The Albanese government has announced a first step in what it says is a crackdown on excessive card surcharges and threatened a ban on surcharges for debit cards from early 2026.

In the latest of its cost-of-living measures, the government will provide $2.1 million for the Australian Competition and Consumer Commission “to tackle excessive surcharges”.

The government also says it is prepared to ban debit card surcharges from January 1 2026, subject to further work by the Reserve Bank and “safeguards to ensure both small businesses and consumers can benefit from lower costs”.

The government is not considering a ban on credit card surcharges, although the ACCC scrutiny will cover both debit and credit cards.

The bank is reviewing merchant card payment costs and surcharging. Its first consultation paper will be released on Tuesday.

The government said in a statement: “the declining use of cash and the rise of electronic payments means that more Australians are getting slugged by surcharges, even when they use their own money”.

“The RBA’s review is an important step to reduce the costs small businesses face when processing payments. We want to ease costs for consumers without added costs for small businesses, or unintended consequences for the broader economy,” the statement from the prime minister, treasurer and assistant treasurer said.

Funding for the ACCC “will enable the consumer watchdog to crack down on illegal and unfair surcharging practices and increase education and compliance activities”.

The Reserve Bank required card providers such as Visa and Mastercard to remove their no‐surcharge rules in 2003 allowing retailers to directly pass on the costs of accepting card payments.

With the spread of payments by card, surcharges have become ubiquitous.

In a parliamentary hearing in August the head of the National Australia Bank Andrew Irvine complained about having to pay a 10% surcharge when he bought a cup of coffee in Sydney.

He told an inquiry it was “outrageous”, saying he didn’t like “the lack of transparency and lack of consistency”.

The ACCC regulates surcharges and can require merchants prove a surcharge is justified. It can take merchants to court to enforce the regulations governing surcharges, and has done so. But many charges are still higher than they are supposed to be.

The European Union bans surcharges.

Treasurer Jim Chalmers said: “Consumers shouldn’t be punished for using cards or digital payments, and at the same time, small businesses shouldn’t have to pay hefty fees just to get paid themselves”.

The total cost to Australian consumers of surcharges is disputed – the RBA review will look at the likely cost.