Proposed changes to card surcharges could lead to higher price for consumers, according to a local Wollongong business owner.
Roy’s Restrobar co owner, Vince Gibbs, 34, said businesses are charged transaction fees by banks each time a customer pays by card, with costs adding up significantly over time.
“We’d pay at least 10,000 dollars a year in fees,” Mr Gibbs said.
Mr Gibbs said these charges, typically around 1.5 per cent per transaction, are passed directly onto customers through surcharges, rather than absorbed by the business.
With the proposed surcharge ban expected to be introduced, Federal Treasurer, Jim Chalmers, said the changes aimed to ease financial pressure on Australians.
“These changes will take pressure off consumers and businesses and help with the cost of living,” Mr Chalmers told the Australian Financial Review.
“Australians should be able to use debit and credit cards without being penalised.”
However, Mr Gibbs said the removal of surcharges would not eliminate the cost, but instead shift it into overall pricing, particularly for small businesses operating on tight margins.
“For most businesses, especially hospitality at the moment.. Most places can’t afford to wear the cost,” he said.
“Rather than having a separate surcharge, everyone’s prices will go up to include the cost of that surcharge.”
Data from the Australian Competition and Consumer Commission (ACCC) shows that card processing fees vary depending on business size, with smaller businesses often paying higher rates than larger companies.
Reserve Bank of Australia, Governor, Michele Bullock said the reforms are aimed at increasing transparency around these fees.
“We will publish merchant fees to make it easier for businesses to check if they are paying high fees,” Ms Bullock said in an interview for the ABC.
“These changes will make card payments simpler for consumers and help businesses get better value from their payment services.”
Consumer attitudes towards surcharges remain divided.
Survey data from the Reserve Bank of Australia and JWS Research shows that 76 per cent of respondents believe surcharges are unnecessary, a smaller portion recognise them as a necessary cost of doing business.
Additional data suggests that most consumers prefer transparent, all-inclusive pricing rather than added dees at the end of transaction.
Mr Gibbs said while removing surcharges may appear beneficial to customers, the long term effect could be higher overall prices and reduce affordability.
“At first glance… customers might think this is great… but they won’t realise at first that the prices have gone up,” he said.
The debate surrounding the proposed changes shows tension between transparency for consumers and cost pressures faced by small businesses, as both adapt to the changing payment system.
Graph Credit: Harrison Mellare
