Returned Payment Fees in Australia: 2025 Guide & Latest Banking Rules

In 2025, as household budgets remain tight, returned payment fees have quietly re-emerged as a sneaky drain on Australians’ finances. These fees—also known as dishonour or failed payment fees—can hit your account when a direct debit, loan repayment, or bill payment bounces back due to insufficient funds or incorrect details. With new banking rules and digital payment platforms on the rise, it’s never been more important to understand how returned payment fees work and how to avoid them.

What Are Returned Payment Fees?

Returned payment fees are charges your bank or service provider applies when a scheduled payment doesn’t go through. This could be because your account doesn’t have enough funds, the payment details are incorrect, or there’s a system error. In 2025, most major banks in Australia charge between $5 and $35 per returned payment, depending on the type of transaction and the institution involved.

• Direct debit dishonours: Regular payments for loans, utilities, or subscriptions fail and trigger a fee.
• Cheque bounces: Although less common with digital banking, bounced cheques still attract fees.
• Credit card repayments: Missed repayments due to insufficient funds can lead to penalty fees and interest charges.

For example, if your $120 gym membership direct debit is rejected by your bank due to a low balance, you might be hit with a $10 fee by your bank and another $15 fee by the gym. Across millions of Australians, these small fees quickly add up.

2025 Policy Updates and Industry Trends

This year, the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have pushed for greater transparency around banking fees. In line with the Consumer Data Right (CDR) reforms, banks are now required to disclose all potential fees—like returned payment charges—upfront and in plain language before you sign up for an account or service.

Some key 2025 developments:

• Fee caps: Several digital banks, including Up and 86 400, have introduced $0 returned payment fees for everyday accounts, prompting major banks to review their fee structures.
• Real-time notifications: Most banks now offer instant SMS or app alerts if a payment is about to fail, giving customers a last-minute chance to top up their account and avoid a fee.
• Open banking competition: Neobanks and fintechs are using low- or no-fee models as a selling point, especially for younger Australians and those on tight budgets.

Despite these positive trends, the big four banks—Commonwealth, Westpac, NAB, and ANZ—still charge returned payment fees on some products, particularly for mortgages, credit cards, and business accounts.

How to Avoid Returned Payment Fees in 2025

With digital tools and better industry transparency, avoiding returned payment fees is easier than ever—if you’re proactive. Here are practical steps to keep your money in your pocket:

• Set up low-balance alerts: Use your bank’s app to receive warnings when your account is running low before scheduled payments.
• Maintain a buffer: Keep a small cash cushion in your transaction account to cover unexpected bills or timing issues with deposits.
• Review direct debits: Regularly audit your subscriptions and automated payments—cancel any you no longer need to reduce risk.
• Update payment details: If you change banks or cards, immediately update your information with all service providers to prevent failed payments.
• Switch to a low-fee account: Compare accounts and consider switching to banks or fintechs that don’t charge returned payment fees for everyday banking.

For example, a Melbourne couple who switched from a traditional bank to a digital bank in 2024 saved over $100 in returned payment fees in just six months, simply by receiving instant notifications and setting up a $50 buffer in their account.

The Bottom Line

Returned payment fees may seem minor, but they can quickly erode your savings—especially in a year when every dollar counts. With new rules making fees more transparent and digital banks leading the way with fee-free options, it’s smart to review your banking setup in 2025. Take advantage of alerts, keep your payment details up to date, and consider switching to a provider that puts your financial wellbeing first.