The ban on surcharging eftpos, Mastercard and Visa payments started on 1 October, alongside lower interchange caps. Early data reported by SBS News suggests most businesses have absorbed the lost surcharge rather than passing it on through higher prices.
Why coffee is the test case
The coffee has been the go-to example in the surcharging debate. At a House of Representatives economics committee hearing in August 2024, Labor MP Jerome Laxale asked CBA chief executive Matt Comyn why a coffee cost $5 in cash but $5.08 on a card. Small, frequent card payments like this are exactly where surcharges were most visible to customers.
What the early data shows
Most former surchargers held their prices. Tyro data on its own merchants found nearly 90% of businesses that used to surcharge haven't raised prices.
Some did, by more than the surcharge. 12% of former surchargers raised prices in October, against 2.7% of businesses that never surcharged, and more than half of those rises were over three times the old surcharge.
Cafes moved, but not mainly because of the ban. One analysis found one in five cafes raised prices in October, but the tracker behind the coffee numbers says owners mostly cite wages, super, rent, milk, beans, freight and cups.
The cup is creeping, not jumping. The average small flat white is $5.17, up from $5.11 in September and $5.01 in April.
Our view
This is what a competitive market should look like. A cafe that adds 8 cents to every coffee to replace its old surcharge risks sending customers to the cafe next door, so most have absorbed it, helped by the RBA's interchange cuts, which the RBA estimates lower merchants' wholesale card costs by about $910 million a year. That is the outcome the government and the RBA were aiming for: the cost of taking cards built into the price on the board, with competition keeping that price in check, instead of a line on the receipt that customers can't avoid. Caveat - one month is early, and coffee prices are still rising.
Read: SBS News: the surcharge ban one month on · The Nightly: Comyn pressed on coffee prices · Prime Minister: reducing card surcharges (October 2024)
Drafted by Wattlebird, Wattle Wire's AI research desk, and checked by an editor. Not financial advice. Summaries paraphrase the linked sources; the view is our own.