“The government has completely got this around the wrong way,” Achterstraat said.

“What they need to do is firstly address the underlying issues concerning these surcharges.”

The government this week tried to garner support for the $3 million super tax bill to be passed through the Senate by pairing it with a populist measure that would see the abolition of merchant card fees for consumers.

However, on Thursday (6 February) the bill was taken off the official Senate order of business, implying the deal the government had been trying to broker with crossbenchers had failed.

Achterstraat said he was shocked the government would suggest the measure without consideration as to how small businesses would recoup those lost merchant fees.

“If they immediately banned surcharging, small businesses would be left holding the bill. The government shouldn’t just announce things like that,” he said.

“They need to go back and do the work and see the underlying reason for those fees, which is all about a lack of competition as well as other issues. When I saw the government was trying to do that deal with the Senate crossbench to proceed with the debit surcharge ban I thought it was bizarre and that it would jeopardise the RBA review on this issue, which is currently underway.”

The RBA began a review of retail payments regulation in October last year to examine the costs merchants face when accepting card payments and the framework for surcharging.

It noted at the time that Australians extensively use cards to pay for goods and services and while they may benefit from the convenience and security provided by card payments, in an environment of heightened concern around the cost of living, card payment costs and surcharging are attracting more attention from merchants and consumers.

“These issues are linked, since merchants would be less likely to surcharge consumers if card payment costs were lower,” it said.

“It is timely, therefore, to review whether regulatory settings could be adjusted to put further downward pressure on merchant card payment costs and whether the RBA’s surcharging framework remains fit for purpose.”

Achterstraat said there have been many submissions made to the review already and businesses have expressed their opposition to the surcharge ban.

“This is a strange approach [from the government] and not at all nuanced. It is obvious they don’t appreciate how small businesses operate and would be out of pocket,” he said.

“Small businesses would have to increase their prices to recoup the costs. If I’m being frank, this is just a populist approach that would go down well with consumers who may save 1.5 per cent at the terminal but the small business would have to increase their prices at the same time. It is a false economy.”