A ban on card payment surcharges took effect on 1 October, and some cafes and restaurants have responded by raising menu prices, ABC News and The Guardian reported. Small Flat White, an online platform tracking prices across more than 1,500 cafes, found that 17% of cafes raised prices after the date, with a typical increase of 50 cents per coffee.
The surcharge ban was led by the Reserve Bank of Australia and was intended to improve pricing transparency for customers and ultimately reduce bank fees. The RBA had stated that prices would rise by only about 0.1% as a result of the ban. The typical card surcharge before the ban was around 0.5 to 1.5% of a transaction's value, meaning the 50-cent increase on coffee is roughly 10% of the coffee price.
UBS economist Stephen Wu said resilient consumer demand and elevated inflation may be allowing merchants to use the surcharge ban as a reason to pass through broader cost pressures. After years of above-target inflation, consumers may have become more tolerant of price increases, Wu said, and pricing patterns in items such as coffee suggest the pass-through could exceed the surcharge amount.
Morgan Campbell, head of policy at Choice, said that where businesses are raising prices by more than the surcharge amount, it is for customers to decide how to respond. Campbell said consumers are better off knowing the price upfront, and that it was always acknowledged some businesses would raise prices following the ban.
Prior to the ban, roughly 16% of businesses were charging surcharges, and the RBA said the reform aimed to reduce card acceptance costs, with small businesses a particular focus. The RBA stated that the former surcharging system was no longer functioning as intended, with surcharges having become hard for consumers to avoid. Some businesses have responded to the ban by moving to cash-only payments or accepting bank transfers instead.
Consumers paying by card at cafes and restaurants may find the final cost of a purchase higher than before the ban for those who previously paid with cash or low-cost payment methods. Small business owners who are no longer permitted to charge a surcharge face higher costs, and some are responding by raising prices, switching to cash-only transactions, or accepting bank transfers.
Reporting: The Guardian, ABC News
Written by Pick & Scroll News from the reporting and documents linked above.
