By PEACE IJIYERA
LAST Thursday (October 1), nationwide surcharge removals came into effect.
This means businesses are no longer able to apply a surcharge to EFTPOS, Mastercard and Visa transactions.
A surcharge is an additional fee that is added to the price of a product used to cover the processing costs when a debit, credit or prepaid card is used to pay.
The announcement was first made in March before it came into effect in October. Written on the Reserve Bank Australia (RBA) website, it was concluded that “it is in the public interest to remove surcharging for all designated card networks” as “surcharging is no longer achieving its intended purpose of steering consumers to make more efficient payment choices”. The RBA writes that “avoiding surcharges has become harder as cash usage has declined”.
According to the RBA, customers will save around $1.6 billion a year, but there remains concerns for business owners, who will have little choice but to raise prices.
Islynde Anne, owner of The Daily Café and Foodstore, said she felt “quite frustrated” when she heard about the changes announced earlier this year.
“I feel like small business in general are already struggling and just for us … it’s a huge impact,” she said.
She explained that absorbed costs of surcharges can be “upwards of $20,000 a year,” and has noticed a decline in people’s spending habits over the last year.
“The banks should be copping those surcharges because with the cost-of-living as it is at the moment, putting your price up already results in customers leaving,” she said.
She said the surcharges that were in place at The Daily Café were around eight cents per transaction and were balanced to cover the business, but to also not charge customers too much.
Ms Anne highlighted an approach businesses are taking where they accept payment by bank transfer or PayID. However she doesn’t believe this is an effective model.
“Hospitality businesses can’t do that … the time it takes for people to stand there and put through the things, it’s just not really worth it.”
To work around the changes, The Daily Café may consider raising prices or encourage customers to pay with cash.
“Hopefully we can get cash back into society a little bit more so us small businesses and any business can afford to survive,” she said.
The changes won’t affect Claudia’s Café, Morwell, as surcharge costs were already being absorbed, however, owner Claudia Davies said she understands how other businesses will feel the effects.
“Any business that is now going to absorb those changes will have difficulty doing that because of how tiny profit margins are, because a lot of businesses are now running very small profit margins and so now, those businesses would probably have to put their prices up to keep being able to pay their bills,” she said.
Being operational for 19 years, Claudia’s Café has survived through COVID, a global financial crisis and mine fire. With the cost-of-living crisis and interest rate rises, Ms Davies said “this is the worst challenge that we’ve ever faced”.
“It’s shocking and it keeps ongoing,” she said.
Owner of Pie Addicts, Debbie Carrodus, said the changes come at an already difficult time when many small businesses are “struggling”.
“It affects us a lot because we have to raise our prices to cover that surcharge now. And then … you’ve got your interest rate rise on top of that, so it makes it really hard for small business,” she said.
To work around the change, Ms Carodus said she may consider offering “a 10 per cent discount for people who pay cash, so we can get people going back to using their cash instead of using a card.”
