The Surcharge Has Gone – But The Cost Remains

OPINION

As of October 1, consumers will no longer be charged a surcharge to use a credit or debit card.

For many who like to know the cost of their meal before they head to the front counter, this will be a welcome change. However, the charge has not disappeared. The cost of processing these transactions has not gone away.

Businesses, particularly small businesses, will need to decide whether to absorb these costs or build them into the price of their goods and services. Small businesses across Dawson have some real concerns.

Many have told me that while they understand customers don't want unexpected fees at the checkout, they now have to deal with being left to absorb another cost. For a business operating on already tight margins, even relatively small transaction fees can add up over multiple sales. That is why reform must address the underlying cost of card payments, rather than simply moving that cost from one place to another. For the privilege of providing customers with card payment options, businesses must factor in merchant fees, terminal rental fees and gateway charges.

For larger businesses like supermarkets and airlines, there is greater power to negotiate with payment providers. Small businesses though, do not have the same bargaining power. Then there’s the other side of this change. When businesses are no longer able to apply a surcharge to customers who choose to pay by credit card, an important element of consumer choice is removed: pay by cash and avoid the surcharge or pay by credit card and accept the additional cost associated with that payment method.

Removing that choice does not make the cost disappear; it simply moves the cost from an individual transaction, into the broader cost of doing business, where it can ultimately be spread across all customers. Small businesses in our region are already doing it tough. The cost of doing business has risen dramatically in the last few years. They are paying higher rents, higher electricity prices and facing more regulation.

For many businesses, it feels like every time they open their inbox there is more bad news – more tax, more government regulation, more green and red tape, more complex industrial relations rules and more bill pain. Margins are shrinking and keeping the doors open is becoming more challenging. The changes to card surcharges are just another impost, another cost, another stress point these businesses have to contend with.

Government should be playing their part in reducing the burden on small business, so business owners can get back to working in their business, not working on just paperwork. Unfortunately, under the current Labor government, the opposite is happening. Removing the surcharge line on the customer receipt does not remove the cost of accepting card payments.

For businesses already facing rising costs and shrinking margins, adding another cost is another pressure on their ability to stay viable. The Government should ensure that removing card surcharges does not simply mean small businesses are left carrying the cost.

ENDS