Card surcharge ban used as 'cover' for larger price increases, Australian experts say

Cafes and restaurants pass on increases beyond the typical 1.5% fee, tracker data and economists suggest

By LineZotpaper

Published13 October 2026

Read Time2 min

Sources3 outlets

Australian businesses are using the ban on credit card surcharges as cover to push through price increases far larger than the roughly 1.5% fee it replaced, experts say, as cafes and restaurants struggle with climbing costs and rising interest rates.

The ban on credit card surcharges, in force since 1 October, is being used by some Australian businesses as cover to raise prices by far more than the typical 1.5% transaction fee, experts say.

Small Flat White, an online coffee price tracker, found that 17% of cafes have increased their prices since the ban took effect. Among those that raised coffee prices, the average increase was 50 cents, or more than 10%, according to a survey of more than 1,500 cafes. That is several times the size of the old surcharge.

The reform, led by the Reserve Bank of Australia, was intended to improve transparency for customers and, ultimately, to lower bank fees.

Stephen Wu, an economist at investment bank UBS, said resilient consumer demand and a high inflation environment "may be allowing merchants to use the change as 'cover' to pass through broader cost pressures".

"Following years of above-target inflation, consumers may be more accepting of price rises," Wu said. "Evidence of 'round-up' pricing in items such as coffee suggests pass-through could exceed the surcharge itself."

The Australian Competition and Consumer Commission has warned businesses that they must not mislead consumers by claiming a price rise is due to the surcharge ban when the increase also reflects other costs. It has also said businesses that try to avoid the ban by describing the surcharge as another type of fee or charge "may be engaging in misleading conduct".

Wes Lambert, chief executive of the Australian Restaurant & Cafe Association, said business costs were rising rapidly while coffee prices in Australia were among the lowest in the world. He said businesses changed prices for many reasons, and that the ban could have been the impetus for owners to build up the courage to pass on costs.

"Maybe this is the catalyst that has caused cafes and restaurateurs around the country to wake up."

Lambert pointed to higher produce costs, steep rents and recent adjustments to junior pay rates and awards. Many business owners are also affected by four interest rate rises in 2026, which have driven up repayments on variable-rate loans and equipment financing.

Analysis

Why This Matters

Consumers may be absorbing price increases far larger than the abolished surcharge, undercutting the transparency goals of the reform.
Hospitality businesses are caught between rising costs and squeezed customers, and the ban has become part of that pricing debate.
ACCC warnings signal possible enforcement action against businesses that attribute broader increases to the ban.

Background

The surcharge ban took effect on 1 October as a Reserve Bank-led reform covering credit card fees that typically added about 1.5% to transactions. Its stated aims were to improve transparency for customers and, ultimately, to lower bank fees. It arrives after years of above-target inflation, with four interest rate rises in 2026 adding financial pressure to businesses and households alike.

Key Perspectives

Hospitality businesses: The Australian Restaurant & Cafe Association says costs for produce, rent and wages are climbing quickly, and coffee in Australia remains among the cheapest in the world. In this view, owners have adjusted prices for many reasons, and the ban was a catalyst, not the cause, of increases that were already needed.

Regulators: The ACCC has drawn a clear line. Claiming a price rise is due to the surcharge ban when other costs are also involved could mislead consumers, and renaming surcharges as other types of fees could be misleading conduct.

Economists: UBS economist Stephen Wu points to resilient demand and high inflation as conditions allowing merchants to pass through "broader cost pressures". Evidence of round-up pricing in coffee suggests the increases go well beyond the old surcharge, meaning consumers may be paying more than the reform was meant to save them.

What to Watch

Whether the ACCC moves from warnings to enforcement action against specific businesses.
Cafe pricing data from Small Flat White, an early indicator of how widespread the practice becomes across other sectors.
Whether price behaviour eases if inflation and interest rate pressures moderate in coming months.

Sources

Card surcharge ban used as ‘cover’ for larger price increases by Australian businesses, experts say — World news | The Guardian
Card surcharge ban used as ‘cover’ for larger price increases by Australian businesses, experts say — Australia news | The Guardian
Card surcharge ban used as ‘cover’ for larger price increases by Australian businesses, experts say — Business | The Guardian