & Beauty. 

Merchants can preempt where the tide is taking us by reviewing their payments now, or face the looming cost.

Ben Zyl is co-founder and CEO of Waave.