ATO convenes snap meeting over credit card ban

The Australian Taxation Office (ATO) has convened an emergency meeting with business groups following backlash over its decision to stop accepting credit card payments. The move, effective at the end of next month, comes in response to the Reserve Bank of Australia's reforms to eliminate card surcharges, which the bank claims will save customers about $1.6 billion annually.

The ATO argues that it would be inappropriate to bear the surcharge fees itself, as it would effectively transfer the cost to taxpayers. However, small business groups and owners have criticized the decision, claiming they have been expected to absorb the fees of card transactions without the option of using credit card payments as a cash flow method.

Andrew McKellar, CEO of the Australian Chamber of Commerce and Industry (ACCI), has called for the ATO credit card ban to be reversed, stating that there is a double standard. Small businesses, he argues, are already facing rising costs and the government's recent fourth interest rate increase.

Master Builders CEO Denita Wawn echoed similar sentiments, stating that the surcharge card ban and other regulatory decisions were made without consultation and show a lack of understanding of the impact on small businesses. She questioned the resilience of small business operators in the current economic climate.

The ATO has stated that it would have preferred to continue accepting credit cards but that credit card companies declined to offer a rate low enough. The costs associated with accepting credit card payments are significant, with merchant fees estimated to be nearly $200 million annually and expected to rise further. The ATO's taxation commissioner, Rob Heferen, acknowledged that it is not sustainable for the ATO to absorb these costs continually, as it would result in reduced revenue for the agency and less funding for all government services.

Other entities, including StrataPay, private schools, local councils, and rental payment platforms, have also announced they will stop accepting credit card payments. The ATO notes that credit card payments make up only 2.3% of total payments to the tax office, with over 60% of credit card payments by value made by privately owned and wealthy groups, and about 5% of all small businesses using credit cards to pay their taxes.