Small businesses have largely absorbed the cost of the new credit and debit card surcharge ban, but rising prices may soon follow as financial pressure mounts. According to an analysis by Tyro, one of Australia’s top Eftpos providers, only 12.4% of merchants raised prices in the three weeks after the ban took effect on October 1. The data covers 65,000 businesses in hospitality, retail, and services.
The ban, enforced by the Reserve Bank of Australia, removed fees merchants could add to card transactions. While many businesses avoided immediate price hikes, the decision came as other costs, rent, wages, and supplier expenses, were already climbing. The RBA’s fifth interest rate rise this year, announced this month, adds further strain.
Tyro’s CEO, Nigel Lee, said some businesses had delayed price increases for 12 to 18 months before the surcharge change. He noted that while card surcharges are gone, the underlying cost of processing payments remains. “Most of them are saying it’s rent, it’s electricity, it’s people costs,” he said. “They’ve been trying to hold back the tide on much of that.”
Businesses that did raise prices increased them beyond their previous surcharge levels, suggesting a direct response to lost revenue. Tyro expects more merchants to follow suit in the next six months. The latest rate hike will likely worsen consumer spending power, Lee said, as higher borrowing costs reduce disposable income.
Small business leaders warn the pressure is unsustainable. Skye Cappuccio, CEO of the Council of Small Business Organisations Australia, said the RBA’s rate rises create three major challenges: consumers with less spending money, higher business borrowing costs, and small business owners struggling with their own mortgages. “These pressures come on top of rising core business costs, significant increases in fuel costs, low consumer confidence, the cashflow impact of Payday Super and the ban on card surcharging,” she said.
The RBA justified the surcharge ban by stating the fees were no longer effective and had become overly complex. Many merchants previously charged 1% to 1.5% on card transactions, but the ban removed that option. Cappuccio acknowledged that some businesses absorbed the cost to stay competitive, but others now face a breaking point. “Many small business owners feel like it has been one hit after another,” she said, adding that the strain is affecting mental health and financial stability.
