Australia’s ban on card surcharges and its impact on businesses and consumers

Consensus Summary

Australia’s ban on card surcharges, set to begin on Thursday (or October 1, as per ABC), marks a major shift in how businesses handle payment fees. The move, which eliminates 1 per cent to 2 per cent surcharges on debit and credit card transactions, is expected to save Australians $1.6 billion annually, according to 7NEWS. While consumers may initially benefit from simpler pricing, small businesses—already operating on thin margins—face tough decisions about how to absorb the lost revenue, with some warning of price hikes or reduced services.

The decision follows years of debate over whether surcharges unfairly penalized cash users while allowing businesses to offset card-processing costs. The Reserve Bank of Australia (RBA) has played a key role, reducing interchange fees to save businesses an estimated $910 million each year, as reported by ABC. However, the ban does not eliminate all costs: banks are trimming rewards programs, and some merchants, like Flexischools (used by 25% of Australian parents), are introducing minimum purchase requirements—such as a $10 checkout—to manage processing fees, the Guardian notes.

Business owners across industries are already adapting. Cafe proprietors like Maj Mourise (7NEWS) fear prices for daily items could rise from $5.30 to $5.50, while nursery owner Calum Haygarth (ABC) cited 'tens of thousands' in annual merchant fees that eroded profits. Some, like Cubby out-of-school hours care (Guardian), are dropping card payments entirely. Meanwhile, cash usage—though still a minority—has seen a slight rebound, with 15% of payments made in cash in 2025, up from 47% in 2022, according to the Guardian. Advocates like Jason Bryce of Cash Welcome predict more businesses will incentivize cash with discounts or signage, mirroring practices in countries like France and Germany.

The articles diverge on specifics, such as the exact start date (Thursday vs. October 1) and financial impacts. 7NEWS highlights potential annual costs of $6,000 to $10,000 for small businesses, while ABC’s bakery owner Dylan McQueen paid $5,785 last year—a figure not echoed elsewhere. The Guardian emphasizes the shift toward cash incentives, while 7NEWS focuses on the erosion of credit card rewards, where customers may now need three or four points for the same perks. These differences reflect broader uncertainties: Will businesses raise prices uniformly, or will some abandon card payments altogether?

Unresolved questions remain about the long-term effects. The Guardian suggests cash transactions could become more common, while ABC’s economist John Hawkins doubts a major comeback for physical currency. Businesses like Flexischools are already testing new fee structures, such as a 6c increase per online transaction, but the full economic ripple remains unclear. As the ban takes effect, consumers may find some products cheaper—but others, particularly at small businesses, could face higher costs or limited payment options.