Labor has revealed it will be launching a full-scale crackdown on card surcharges, but relief won't likely come until 2026. The government is giving more funding to the consumer watchdog and will wait for the Reserve Bank (RBA) to design safeguards.

Card surcharges were introduced by the RBA back in 2003 due to fears credit would outstrip debit spending. Swinburne University's Professor Steve Worthington told Yahoo Finance the mission has been achieved, but it's given rise to businesses slapping unnecessarily high surcharges.

"I think what [the RBA has] done is opened the floodgates to people just trying to rort the system," he said. "It's just another way of gouging us."

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How do card surcharges work?

Businesses are only allowed to surcharge customers whatever it costs them to provide the digital payment system. They aren't allowed to profit from the system.

Some don't pass the cost onto consumers and decide to either absorb it into the base price of their goods or services, or just take the hit.

But, they also have to include the surcharge in the display price if there's no way to pay without the surcharge like with cash.

So if a cafe charges $5 for a coffee but does not accept cash, it can be fined for not properly advertising the coffee to include the surcharge amount.

The rule of thumb is that for EFTPOS, it's usually 0.5 per cent or less of the transaction cost, for debit it's between 0.5 to 1.0 per cent and credit is 1.0 to 1.5 per cent.

However, there are many places that charge much higher rates and it's the Australian Competition and Consumer Commission's (ACCC) job to go after those businesses that gouge Aussies.

Albanese and Chalmers' plan to get rid of surcharges

Labor referenced RBA data that showed surcharging is costing Australians close to $1 billion a year.

The government will give the ACCC $2.1 million to analyse excessive surcharging and report back, under the new plan.

“Consumers shouldn’t be punished for using cards or digital payments, and at the same time, small businesses shouldn’t have to pay hefty fees just to get paid themselves,” Treasurer Jim Chalmers said.

“This is all about getting a better deal for consumers, reducing costs for small businesses and promoting a more competitive payments system."