Blasted as greedy and out of touch, Commonwealth Bank announced it would shift all customers with a "Complete Access" account to a "Smart Access" account, which includes an "assisted withdrawal fee".
The $3 fee hits customers when they take cash out from bank branches, post offices or over the phone, but it does not include withdrawals from ATMs.
But after a near 24-hour bashing from all sides of politics, the bank's head of retail services Angus Sullivan on Wednesday announced a temporary reversal of the charge for those likely to take a hip-pocket hit.
Customers will not be charged the $3 fee to withdraw cash from ATMs. (David Mariuz/AAP PHOTOS)
For the estimated 100,000 customers who would have been worse off due to the change, the bank will not enforce the change for at least the next six months.
"Those we expect might be slightly worse off and need more support in making sure their banking arrangements are appropriate, we're going to pause the changes we announced," Mr Sullivan said.
"We're going to spend the next six months individually engaging with those customers to make sure we have a solution tabled for each one of them rather than a simple migration across to a Smart Access account."
Those who would have been better off or in the same position due to the account switch will still move across.
Age, service and disability pensioners, customers aged under 18 and people with disabilities that require them to use branches would already have the fee waived.
It is also waived if more than $2000 is deposited into the account in a month.
But that did not stop a pile-on from prominent politicians, who earlier urged the bank to reconsider the decision.
"People understand there's some charges relating to banking transactions, but this seems pretty extraordinary to have a charge of this size for a simple transaction of going into a bank and withdrawing your own money," Finance Minister Katy Gallagher told Nine's Today program.
Fellow Labor minister Clare O'Neil said the proposal was a "kick in the guts".
"Everyone's had a bit of a tough year on the cost-of-living front … come on guys, it's Christmas, we don't need this right now," she told Seven's Sunrise.
The bank said its fees on the Smart Access account, its main transaction account, had not changed and it continued to offer withdrawal fee waivers for eligible customers.
But Liberal senator Jane Hume said customers would vote with their feet and close their accounts - including herself.
"I have a Commonwealth Bank account I've had since I was at university, I will be shutting it because of this decision," she said.
Finance Minister Katy Gallagher described Commonwealth Bank's fee as 'pretty extraordinary'. (Mick Tsikas/AAP PHOTOS)
"I don't know whether it's a Complete Access account or not (but) it's a bad decision and I will be shutting my account."
Independent MP Monique Ryan said the move showed cash was under threat in Australia.
The government recently announced a proposed mandate for businesses like supermarkets, pharmacies and petrol stations that sell essential items to accept cash payments.
About 94 per cent of businesses accept cash, but this is down from 99 per cent before the COVID-19 pandemic.
17°C