ATO to stop accepting credit card payments after November 30, warns of cash flow impact

Why This Matters

• Businesses that rely on credit cards for cash flow management will need to find alternative payment methods, potentially increasing the risk of late payments or use of more expensive credit options.
• The change reflects a broader shift in payment practices as surcharging bans alter the economics of card acceptance, potentially leading to reduced payment flexibility.
• The ATO's own admission of cash flow impact indicates the agency recognises the burden this may place on small and medium enterprises.

Background

The Australian government has introduced a ban on card surcharging, which prohibits merchants from adding a fee to credit and debit card transactions. The ATO has cited this ban as the reason for ending credit card acceptance, as the agency previously relied on surcharging to cover the cost of processing those payments.

Key Perspectives

ATO: The agency says the change is a direct result of the new surcharging ban and acknowledges it may make cash flow management harder for taxpayers paying by credit card. Business groups: Critics argue the decision will disrupt established payment practices and create cash flow challenges, particularly for businesses that rely on credit cards to manage timing of tax payments.

What to Watch

• Whether the ATO introduces alternative payment methods, such as direct debit or other electronic options, before the November 30 deadline.
• The response from business organisations and potential calls for the decision to be reconsidered.
• The impact on tax payment timeliness and compliance rates following the change.