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Sydney businesses push cash as card surcharge ban bites

Owners reintroduce minimum payments and urge cash use, warning of thousands in lost revenue

By LineZotpaper
Published
Read Time1 min
Sources3 outlets
Small business owners across Sydney are reintroducing minimum amounts for card payments and putting up signs urging customers to pay cash, as they face losing thousands of dollars each year due to the new ban on card surcharges that took effect on October 1.

The Reserve Bank of Australia decided it was in the "public interest" to ban surcharges on card payments from October 1, a move Prime Minister Anthony Albanese said could make the cost of a cup of coffee cheaper. The changes were expected to save consumers $1.6 billion every year.

But economists have warned the new rules could be inflationary, as businesses raise prices to recoup electronic payment costs under the ban.

In Leichhardt, the owner of popular Italian trattoria La Botte Doro, Gabrielle Franco, has put up a sign saying "cash is king", encouraging people to pay cash. He estimates he stands to lose between $12,000 and $16,000 should he absorb the costs of electronic payments, noting he declared all income to the Australian Tax Office.

"I can't increase prices," Franco said. "It is a small business. I work seven days like a dog. The government is taking $16,000 out of my pocket."

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Analysis

Why This Matters

  • The ban was designed to lower costs for consumers, but businesses may instead raise prices broadly, potentially offsetting the intended savings.
  • Small businesses, especially in hospitality, operate on thin margins and the loss of surcharge revenue could force closures or reduced service.
  • The outcome will test whether government intervention in payment fees actually benefits consumers or creates new economic distortions.

Background

The ban on card surcharges was introduced by the Reserve Bank of Australia, which deemed it in the public interest. It took effect on October 1. The government promoted the change as a cost-of-living relief measure, with the Prime Minister using the example of a cheaper cup of coffee. However, businesses have long used surcharges to cover the merchant fees charged by payment networks, which typically range from around 1% to 3% per transaction.

Key Perspectives

Small Business Owners: They face absorbing costs they previously passed on to customers, with estimates of thousands of dollars in lost revenue per year. Some are turning to cash incentives and minimum card payment thresholds to manage the burden. Government and RBA: The policy aims to save consumers $1.6 billion annually by removing opaque surcharges, and was justified as being in the public interest. Economists: Some warn the ban could prove inflationary if businesses raise base prices to recover payment costs, ultimately negating consumer savings.

What to Watch

  • Whether more businesses introduce minimum card amounts or cash discounts in response.
  • Consumer prices in sectors like hospitality and retail for signs of inflation linked to the ban.
  • Potential government amendments or delays if the backlash continues, as flagged in related coverage.

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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