Cafes, small businesses fear brunt of surcharge cut

The Advertiser

16-07-2025

After the morning rush of lattes and flat-whites flying out the door, Alan Low likes to settle in with his own coffee and try to balance his cafe's books.
The exercise could become even trickier after the Reserve Bank of Australia proposed to remove surcharges on EFTPOS, Mastercard and Visa card transactions, which could save consumers $1.2 billion a year.
But the inner-Sydney cafe owner feels small businesses have been left out of the equation.
Every cent counts with a necessary $12,000-$15,000 a year collected through surcharges on the volume of sales Mr Low's cafe does.
"There's nothing that is actually cheap for us," he told AAP.
"There has to be one way that is actually to help us substitute it out
"There's no way for us to absorb the cost anymore ... and the last thing we want is to jack up the prices for customers."
Lowering the cap on interchange fees - another RBA recommendation - could save the sector $1.2 billion.
The fee is paid by a business to a customer's card issuer when a transaction occurs.
But for Mr Low - who rattled off a list of exorbitant expenses ranging from electricity, wages and insurance - the expected changes could have an impact.
Small business owners face the same inflationary pressures that have hit consumers in recent years, he said.
The cafe's margins have taken a hit as workers come into the city less frequently and residential buildings eat up spaces.
The peak hospitality body also slammed the RBA's decision, saying it does not go far enough to help small businesses out.
"To put it bluntly, it's a political fix – not a solution," Australian Hotels Association chief executive Stephen Ferguson said.
"The RBA policy to ban surcharges just covers up the problem."
But RMIT academic Angel Zhong was more upbeat, arguing the changes would overhaul an outdated transaction system and foster competition in payment services.
"Small businesses stand to gain significantly from both the surcharge ban and interchange fee caps," she said.
"With lower processing costs and simplified pricing, they can focus on serving customers rather than navigating complex payment fees."
Dr Zhong warned "the transition needs careful monitoring" and it remains to be seen if and when actual savings filter down to businesses and consumers.
Following news of the proposed changes, three-quarters of more than 3000 customers surveyed by financial comparison site Canstar said the fees should be banned.
A survey of more than 1000 people commissioned by Visa earlier in July reported 85 per cent would prefer surcharges be built into upfront prices rather than charged separately.
The payments provider said reducing interchange fees risked hampering local investment in fraud protection.
"This is a dramatic shift that would have ripple effects far beyond payments," Visa Oceania manager Alan Machet said.
After the morning rush of lattes and flat-whites flying out the door, Alan Low likes to settle in with his own coffee and try to balance his cafe's books.
The exercise could become even trickier after the Reserve Bank of Australia proposed to remove surcharges on EFTPOS, Mastercard and Visa card transactions, which could save consumers $1.2 billion a year.
But the inner-Sydney cafe owner feels small businesses have been left out of the equation.
Every cent counts with a necessary $12,000-$15,000 a year collected through surcharges on the volume of sales Mr Low's cafe does.
"There's nothing that is actually cheap for us," he told AAP.
"There has to be one way that is actually to help us substitute it out
"There's no way for us to absorb the cost anymore ... and the last thing we want is to jack up the prices for customers."
Lowering the cap on interchange fees - another RBA recommendation - could save the sector $1.2 billion.
The fee is paid by a business to a customer's card issuer when a transaction occurs.
But for Mr Low - who rattled off a list of exorbitant expenses ranging from electricity, wages and insurance - the expected changes could have an impact.
Small business owners face the same inflationary pressures that have hit consumers in recent years, he said.
The cafe's margins have taken a hit as workers come into the city less frequently and residential buildings eat up spaces.
The peak hospitality body also slammed the RBA's decision, saying it does not go far enough to help small businesses out.
"To put it bluntly, it's a political fix – not a solution," Australian Hotels Association chief executive Stephen Ferguson said.
"The RBA policy to ban surcharges just covers up the problem."
But RMIT academic Angel Zhong was more upbeat, arguing the changes would overhaul an outdated transaction system and foster competition in payment services.
"Small businesses stand to gain significantly from both the surcharge ban and interchange fee caps," she said.
"With lower processing costs and simplified pricing, they can focus on serving customers rather than navigating complex payment fees."
Dr Zhong warned "the transition needs careful monitoring" and it remains to be seen if and when actual savings filter down to businesses and consumers.
Following news of the proposed changes, three-quarters of more than 3000 customers surveyed by financial comparison site Canstar said the fees should be banned.
A survey of more than 1000 people commissioned by Visa earlier in July reported 85 per cent would prefer surcharges be built into upfront prices rather than charged separately.
The payments provider said reducing interchange fees risked hampering local investment in fraud protection.
"This is a dramatic shift that would have ripple effects far beyond payments," Visa Oceania manager Alan Machet said.
After the morning rush of lattes and flat-whites flying out the door, Alan Low likes to settle in with his own coffee and try to balance his cafe's books.
The exercise could become even trickier after the Reserve Bank of Australia proposed to remove surcharges on EFTPOS, Mastercard and Visa card transactions, which could save consumers $1.2 billion a year.
But the inner-Sydney cafe owner feels small businesses have been left out of the equation.
Every cent counts with a necessary $12,000-$15,000 a year collected through surcharges on the volume of sales Mr Low's cafe does.
"There's nothing that is actually cheap for us," he told AAP.
"There has to be one way that is actually to help us substitute it out
"There's no way for us to absorb the cost anymore ... and the last thing we want is to jack up the prices for customers."
Lowering the cap on interchange fees - another RBA recommendation - could save the sector $1.2 billion.
The fee is paid by a business to a customer's card issuer when a transaction occurs.
But for Mr Low - who rattled off a list of exorbitant expenses ranging from electricity, wages and insurance - the expected changes could have an impact.
Small business owners face the same inflationary pressures that have hit consumers in recent years, he said.
The cafe's margins have taken a hit as workers come into the city less frequently and residential buildings eat up spaces.
The peak hospitality body also slammed the RBA's decision, saying it does not go far enough to help small businesses out.
"To put it bluntly, it's a political fix – not a solution," Australian Hotels Association chief executive Stephen Ferguson said.
"The RBA policy to ban surcharges just covers up the problem."
But RMIT academic Angel Zhong was more upbeat, arguing the changes would overhaul an outdated transaction system and foster competition in payment services.
"Small businesses stand to gain significantly from both the surcharge ban and interchange fee caps," she said.
"With lower processing costs and simplified pricing, they can focus on serving customers rather than navigating complex payment fees."
Dr Zhong warned "the transition needs careful monitoring" and it remains to be seen if and when actual savings filter down to businesses and consumers.
Following news of the proposed changes, three-quarters of more than 3000 customers surveyed by financial comparison site Canstar said the fees should be banned.
A survey of more than 1000 people commissioned by Visa earlier in July reported 85 per cent would prefer surcharges be built into upfront prices rather than charged separately.
The payments provider said reducing interchange fees risked hampering local investment in fraud protection.
"This is a dramatic shift that would have ripple effects far beyond payments," Visa Oceania manager Alan Machet said.
After the morning rush of lattes and flat-whites flying out the door, Alan Low likes to settle in with his own coffee and try to balance his cafe's books.
The exercise could become even trickier after the Reserve Bank of Australia proposed to remove surcharges on EFTPOS, Mastercard and Visa card transactions, which could save consumers $1.2 billion a year.
But the inner-Sydney cafe owner feels small businesses have been left out of the equation.
Every cent counts with a necessary $12,000-$15,000 a year collected through surcharges on the volume of sales Mr Low's cafe does.
"There's nothing that is actually cheap for us," he told AAP.
"There has to be one way that is actually to help us substitute it out
"There's no way for us to absorb the cost anymore ... and the last thing we want is to jack up the prices for customers."
Lowering the cap on interchange fees - another RBA recommendation - could save the sector $1.2 billion.
The fee is paid by a business to a customer's card issuer when a transaction occurs.
But for Mr Low - who rattled off a list of exorbitant expenses ranging from electricity, wages and insurance - the expected changes could have an impact.
Small business owners face the same inflationary pressures that have hit consumers in recent years, he said.
The cafe's margins have taken a hit as workers come into the city less frequently and residential buildings eat up spaces.
The peak hospitality body also slammed the RBA's decision, saying it does not go far enough to help small businesses out.
"To put it bluntly, it's a political fix – not a solution," Australian Hotels Association chief executive Stephen Ferguson said.
"The RBA policy to ban surcharges just covers up the problem."
But RMIT academic Angel Zhong was more upbeat, arguing the changes would overhaul an outdated transaction system and foster competition in payment services.
"Small businesses stand to gain significantly from both the surcharge ban and interchange fee caps," she said.
"With lower processing costs and simplified pricing, they can focus on serving customers rather than navigating complex payment fees."
Dr Zhong warned "the transition needs careful monitoring" and it remains to be seen if and when actual savings filter down to businesses and consumers.
Following news of the proposed changes, three-quarters of more than 3000 customers surveyed by financial comparison site Canstar said the fees should be banned.
A survey of more than 1000 people commissioned by Visa earlier in July reported 85 per cent would prefer surcharges be built into upfront prices rather than charged separately.
The payments provider said reducing interchange fees risked hampering local investment in fraud protection.
"This is a dramatic shift that would have ripple effects far beyond payments," Visa Oceania manager Alan Machet said.