‘No-Dishonour-Fees’ movement calls for business to boycott unfair consumer charges

Melbourne, 27 March, 2025 - Dishonour fees are causing unnecessary widespread distress, with little benefit to businesses or consumers, according to new research from bank payment company GoCardless. The survey of more than 1,000 respondents reveals that 87% of Australians believe these fees should be banned or limited, with 76% saying such charges are unfair.

Dishonour fees are fees a financial institution applies when a payment doesn't go through or fails, for example, if there are insufficient funds in the account or an error in payment details.

These fees are a common burden, with nearly one in three Australians (32%) charged a failure fee – also known as a ‘failure fee’ or ‘late payment fee’ – in the past year.

These charges often worsen existing financial stress for those already struggling, so it’s no wonder that 86% of Australians say they’re more likely to return to businesses that avoid these charges altogether. The survey reveals that doing so allows businesses to gain a competitive edge and earn customer loyalty by, for example, simply moving to a payment provider that doesn’t charge unnecessary fees.

Kyle Willersdorf, Account Director Australia and New Zealand at GoCardless says:  “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 They also unfairly damage the reputation of small and medium businesses, which are often blamed for fees driven by outdated payment systems.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.”

Support for Fair Payment Practices

Australians are clear about their frustrations with late payment fees. Of those who believe these fees are unfair, 41% agree that the fees they have seen are also disproportionately high. Adding to the confusion, 53% of respondents assume that dishonour fees are charged by the banks – and even though these fees are usually charged by the payment providers, only 6% of respondents believe they are the ones responsible.

With so much dissatisfaction, businesses have an opportunity to act. By addressing these concerns with transparent and empathetic payment practices, they can ease customer frustration and build lasting trust. The reasons behind these fees highlight the need for reform, especially with other anti-consumer surcharges currently under governmental scrutiny.

The GoCardless research indicates insufficient funds cause 57% of payment failures, while 36% stem from outdated payment systems like expired cards. This highlights how these fees often penalise people for everyday financial challenges, turning common mistakes into revenue streams for payment providers.

Financial and Emotional Toll of Failure Fees

Dishonour fees don’t just strain wallets - they take a toll on emotional well-being. According to the research, 82% of Australians charged a dishonour fee in the last 12 months say these charges create unnecessary financial stress. For many, especially those already struggling, the fees amplify existing pressures and contribute to a sense of frustration and helplessness.

The financial impact is equally significant. Nearly three-quarters (74%) of Australians agree they’ve been left in a worse financial situation after being hit with a late payment fee. Almost half (49%) of respondents who believe these fees are unfair also say businesses should show more sensitivity to people who need extra time to pay, particularly given the current economic climate. 

Kyle Willersdorf says cutting failure fees altogether would benefit both businesses and their customers:

“Charging dishonour fees is optional for payment service providers (PSP), and it’s something GoCardless has opted to avoid doing. Our perspective is that if a PSP earns money from a business’ misfortunes, then it is not aligned with that business’ best interests. We operate – and encourage other PSPs to operate –  in a way that better aligns with the priorities of both businesses and consumers.”

“For example, GoCardless proactively manages payment failure with the help of Success+, our AI-powered tool that increases success rates to help businesses recover, on average, 70% of all payments that initially fail -- whilst minimising disruptions to service for customers. By adopting transparent, innovative and customer-first practices, businesses can reduce frustration, improve loyalty, and build a reputation for fairness and reliability.” says Mr Willersdorf.

Case Study excerpt: Dukes Gym owner Jonathan Quieros

Jonathan Quieros, owner of Dukes Gym in Melbourne, is a vocal advocate for limiting or banning the dishonour fees charged by banks and payment platforms. As a gym owner, Quieros’ industry is one where dishonour fees are incredibly common, often charged by the payment providers that service large-scale fitness franchises and small independent operators alike.

In a recent interview with Yahoo Finance, Quieros highlighted the “unreasonable” financial strain these fees place on both consumers and small businesses. He pointed out that some Australians are paying up to $500 annually in these "sneaky" fees, which hurt customer-business relations and put a strain on people’s financial well-being at a time when many are already doing it tough.

“Customers don’t differentiate between us and the payment processor, so in their eyes, it’s all just the merchant,” said Quieros.

Quieros emphasised that on the business side, dishonour fees disproportionately affect small companies, which often operate on tighter margins. He argued that these fees not only burden consumers, but also hinder the operational efficiency of businesses that rely on timely payments and positive customer relationships.

Jonathan’s stance aligns with a broader movement seeking greater transparency and fairness in banking and payment practices in Australia. The push to curb dishonour fees highlights a need for regulatory reforms that protect consumers from unnecessary costs and promote more ethical financial conduct.

About this report

• This study was conducted online between 28 November and 1 December 2024.

• The sample comprised of a nationally representative sample of 1,003 Australians aged 18 years and older.

• For brevity, this sample is referred to simply as ‘Aussies’ throughout the report.

• YouGov designed the questionnaire in consultation with LaunchLink and GoCardless.

• Following the completion of interviewing, the data was weighted by age, gender and location to reflect the latest ABS business population estimates.