Card surcharge ban to hit small businesses, cash may make a comeback

A ban on card surcharges is set to take effect from October 1, leaving some small businesses to consider raising prices or encouraging customers to pay with cash. The move, which aims to level the playing field, will prevent businesses across Australia from adding a surcharge to card payments.

For bakery owner Dylan McQueen, card fees were a significant expense last financial year, totaling $5,785. While he displayed signs reading "CASH PREFERRED," cash transactions accounted for only 16 per cent of his sales. "People pay for convenience," Mr McQueen said. "They pay for it without them even realising."

Mr McQueen never added a card surcharge, citing principle as his reason. "It's just out of principle; I don't believe in it," he said.

The Reserve Bank estimated that the change would save businesses $910 million each year. However, some business owners, like nursery owner Calum Haygarth, said they would need to raise prices to offset the costs. "It's not justifiable to be running a business going backwards, basically," he said. Mr Haygarth added that merchant fees made up "tens of thousands" in his annual operating costs.

For small items under $20, Mr Haygarth charged an extra 2.9 per cent for card-paying customers. "It's just another added cost that we really don't need," he said, adding that it would be unfair for cash customers.

Economist John Hawkins said about half of Australians used no cash in a typical week. "There's a significant number of people now who don't carry any cash with them," Dr Hawkins said. He added that businesses promoting cash use were more motivated by avoiding fees than by dodging taxes.

Dr Hawkins said the public did not appreciate that costs still existed for providing payments through cash as well. "One way or another people are going to have to pay for it and it's proper that they should," he said.

Mr Haygarth noted that while there were some costs for using cash, he did not believe they were comparable to the costs of running credit cards. "It wouldn't be anywhere near the cost of running credit cards," he said.