Australia’s surcharge ban may shift card costs into cafe prices, tracker finds
Australian small businesses are challenging the surcharge ban, despite the government saying it will cut payment costs. Hospitality groups warn merchant fees…
Small businesses say Australia’s surcharge ban could shift card costs rather than remove them. Assistant Treasurer Daniel Mulino called the reform “a huge positive for business,” but hospitality representatives want the government to scrap it altogether.
The dispute comes as the government delayed a separate ban on businesses accepting credit card payments after pressure from the business community. The surcharge ban remains in place, and its early effects are already visible in some cafe prices.
Small Flat White, an online coffee price tracker, found that 17 per cent of cafes increased prices since the ban came into effect on October 1. Among cafes that raised prices, the average increase was 49c, or about 10.7 per cent.
For customers, the change means a card payment surcharge is no longer added at the till, but businesses may build payment costs into their prices. Whether consumers ultimately pay less depends partly on how merchant fees change and whether businesses can secure better deals from payment providers.
Disagreement over fees and savings
The Reserve Bank has capped interchange fees, paid by a business’s payment provider to a customer’s card issuer, and improved transparency around prices set by card networks. Mulino said the changes would save small businesses $900 million per year.
“The Reserve Bank, when they looked at this, saw that Australia was an outlier,” he told ABC’s Afternoon Briefing program on Friday. He said the reform was needed because consumers were frustrated at being charged a different price when they tapped their card.
Choice head of policy Morgan Campbell also backed upfront pricing. “Consumers are always better off knowing the price up-front rather than getting a surprise at the till through a surcharge,” he told AAP.
Campbell said merchants faced a one-off price increase when the ban began, but small businesses should be able to shop around for better deals with card providers over time. That, he said, should ultimately lower costs.
Wes Lambert, chief executive of the Australian Restaurant and Cafe Association, disputed the expected benefits. He said the changes could make scheme fees charged by card networks such as Eftpos and Visa less transparent. Merchant fees, which cover the total transaction fees businesses pay, could climb from around one per cent to US levels of 2.5-3 per cent, he warned.
“There is a low understanding of the actual payments industry,” Lambert said.
Hospitality businesses say costs are mounting
Lambert also challenged the Reserve Bank’s estimate that only 15 per cent of businesses imposed card surcharges before the ban. He said surveys showed 81 per cent of restaurant and cafe owners passed on some type of surcharge.
The disagreement matters for hospitality operators already dealing with higher inflation and wage costs. Lambert said those expenses were rising faster than restaurants and cafes could typically raise prices, squeezing their bottom lines. If payment fees also increase, businesses may face further pressure to adjust prices or absorb the costs.
Greens leader David Shoebridge said the government should have legislated to make banks pay card costs, rather than leaving consumers and small businesses to bear them.
“We are hopeful that both the RBA and the government will recognise the circus that this has created, and that they should rethink their position,” Lambert said.
Small Flat White’s tracker found that 17 per cent of cafes raised prices after the ban took effect on October 1.
Source: au.finance.yahoo.com
