Australia’s sweeping card surcharge ban has scrapped extra checkout fees on retail purchases, including coffees, clothes and groceries, with businesses warning higher prices could eat into shoppers’ savings.
Thursday’s ban covers Visa, Mastercard, eftpos and American Express payments. The Reserve Bank of Australia estimates consumers paid $1.6 billion a year in surcharges on Visa, Mastercard and eftpos.
Bayswater cafe owner Rob Strahan said absorbing card fees would threaten The Oarhouse, which he runs with his wife Nic on the Swan River.
“It’s absolutely not savings because the bank charges are still there. So either I absorb it and I go broke, or I pass it on,” he said.
The Reserve Bank expects shoppers to pay less overall as lower processing costs flow through to prices. It forecasts about $910 million in annual reductions in merchants’ costs once domestic and foreign-card fee changes are in place.
Canstar data insights director Sally Tindall welcomed clearer checkout pricing.
“The big win here is certainty. If the price on the shelf says $100, consumers should be able to pay $100 without a surprise fee appearing at the checkout,” she said.
At The Oarhouse, a 12-ounce coffee has risen from $6 to $6.50.
Mr Strahan said the ban helped prompt the increase after two years without a price change. He said supplier costs had recently risen about 20 per cent, while staff had received three pay rises since the last increase.
Including the cafe’s previous 1.8 per cent card surcharge, that coffee cost about $6.11. A card customer now pays about 39¢ more, while someone paying cash faces the full 50¢ increase.
“Now the beauty of being able to pass on the surcharge was that if you paid cash, you weren’t penalised, and if you paid with a card, then you knew that fee was yours,” Mr Strahan said.
The cafe absorbed about $15,000 in card fees in its first year before charging customers separately, he said.
“We live in a largely cashless society, so not accepting card payments is not a realistic option for most businesses,” Chamber of Commerce and Industry WA chief executive Will Golsby said.
Mr Strahan’s online notice explaining the price rise has attracted thousands of views.
“The comments have been largely very positive,” he said, acknowledging some complaints.
Darkstar Coffee assistant manager Marcus Cozza has been speaking to cafe owners across the wholesaler’s WA network, which stretches from Exmouth to Albany and throughout metropolitan Perth.
Some had added 50¢ to coffees, while others were absorbing the fees, he said.
Australian Chamber of Commerce and Industry chief executive Andrew McKellar said operators had used surcharges to recover merchant fees, warning the ban was “pushing up prices and hurting small business”.
Darkstar, which also runs a cafe and sells equipment, had already built payment costs into its prices.
“For us, we’re not going to put the price up because it’s kind of integrated already,” Mr Cozza said.
The Reserve Bank estimates about 16 per cent of merchants previously surcharged and expects businesses already absorbing fees to benefit from lower processing costs.
Mr Cozza feared rising menu prices would deter customers, reducing trade for cafes and the wholesalers supplying them.
He had urged cafe owners to contact their payment providers and negotiate lower rates, and planned to do the same for Darkstar.