New research from bank payment company GoCardless has revealed a strong sentiment among Australians regarding dishonour fees, with 87 per cent saying such fees should fees should be banned or limited and 76 per cent saying these are unfair.
Dishonour fees are fees imposed by a financial institution when a payment doesn’t go through or fails, for example, if there are insufficient funds in the account or an error in the payment details. Figures suggest that 32 per cent of Australians get charged a dishonour fee in the past year.
As such, dishonour fees are considered a burden to many Australians as they face ongoing financial challenges, and 86 per cent have said they are more likely to return to businesses that avoid these charges altogether, with such businesses standing to benefit from increased customer loyalty and competitive advantage.
Small businesses blamed
Unfortunately, small businesses are often blamed for the pesky charges.
Kyle Willersdorf, Account Director Australia and New Zealand at GoCardless commented, “Australians have made their stance on dishonour fees loud and clear: these archaic and unnecessary charges are flat-out harmful to businesses and customers. They also unfairly damage the reputation of small and medium businesses, which are often blamed for fees driven by outdated payment systems. Too often, these charges turn failure into a revenue stream for payment providers, instead of incentivising them to work with their business customers to improve payment success.”
The GoCardless research found that insufficient funds cause 57 per cent of payment failures, while 36 per cent stem from outdated payment systems like expired cards, noting that these fees often penalise people for everyday financial challenges while payment providers get to enjoy an additional revenue streams..
Of those who believe these fees are unfair, 41 per cent agree that the fees they have seen are also disproportionately high, which highlights the need for reform, especially with other anti-consumer surcharges currently under governmental scrutiny.
As a result, the 82 per cent of Australians that get charged with a dishonour fee in the last 12 months shared that these charges create unnecessary financial stress.
The research said that by addressing these concerns with transparent and empathetic payment practices, businesses can ease customer frustration and build lasting trust.
Willersdorf stated that cutting failure fees altogether would benefit both businesses and their customers. He said, “Charging dishonour fees is optional for payment service providers (PSP). Our perspective is that if a PSP earns money from a business’ misfortunes, then it is not aligned with that business’ best interests. By adopting transparent, innovative and customer-first practices, businesses can reduce frustration, improve loyalty, and build a reputation for fairness and reliability.”
