Australian businesses have raised concerns that a recent government ban on card payment surcharges will lead to higher prices for consumers, challenging official claims that the policy will help lower living costs. The surcharge ban came into effect on October 1, 2026, following a review by the country’s central bank and competition regulators.
Under the new rules, businesses are no longer allowed to add surcharges ranging from 0.5% to 1.5% on payments made by credit or debit cards as opposed to cash. The Reserve Bank of Australia (RBA) also reduced the interchange fees paid by businesses for processing card transactions. The centre-left government contends that these measures will save Australians approximately A$1.6 billion (US$1.11 billion) annually in fees, with businesses expected to save around A$910 million.
Despite these projections, many business owners have said the surcharge ban will increase their operating costs and ultimately prompt price increases. Dre Walters, owner of two bars in Sydney, described the ban as an added financial burden alongside regular increases in alcohol taxes. “100% this will be passed on. I don’t know how the government is saying it will result in cheaper prices. It will definitely be factored into prices,” Walters said, noting that small businesses face significant challenges in covering expenses such as rent and wages.
Similar sentiments were expressed by Peter Semaan, who runs the Rusty Rabbit Cafe in Darlinghurst, Sydney. He has already increased prices on food and beverages by about A$2 on average and said customers have been understanding of the change. “They know it’s coming, today was the day,” Semaan remarked.
Industry representatives also highlighted difficulties in adjusting to the new regulations. Wes Lambert, CEO of the Australian Restaurant and Cafe Association, pointed out that some businesses were still charging surcharges on the first day of the ban, despite months of advance notice. Lambert warned that the policy could negatively affect the profitability of many small enterprises, with costs likely passed on to consumers.
The Australian restaurants and cafes sector generates around A$66 billion in annual revenue but operates on thin profit margins of 2.8% to 3.1%. Analysts from Macquarie Bank estimate that the removal of interchange fees could reduce banking sector income by about A$900 million in 2027, equating to 1% to 2% of total earnings. However, they noted that anticipated cuts to credit card reward programs may partially offset these losses.
The RBA and the Australian Competition and Consumer Commission have emphasized that merchants will still bear costs associated with card payments, but these expenses should be integrated into general pricing rather than levied as separate surcharges. Current data indicates that about 16% of Australian businesses apply surcharges.
According to the RBA, the overall effect of the policy on consumer prices is expected to be minor, estimating an increase of approximately 0.1% in measured inflation. The central bank noted this would likely be a one-off adjustment, as consumers were already paying card-related fees through surcharges that had not been included in the Consumer Price Index.