IFCBAA members are concerned about proposals that would prevent businesses from passing on credit card processing fees to customers and instead require businesses to absorb these costs.
While we appreciate the objective of reducing transaction costs for consumers, merchant service fees represent a genuine and direct cost imposed on businesses by payment providers, banks, and card schemes. In many cases, customers choose to pay by credit card for convenience, rewards programs, or extended payment terms, and the associated costs are a direct consequence of that payment choice.
The customs brokerage and freight forwarding sector operates in a highly competitive environment with generally modest margins. Many of our members process substantial payments on behalf of importers and exporters, including freight charges, customs duties, taxes, and other government-related charges.
Credit card transaction fees on these high-value payments can be significant and, if unable to be recovered, will place additional financial pressure on businesses already facing increasing operating costs.
This issue is particularly important in relation to customs duty and GST paid on behalf of importers. These amounts are generally pass-through costs: customs brokers collect or facilitate payment of the duty and GST payable to government, without applying any margin to those amounts.
Many importers, particularly small and medium-sized businesses, rely on the ability to place these charges on a credit card as a practical way to manage short-term cash flow and obtain the release of goods while awaiting customer payments or business revenue.
Where a customs broker offers this payment facility, the credit card merchant fee is not a discretionary business expense or profit item; it is a direct cost of enabling the importer to use credit for these government charges.
If customs brokers are no longer permitted to recover that card acceptance cost from the importer choosing to use the facility, many brokers may be unable to continue offering the service. The result would be a material cash-flow impact on importers, particularly smaller businesses that depend on credit to fund duty and GST at the point of importation.
The practical outcome of prohibiting surcharges is unlikely to eliminate these costs. Instead, businesses will be forced to recover them through higher overall pricing structures. This would result in all customers subsidising the cost of credit card payments, including those who elect to use lower-cost payment methods such as EFTPOS, direct bank transfers, or other electronic payment options.
Furthermore, the ability to separately identify and recover payment processing costs provides transparency to customers and encourages informed decisions regarding payment methods. Removing this transparency obscures the true cost of payment services and diminishes the principle that users of higher-cost payment methods should bear the associated expense.
IFCBAA members support measures that promote fair and competitive payment systems. However, we respectfully submit that any reform should focus on reducing the underlying merchant fees charged by financial institutions and card schemes rather than transferring those costs to businesses. Failure to address the root cause of these charges will simply shift the burden onto Australian businesses and, ultimately, consumers through increased prices.
We encourage the Reserve Bank of Australia to carefully consider the impact on the customs brokerage and international freight forwarding sector and to consult further with industry stakeholders before implementing any measures that would prohibit the recovery of legitimate payment processing costs.