Older Aussies reject price hikes under RBA’s card surcharge reforms

It seems that everywhere you look these days, prices are going up and up.

Now, Australians could soon be even more out of pocket, with whispers that businesses may raise prices following the RBA’s plans to ban customer surcharges on card payments.

Under the proposed changes, consumers would no longer pay debit or credit card surcharges at the checkout — a move expected to save Australians an estimated $1.2 billion a year.

While the changes would put some money back in shoppers’ pockets, businesses would still face costs for accepting card payments. The RBA wants to reduce interchange fees, but that’s only one part of the total fee. Unless banks pass on those savings, businesses may not see much difference.

For businesses that currently add a card surcharge, a 1.5 per cent fee passed on to customers today would become a 1.5 per cent cost they must absorb or bake into everyday prices to recoup their costs.

While any price rise is unwelcome, it’s older Aussies who are most opposed, according to new research from Money.com.au.

The nationally representative survey of more than 1,000 Australians found that 55 per cent of Baby Boomers say it wouldn’t be fair for businesses to raise prices on goods and services to offset card-processing costs, since those would no longer be directly paid by customers under the proposed reforms.

Money.com.au’s Finance Expert, Sean Callery, explains that older Australians often feel the pinch of price hikes more than younger people, as those on fixed incomes have less flexibility in their budgets.

“Australians in their 50s and 60s have lived through decades of all sorts of policy changes from the Reserve Bank, so they’re naturally sceptical when told that its proposal to ban debit and credit card surcharges could lead to higher prices because businesses would lose that revenue,” he says.

“Those on fixed or limited incomes are already cutting back due to higher living costs, so even small price increases can have an impact. While younger Australians may accept small rises if it means being able to use their card at checkout for free, older generations see it as robbing Peter to pay Paul.

“Whatever form the RBA’s changes take, businesses will still have to pay banks for payment services. The big question is whether they will wear those costs or build them into higher prices for consumers in place of a card surcharge at checkout. It’s hard to think that restaurants, cafés, pubs, and small shops and businesses would simply absorb those costs when their margins are already so tight.”

With older Aussies seemingly bombarded with rising costs left and right, it’s now more important than ever to find ways to save money and cut costs.

Founder and CEO of Stockspot, Chris Brycki, recently told Starts at 60 about several key areas where retirees can make much-needed savings:

• • Government – Most governments provide seniors with discounts and reduced prices for items such as transport.
  • Groceries – Brycki suggests that “where possible, bulk buy things when they go on sale, especially non-perishable items like cleaning products. Also look for special savings days.”
  • Utilities – Some utility providers offer a discount to seniors and retirees. Shop around to find a provider that offers discounts and to ensure you are getting the best prices.
  • Healthcare – Again, shop around to ensure you have the best health cover available. Some providers give discounts to seniors, provided they have a Seniors Card or are retired.

While a rise in prices is far from ideal, older Aussies can still take practical steps to save money and lessen the financial strain.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.