New regulations prohibiting credit card surcharges took effect across Australia last Thursday, prompting a mixed response from businesses and political figures. The change, introduced by the Labor government and the Reserve Bank of Australia, aims to save consumers an estimated A$1.6 billion annually in fees by banning additional charges of up to 2 percent on card or phone payments.

Under the new rules, retailers and service providers can no longer impose extra costs on customers choosing to pay via credit or debit card. While consumer advocates have welcomed the move, small business owners have raised concerns about its financial impact.

Many operators say they relied on the ability to levy surcharges to offset the fees charged by payment providers. Without this option, some warn they may need to increase prices overall to cover costs. Lily Nguyen, a nail technician, said the ban could force her to raise prices. “If we have to pay a lot of tax we have to increase the price,” Nguyen said, noting that most customers prefer contactless payments.

Similarly, bakery owner Christiana Daaboul described cash flow difficulties stemming from the inability to use credit cards to delay payments, such as those related to her Business Activity Statement. “If I don’t have the cash flow, I’m screwed and then penalties incur,” she said.

Political debate has ensued since the ban’s introduction. Prime Minister Anthony Albanese was criticized after a social media video suggested the measure would lead to cheaper coffee purchases for consumers. Representatives from the hospitality sector countered that any savings on fees would likely be offset by price increases elsewhere.

Opposition Leader Angus Taylor condemned the government’s policy, calling it “the most anti-small business government in Australian history.” He urged the Prime Minister to repeal the ban, arguing the government was making it more difficult for small businesses to operate amid rising costs for power, rent, and supplies. He specifically criticized the move as impeding businesses’ ability to manage tax payments through credit.

The government has defended the policy as a consumer-protection measure, intended to reduce the hidden costs consumers face when using electronic payment methods. However, the backlash from segments of the small business community highlights ongoing tensions between regulatory efforts aimed at consumers and the operational realities faced by merchants. The long-term effects of the new ban on pricing and business viability remain to be seen.