Banks must cancel direct debits on request. Why isn’t it the same for card payments?

Have you ever noticed that cancelling some subscriptions feels as simple as walking out a clearly marked “exit” door, while others are like trying to escape a complex maze? It’s one of the big frustrations of modern life.

Relief could be on the horizon in Australia, as the federal government presses ahead with plans to crack down on unfair trading practices – including such “subscription traps”.

This month, the government introduced proposed new laws to parliament, which would force businesses to make cancelling a subscription “straightforward”, “easy to find” and only require “steps that are reasonably necessary”.

However, the tactics used to lock in subscribers keep changing, often faster than regulation can keep up. Consumers should also have other options at their disposal.

Right now, for subscriptions paid via a direct debit, consumers can call their bank and ask them to cancel the payment, which the bank must do.

But surprisingly, unlike in some other countries, Australian law doesn’t require banks to do the same if a consumer requests to cancel a recurring credit or debit card payment.

Banks can still choose to do so. Some Australian banks have announced they are rolling out new subscription management features in their apps. But others tell a customer to contact the merchant instead.

Australians deserve equal cancellation rights through their bank, regardless of the payment method used. It’s their money, after all.

The promise of easier cancellations

A few decades ago, the subscription model was only common in a few key corners of the economy, such as gym memberships and newspaper or magazine deliveries.

Now, it’s everywhere: from streaming TV, music and gaming services to shopping apps and home-delivered meal kits.

Industry research firm Telsyte estimates there were more than 50 million entertainment subscriptions in Australia in 2025, roughly two per person. And that is just entertainment. Add in all the other types of subscription, and the number is much higher.

The government’s broader crackdown isn’t just targeting subscription traps. It has also singled out “drip pricing”, where extra fees are added to the price originally displayed, and any other tactics that “unreasonably distort” the environment where a consumer makes decisions.

How banks could help

The proposed laws focus on how consumers cancel subscriptions with the business they signed up with. But this says little about the role of banks, even though banks could make it much easier to stop these payments with just a call or a tap in their app.

That option exists now for direct debits, which are different from recurring payments. When you set up a direct debit, you are authorising a service provider to withdraw a certain amount of money directly from your account at specified times.

If you ask a bank to cancel a direct debit from your account, they must immediately stop the payment. They can’t ask you to contact the service provider first.

Direct debit still remains widely used for recurring payments, and some subscriptions have a direct debit option. But it’s more commonly used for bills, particularly essential services such as energy and phone bills.

Most online payments are now made using credit or debit cards, which don’t have this cancellation protection under the law.

How other countries make it easier

Australia’s lagging behind other countries on this.

For example, in the United Kingdom, if you ask your bank to stop a recurring card payment, they have to do it, even if you haven’t spoken to the business first.

In India, banks are required to give customers an online way to cancel, pause or manage recurring payments on their cards.

And in the European Union, consumers have the right to withdraw consent for recurring charges on any payment method, including cards, at any time, after which banks must stop further payments.

Why banks are the missing piece

There is no clear reason for this difference. It is mostly a result of how payment systems evolved, not any deliberate decision about what is fair.

Direct debits were built for everyday bills such as electricity, water and internet. You give a company permission to take money from your bank account automatically. But you stay in control.

Cards were originally built for point-of-sale transactions, and only later adapted to handle recurring payments as subscriptions became more common. The systems for stopping those payments never really caught up.

Card networks Mastercard and Visa have already introduced tools to allow banks to show and manage subscriptions inside their apps. This gives users the ability to see, manage and cancel recurring payments, without dealing directly with the business.

The question is why more Australian banks are not using those tools, or building their own, and whether they will without being required to by the law.

Giving consumers another tool

A simple change could close the gap: giving consumers the same right to stop card-based subscription payments through their bank as they already have for direct debits.

Treasury, the Australian Securities and Investments Commission, and the Reserve Bank of Australia’s Payments System Board are the natural places to drive this. This could be done through an extension of the ePayments Code, or a targeted obligation on banks to offer basic subscription controls for card payments.

Banks sit at the centre of every payment their customers make. They have the data, the functionality and the ability to act.

But unless they are required to do so, making cancellations easier likely won’t be a priority for the sector.