Small businesses struggle with rising costs as changes in card surcharge payments loom

Small businesses in regional Australia are struggling to stay afloat as rising costs and changes to card surcharge payments loom large. In the town of Keith, a natural halfway point between Melbourne and Adelaide, Sunday afternoon is usually a quiet time, but for clothing shop owner Francene Martin, today was a particularly tough day.

Ms Martin's store, Retail Therapy, was closed, and she had not made a single sale. She says she feels "constant pressure" from mega competitors like Amazon, Temu and Shein. "I was quite despondent," Ms Martin said. "I've been in the town 16 years, and even with a 50 per cent off sale, I didn't make a single cent."

Cost creep 'crippling' for small operators

In Ballarat, one of Victoria's largest regional centres, Frazer Wyley, operations and social media manager at Prey cafe, has taken to social media to share his experiences. "When I made the post, I was originally thinking about all our beautiful friends in hospitality and retail who are closing their doors or thinking about closing," he said. "I think it's been a conversation that a lot of people don't have in the open."

Mr Wyley highlighted the slim margins small businesses already occupy, and the impact of changes to EFTPOS charges. "Right now, thousands of operators are sitting up after close, staring at the week's takings and asking the same question, 'How do I make this work?'"

He pointed to the costs involved in running a cafe, including the cost of a cup of coffee. "Inside that cup of coffee are so many expenses; the cup, the lid, the water, the wages, the super, EFTPOS fees, the ingredients, when you break it down … the margins are so slim," he said in his social media post. "We're talking less than 10 cents."

Call to action

Mr Wyley urged customers to support small businesses in their local towns. "If you have some favourite businesses, or you see a new one opening, put them on a roster. If you can visit in store, that really goes a long way to helping keep doors open," he said. "We need to share the love around and keep these communities strong together."

Ms Martin echoed this call to action, saying she was determined to meet the challenges to keep her store open. "Obviously, I can't compete with those businesses, but I have things they don't have. I've built up a rapport with my customers, I know their names, their stories, their size and style. It's a partnership."

National trends

According to CreditorWatch's Business Risk Index for August, one in eight Australian cafes and restaurants have closed in the past year. Payment defaults are also rising nationally for the third consecutive month.

CreditorWatch chief economist Ivan Colhoun said this year was one of mounting "shocks" for small businesses, particularly via changes in e-commerce, rising inflation and higher interest rates. "The cost of things is much higher than it was five years ago so even if inflation slows it doesn't mean prices are going down and these costs have reversed, it just means they're going up at a slower rate," he said.