Credit card surcharge ban: 7% of surveyed businesses consider refusing credit cards
A Queensland business survey finds 7% considering abandoning credit-card payments. The ATO has already encountered the same cost problem. What happens next?
Australia's new ban on card surcharges is barely two weeks old, but evidence is emerging of an unintended consequence: some merchants are considering whether to accept credit cards at all.
A Business Chamber Queensland survey of approximately 920 business owners, reported by the Courier-Mail, found that 7% were considering discontinuing credit-card acceptance, while 35.1% intended to seek lower merchant fees.
These are intentions rather than confirmed decisions, and the survey is not necessarily representative of Australian businesses. Nevertheless, the findings identify an important potential consequence of the reforms.
What has changed?
From 1 October, card networks prohibited surcharges on Visa, Mastercard and eftpos transactions. American Express and other major providers introduced similar restrictions.
The RBA also reduced domestic interchange-fee caps, with further reforms scheduled for 2027.
The Government estimates the package will eliminate $1.6 billion in annual consumer surcharges and reduce merchant costs by $910 million.
But abolishing a surcharge does not eliminate the underlying processing cost.
Merchants can negotiate lower fees, absorb remaining costs, increase general prices or stop accepting particular cards.
The ATO provides a revealing example
The Australian Taxation Office initially decided to stop accepting direct credit-card payments from December, rather than absorb processing costs.
Following business protests, the Government intervened on 9 October, extending acceptance until 30 June 2027 with transitional funding.
The ATO's experience demonstrates the trade-off now confronting private merchants.
What happens next?
The reform has a sound objective: simpler prices and lower payment costs. But its success cannot be measured simply by the disappearance of surcharges.
The real test is whether total payment costs fall without reducing consumers' payment choices or shifting substantial costs into higher prices.
The 7% survey finding is an early warning, not yet evidence of widespread withdrawal.
7% Considering stopping credit-card acceptance | 35.1% Intending to seek lower merchant fees |
$1.6bn Card surcharges removed | $910m Lower merchant payment costs |
1. Negotiate Find a cheaper payment provider | 2. Absorb Accept lower profit margins |
3. Reprice Include costs in general prices | 4. Withdraw Stop accepting costly cards |