Business
• Analysis
Card surcharge ban australia: experts say it is 'cover' for larger price rises
Experts say Australian businesses are using the credit card surcharge ban, in force since 1 October, as 'cover' to pass on price increases larger than the roughly 1.5% surcharge it removed, with cafe prices already climbing.
By Haut Monde Post
• October 13, 2026
• 3 Min Read
A reform meant to cut fees
Since 1 October, credit card surcharges - typically worth about 1.5% of a transaction - have been banned in Australia, as part of a Reserve Bank-led reform aimed at improving transparency and lowering bank fees. But consumer advocates and economists say some merchants are treating the change as cover: using the removal of a small fee to justify much bigger increases.
Coffee prices already moving
The evidence is showing up fastest at the counter. Small Flat White, an online coffee price tracker, has found that 17% of cafes have raised prices since the ban began. Among the cafes that did move, the average increase was 50c - more than 10% - in a survey covering more than 1,500 venues.
Stephen Wu, an economist at investment bank UBS, said resilient consumer demand and a high inflation environment may be allowing merchants to use the change to pass through broader cost pressures.
- •After years of above-target inflation, consumers may be more accepting of price rises, according to Wu.
- •He noted that 'round-up' pricing on coffee suggests the pass-through could exceed the surcharge itself.
The watchdog's line and the industry's reply
The Australian Competition and Consumer Commission has warned businesses they must not mislead consumers by attributing a price rise to the surcharge ban when it also reflects other costs. It added that businesses trying to avoid the ban by describing the surcharge as another type of fee or charge may be engaging in misleading conduct.
The hospitality industry pushes back on the framing. Wes Lambert, chief executive of the Australian Restaurant & Cafe Association, said business costs are rising rapidly while Australian coffee prices remain among the cheapest in the world. He pointed to rising produce costs, steep rents and recent adjustments to junior pay rates and awards as the reasons restaurants give for price hikes, and many owners are also carrying higher repayments on variable-rate loans and equipment financing after four interest rate hikes in 2026.
Maybe this is the catalyst that has caused cafes and restaurateurs around the country to wake up.
In Lambert's view, the ban may simply have given owners the courage to pass costs on they were already absorbing.
Fallout and what happens next
Despite being telegraphed well in advance, the ban has drawn a furious response from small business groups. The backlash reached government when the Australian Taxation Office announced it would no longer accept credit card payments for tax owing, prompting intervention from treasurer Jim Chalmers. Chalmers said the government would provide additional funding to the ATO to cover the cost of the surcharge until the middle of next year.
Choice head of policy Morgan Campbell said there was no surprise in how the ban is playing out.
There was always an acknowledgement that some businesses would put up their prices. But consumers are better off knowing the price up front.
Campbell said it is too early for Choice to begin its own research, noting some effects will take time to wash through the system, and that the RBA expects businesses to put more effort into finding lower-cost bank providers. If businesses raise prices by more than the surcharge, he suggested it is up to customers to decide how to respond.
