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Retailers warn of price rises despite RBA surcharge reforms

Small business owners say they are forced to raise prices to absorb remaining bank fees

By LineZotpaper
Published
Read Time2 min
Sources2 outlets
The Reserve Bank's sweeping reforms on credit and debit card surcharging, intended to save customers $1.6 billion annually, are prompting some retailers to increase their prices as they seek to recoup fees that remain payable to banks.

Salon owner Sheridan Shaw said she has been forced to raise her prices because absorbing the costs would be detrimental to her business. Using direct debit bank transfers to avoid fees is not an option; Ms Shaw cited reconciliation challenges and the burden of chasing failed payments. The Australian Hairdressing Council's chief executive Fiona Beamish said hairdressers across the country are concerned about having to raise prices and risk upsetting customers. "The clients are expecting to now not be charged this particular surcharge ... but it is really tough on business to be able to communicate [a price rise]," she said.

The Reserve Bank maintains that the reduction of interchange fees will save businesses $910 million a year. However, the Australian Chamber of Commerce and Industry (ACCI) disputes this. Chief executive Andrew McKellar said: "The reality is that for small businesses in particular, this won't save them money. There are no real winners in any of this because the costs will still be there." Mr McKellar also criticised the Australian Taxation Office's announcement that it will stop accepting credit card payments from November 30, calling it "a staggering double standard" that shows a lack of concern for small businesses.

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Analysis

Why This Matters

  • Consumers may not see the savings the RBA intended, as businesses pass on remaining costs through higher prices.
  • Small businesses, already under pressure from rising operating expenses, face the difficult choice of absorbing costs or risking customer backlash with price increases.
  • The dispute between the RBA and business groups highlights a gap between policy goals and on-the-ground realities.

Background

The Reserve Bank of Australia recently introduced reforms to cap interchange fees on credit and debit card transactions, aiming to reduce surcharging costs for consumers and businesses. The reforms ban surcharging on most card payments, but banks and payment providers continue to charge businesses certain fees that cannot be passed on to customers.

Key Perspectives

Small businesses and industry bodies: Salon owner Sheridan Shaw and the Australian Hairdressing Council argue that businesses cannot absorb the remaining bank fees, forcing them to raise prices. They fear losing customers who expected surcharges to disappear. Australian Chamber of Commerce and Industry (ACCI): CEO Andrew McKellar says the reforms will not save small businesses money and that costs will still be passed through to consumers. He also condemns the ATO's separate decision to ban credit card payments as hypocritical. Reserve Bank of Australia: The central bank maintains that the changes will save businesses $910 million annually, though it acknowledges that some costs remain.

What to Watch

  • Whether more retailers publicly announce price increases as a direct result of the reforms.
  • The November 30 deadline for the ATO's credit card payment ban, and any backlash or adjustments by businesses.
  • Further statements from the RBA or Treasury if the predicted savings fail to materialise for consumers.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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