Card surcharge ban lifts business, strata and council costs
Australia’s prohibition on debit and credit card surcharges is shifting payment costs into advertised prices, strata levies and public-sector budgets, raising questions about whether consumers are receiving the savings promised by the reform.
The Reserve Bank of Australia’s ban took effect on 1 October. The Albanese government promoted the change as a consumer measure expected to save $1.6 billion a year, but the early response has been mixed. One in six cafes has increased coffee prices, while businesses that kept prices unchanged have had to absorb card-processing expenses.
Costs move beyond the checkout
The effects are extending beyond cafes and restaurants. Some doctors have raised consultation fees, some strata schemes have imposed higher levies, and some private schools have stopped accepting credit cards. Councils are also using ratepayer funds to meet processing costs.
The reported increase in strata levies shows that the policy’s effects are reaching property-related expenses, although the article does not quantify the size of those increases.
UNSW consumer behaviour professor Nitika Garg said households were already under financial pressure and remained highly sensitive to higher headline prices. That made it harder for consumers to recognise the benefit of removing a separate surcharge when the base price increased at the same time.
Small businesses warn of cash-flow strain
RMIT marketing professor Marian Makkar said some consumers were returning to cash to avoid other fees that businesses had added to advertised prices after losing surcharge revenue. She also said the change could encourage slower and more considered spending by reducing the convenience associated with card purchases.
A separate concern emerged after the Australian Taxation Office decided it would no longer accept credit card payments for tax liabilities. Small businesses warned that the restriction could create defaults because some operators rely on credit cards to manage limited cash flow.
Treasurer Jim Chalmers subsequently announced additional funding that would allow the ATO to delay the start of its credit card payment restriction by up to one year.
Hospitality and councils face added pressure
Justin Newton, who runs House Made Hospitality and sits on the Australian Restaurants and Cafes Association board, said higher prices could discourage customers from dining out.
His venues had increased prices twice over the previous year: first after a 4.65 per cent increase in award wages and again to compensate for lost surcharge revenue. Newton said customers could interpret repeated price increases as profiteering even though hospitality margins remained tight.
Local governments are also assessing the effect. Jared Wright, a Liberal member of Central Coast Council in NSW, said the changes could cost his council as much as $400,000 a year. He estimated that councils nationwide could spend up to $200 million on card-processing fees.
Wright argued that the additional expense was material because the same funding could otherwise support local infrastructure. His figures were presented as potential costs rather than confirmed expenditure.
SOURCE ATTRIBUTION:
Based on reporting by Campbell Kwan for AFR Weekend.
