Share and Follow
Starting October 1, businesses will no longer be able to impose card surcharges on transactions, a change that requires them to shoulder the costs previously transferred to customers.
However, this shift might lead to increased prices in places like cafes, restaurants, and local convenience stores.
Fei Gao, a lecturer at the University of Sydney’s Business School, explains that many businesses may respond to the surcharge removal by raising their prices to compensate for the absorbed costs.
“The surcharge will be integrated into the overall price of goods,” Gao informed nine.com.au.
Particularly vulnerable to this change are small businesses in the hospitality sector, such as cafes, restaurants, and corner shops, which will feel the impact of the new card surcharge rules most acutely.
Gao predicts some will hike prices early to try to manage new costs.
“They want to adapt to the change sooner than others, so they will start to incorporate it earlier,” Gao said.
Regardless of when businesses increase prices, one thing remains the same: Aussies who still pay with cash will be worse off.
That’s because price hikes will apply to all customers, not just those who pay by card.
Australian Hotels Association chief executive Stephen Ferguson told nine.com.au Aussies who have remained loyal to cash are getting the short end of the stick.
He said the RBA’s decision “doesn’t pass the pub test” and will only hurt consumers and small business.
“The costs that we have to pass on to consumers are too high,” he told nine.com.au.
“There needs to be proper safeguards to ensure that any benefit flows back through to small business, so that benefits can be passed to savings can be passed to consumers.”
As well as scrapping card surcharges, the RBA will also reduce interchange caps for domestic card transactions on October 1 to lower businesses’ costs.
But Ferguson’s worried small businesses will never actually see the benefits.
“What we saw in Canada when interchange was lowered was that the big payment providers simply pocketed that that money themselves,” he said.
“There needs to be proper safeguards to ensure that any benefit flows back through to small business, so that benefits and savings can be passed to consumers.”
Though the RBA’s decision hasn’t been popular with small businesses, Gao said there’s a silver lining for consumers.
Having card surcharges baked into the price of goods and services will make it easier for Aussies who pay by card to know what each purchase is going to cost them.
“It’s not entirely a bad thing to customers, in terms of transparency.”
NEVER MISS A STORY: Get your breaking news and exclusive stories first by following us across all platforms.