Australians illegally charged billions in merchant fees by the federal government

The federal government is moving to put a stop to illegal merchant fees after revelations Australians have been charged billions of dollars in surcharges for government transactions.

Services including passport renewals, visa applications and tax bills attracted the charge when payments were made with a debit card.

Customers have paid the fees since the John Howard government era, 2GB Drive radio host Chris O’Keefe first reported today.

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The issue was uncovered after a similar discovery was made in New South Wales in October, where $144 million was collected illegally by the state government over eight years.

A multi-agency taskforce was set up to examine the issue at a federal level.

9News understands there are no plans to refund people who were charged the small merchant fee, due to the challenges of auditing across government services over many years.

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Finance minister Katy Gallagher said laws will be introduced to make the fees legal retrospectively on Monday, but debit card fees will not be charged from January 1 in 2025.

A joint statement released by Gallagher, Treasurer Jim Chalmers and MP Andrew Leigh said the new legislation would provide the finance minister with the power to “quickly and efficiently amend Commonwealth surcharging policies”.

“These bills will not impose any new surcharges but fix the historical issue to ensure existing surcharges are authorised by legislation,” the statement said.

“While the Reserve Bank of Australia (RBA) completes its important work on the surcharging review and how payment fees can be reduced economy-wide, we will stop passing on debit surcharges from the ATO and Services Australia to make sure these everyday payments don’t cost Australians more.”

Charges for people who use credit cards to pay for government fees and services will remain in place.

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