Businesses are using the recent ban on credit card surcharges as “cover” to pass along much larger price increases to customers, experts say, as cafes and restaurants struggle to cope with climbing costs and rising interest rates.
asserted
cafes → use → costs
Credit card surcharges, typically worth about 1.5% of the transaction, were banned from 1 October, as part of a Reserve Bank-led reform aimed at improving transparency for customers and, ultimately, lowering bank fees.
Small Flat White, an online coffee price tracker, has reported that 17% of cafes have increased their prices since the start of the surcharge ban.
asserted
% → ban → ban
Of those who raised coffee prices, the average increase was 50c, or more than 10%, according to the survey of more than 1,500 cafes.
uncertain
increase → raise → cafes
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 as ‘cover’ to pass through broader cost pressures”.
uncertain
merchants → say → pressures
“Following years of above-target inflation, consumers may be more accepting of price rises,” Wu said.
uncertain
Wu → follow → rises
“Evidence of ‘round-up’ pricing in items such as coffee suggests pass-through could exceed the surcharge itself.”
uncertain
through → round → surcharge
The Australian Competition and Consumer Commission (ACCC) has warned businesses that they must not “mislead consumers” by claiming a price rise is due to the surcharge ban when the increase also reflects other costs.
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increase → warn → costs
The ACCC has also said that businesses who try to avoid the ban by describing the surcharge as another type of fee or charge “may be engaging in misleading conduct”.
uncertain
who → say → conduct
Wes Lambert, chief executive of the Australian Restaurant & Cafe Association, said business costs were rising rapidly while coffee prices in Australia were among the cheapest in the world.
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prices → say → world
Lambert said businesses change their prices for many reasons, and that the surcharge ban could have been the impetus for company owners to build up the courage to pass on costs to customers.
“Maybe this is the catalyst that has caused cafes and restaurateurs around the country to wake up.”
uncertain
cafes → say → country
Lambert said restaurants were blaming the need for price hikes on rising produce costs, steep rents, and recent adjustments to junior pay rates and awards.
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restaurants → say → rates
Many business owners are also affected by the four interest rate hikes in 2026, which have driven up repayments on variable-rate loans and equipment financing.
“It should be no surprise that in a high inflation, high interest rate environment that businesses are going to raise their prices,” he said.
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he → affect → prices
Despite being telegraphed well in advance, the surcharge ban has triggered a furious response from small business groups.
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ban → telegraph → groups
Jim Chalmers, the treasurer, was forced to intervene after the Australian Taxation Office announced it would no longer accept credit card payments for tax owing.
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it → force → owing
Chalmers said the government would provide additional funding to the ATO to cover the cost of the surcharge until the middle of next year.
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government → say → year
Despite the furore, Morgan Campbell, the head of policy at consumer advocate group Choice, said: “I don’t think there’s any shock in the way this is working”.
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this → say → way
“There was always an acknowledgement that some businesses would put up their prices.
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businesses → be → prices
But consumers are better off knowing the price up front,” Campbell said.
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Campbell → know → front
He said it was too early for Choice to begin its own research on how the surcharge ban was working.
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ban → say → research
“Some of this will take some time to wash through the system,” he said, noting the RBA expected businesses to put more effort into finding lower cost bank providers.
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businesses → take → providers
If some businesses are putting up their prices by much more than the surcharge, Campbell suggested it was up to customers to decide how to respond.
uncertain
it → put → customers
The Aporia
