CBA boss hits back $4 billion cashless ‘rort’: ‘Grossly exaggerated’

Commonwealth Bank of Australia (CBA) has hit back at accusations the banks are “rorting” customers through card surcharge payments. The bank’s chief executive Matt Comyn rejected a "like-for-like" comparison between the cost of using cash and card while fronting a parliamentary hearing on Thursday.

Comyn was confronted by Labor MP Jerome Laxale who held up a $5 note and asked why a coffee would only cost $5 if he used cash but $5.08 if he used a card. The politician has argued Australians are paying up to $4 billion in card surcharges simply to “access their own money”.

The leader of Australia's biggest bank said the multi-billion dollar claim was “grossly exaggerated or inaccurate”.

“That number is just simply wrong … We believe that’s at least overstated by three times,” Comyn said.

He cited a recent report commissioned by Mastercard that found the cost of accepting a card payment was 1.8 per cent of the goods, while cash was more than double at 3.9 per cent.

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A recent analysis of Reserve Bank of Australia (RBA) data by the ABC found card surcharges were costing Australians closer to $960.26 million a year.

Why do I have to pay a surcharge for cards and not cash?

The extra cost of using cash is impacted by a range of factors. You need to move it, secure it and store it.

RMIT associate professor of finance Dr Angel Zhong said there are also “hidden costs” of cash that businesses have to handle.

“Research shows that on average, it takes a small business in Australia 29 days per year to handle cash. So that includes everything, receiving cash, counting cash, reconciling and deposting in cash,” Zhong told Yahoo Finance.

So, why is there surcharging for digital payments and not cash?

Comyn said the extra costs of using cash were "embedded into the price", much like "the cost of coffee beans or milk".

And the reason digital payments weren't treated the same? The bank boss said this was how charges had been done historically in Australia, so customers simply accepted it.

“Australia, unlike Europe, allows merchant surcharging or business surcharging. They are able to surcharge the cost of the acceptance,” he said.

“I think there is a reasonable hypothesis that at least some businesses are surcharging more than the cost of acceptance but there is no data on that.”

There is a ban on excessive surcharging or applying one when cash payments are not allowed. The Australian Competition and Consumer Commission can investigate breaches.

Cost of electronic payments reducing

The RBA is currently reviewing merchant costs and surcharging and it has been speculated they could follow the United Kingdom and Europe in banning the practice.

This means businesses must absorb the cost themselves, potentially passing it on through pricing instead of the extra addition when a transaction is made.

“People don’t use cash any more, so everything is just getting surcharged. It’s prevalent in the retail industry, particularly hospitality,” RBA governor Michele Bullock said.

“We are going to be looking at the economic circumstances now, and whether surcharging is still fit for purpose as an instrument to improve efficiency in competition.”

Comyn said the cost of accepting electronic payments had fallen by more than 30 per cent, making Australia “one of the lowest” markets in the world and cheaper than the US and Canada.

“Fundamentally, the electronic payments infrastructure and the service and commercial outcomes for the service and commercial outcomes for the economy as a whole are extremely efficient and competitive,” he said.

“I don’t think it’s appropriate when others describe that in terms of a rort. I don’t think that is factually correct.”

Commonwealth Bank processes about 20 million payments per day, with about five million disputed each year, which also contributed to the cost of card payments and cost the bank around $100 million.

“I can assure you, there’s been a lot of downward pressure on lowering the cost of payments," he said.

"There’s been a lot of investment in making the payments infrastructure much faster, cheaper. In this case for consumers, there are also risks associated with that.”

Comyn noted the bank's merchant acquiring business, like through Mastercard, was not profitable.

He said money the bank received from card issues was given back to customers through points, including frequent flyer points, or investments in things like fraud and technology.

CBA 'committed' to cash

It comes after the bank revealed it was spending $350 million a year provide cash services over the counter in branches and through ATMs.

Comyn said it was cheaper for banks to trade in digital payments than cash dollar-for-dollar, but noted this was “a false comparison”.

He noted the bank distributed around $4 billion in cash each month through its branch and ATM network.

“We are proud to maintain Australia’s largest branch network, and more than twice as many ATMs as any other bank,” Comyn said.

“CBA has committed to keeping all of our regional branches open until at least the end of 2026.

“Cash is important for many customers and we’re committed to ensuring a reliable and efficient distribution of cash to communities.”

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