The recent ban on credit card surcharges in Australia has coincided with notable price increases at cafes and restaurants, prompting experts to suggest that businesses may be using the reform as a pretext to implement broader price hikes. The prohibition on surcharges of around 1.5% took effect on October 1 as part of a Reserve Bank-led initiative intended to enhance pricing transparency and reduce banking fees for consumers.

Data from Small Flat White, an online coffee price tracker, shows that 17% of cafes have raised their prices since the surcharge ban began. Among those, the average price increase for coffee was approximately 50 cents, representing a rise of more than 10%—significantly higher than the typical surcharge amount. The tracker surveyed over 1,500 cafes for this analysis.

Stephen Wu, an economist at UBS, commented that persistent consumer demand amid a high inflation environment may be enabling businesses to use the ban as an opportunity to pass on wider cost pressures to customers. “Following years of above-target inflation, consumers may be more accepting of price rises,” he said, adding that evidence of “round-up” pricing suggests that pass-throughs frequently exceed the value of the surcharge itself.

The Australian Competition and Consumer Commission (ACCC) has cautioned businesses against misleading consumers by attributing price increases solely to the surcharge ban when other factors contribute to higher costs. The regulator also warned that attempting to circumvent the surcharge ban by rebranding surcharges under different names could constitute misleading conduct.

Wes Lambert, chief executive of the Australian Restaurant & Cafe Association, noted that while coffee prices in Australia remain among the lowest globally, businesses face rapidly rising costs across the board, including produce prices, steep rent expenses, and recent changes to junior pay rates and awards. He suggested that the removal of card surcharges may have provided an impetus or “catalyst” for some cafes and restaurants to begin passing these accumulated costs onto customers.

Lambert further highlighted the impact of four interest rate hikes in 2026, which have made repayments on variable-rate loans and equipment financing more expensive for many business owners. “It should be no surprise that in a high inflation, high interest rate environment, businesses are going to raise their prices,” he said.

Despite the surcharge ban being announced well in advance, it has sparked significant pushback from small business groups. The controversy escalated when the Australian Taxation Office (ATO) announced it would no longer accept credit card payments for tax liabilities. In response, Treasurer Jim Chalmers intervened, promising additional government funding to the ATO to cover surcharge costs until mid-2027.

Morgan Campbell, head of policy at consumer advocacy group Choice, acknowledged that some price increases were expected following the ban but emphasized that consumers ultimately benefit from clearer upfront pricing. “I don’t think there’s any shock in the way this is working,” she said, noting that the Reserve Bank anticipates businesses will seek more cost-effective banking options over time. Campbell also stated it was premature for Choice to conduct its own comprehensive assessment of the ban’s effects and encouraged consumers to respond based on their own experiences if they observe disproportionately large price increases.