Consumers will be protected from excessive credit card surcharges after new laws cleared parliament.
Merchants can be fined up to $108,000 if caught overcharging customers for using their credit card, under new powers given to the Australian Competition and Consumer Commission.
Cabinet minister Simon Birmingham told the Senate on Monday some merchants were using credit card fees to squeeze higher profits out of customers, with surcharges of 10 per cent or more in some cases.
The new laws would provide savings to everyday Australians, he said.
"What we're targeting here are misleading payments where consumers face a fee allegedly associated with conducting a purchase by credit card that is indeed not a genuine and real and accurate reflection of the cost of that fee," he said.
The laws passed with the support of Labor and the Greens, although the minor party failed in its bid to amend the bill to crackdown on excessive ATM fees as well.
Greens senator Peter Whish-Wilson hit out at banks "gouging" consumers for accessing their own money.
Consumers were being charged between $2 and $3 for using ATMs, even though it only costs the bank 77 cents to process the transaction, he said.
Banks were making $600 million every year from ATM fees, describing it as one of Australia's biggest rorts, he said.
Senator Birmingham said, unlike credit card surcharges, the Murray inquiry made no recommendations around ATM fees.
They were two separate issues and it would be wrong for lawmakers to take action without adequate consultation, he said.
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