Queensland Small Business Warns Card Surcharge Ban Could Cost It $13,000 a Year

A Queensland small business owner has warned that changes to card surcharges could leave her facing more than $13,000 in additional annual expenses, despite government assurances that the reforms will save businesses money.

On Oct. 1, the government announced a ban on bank card surcharge for customers, in a move that was directed by the Reserve Bank of Australia (RBA).

The reforms have been lauded by the government as cost-of-living relief, but many small businesses fear they will face additional financial pressure if they can no longer pass card-processing fees directly on to customers.

Debbie Gordon, who runs Pet Wellness Hub in the regional city of Bundaberg, said the changes could have a significant impact on her business, which sells pet food, treats, and supplements both in-store and online.

“The changes to card surcharges will have a direct impact on my business because they represent another ongoing expense that a small independent business has to absorb,” she told The Epoch Times.

“I typically serve around 30 to 50 customers a day, and based on my current transaction volumes, I estimate the additional cost to my business could be around $50 or more per day.”

Gordon said that over a five-day trading week, this would amount to around $250 in extra expenses, or more than $13,000 annually.

“That is a significant amount of money that could otherwise go towards stock, wages, rent, equipment, or simply helping to keep the business viable,” she said.

Her estimate is based on current transaction volumes, and it remains unclear how much her net costs could change once any reductions in payment-processing fees are taken into account.

Gordon said businesses might be forced to increase prices to offset the additional expenses, potentially undermining the intended cost-of-living relief for consumers.

“There is also the flow-on effect—businesses are already facing increasing costs across the board, and the obvious response is to look at increasing prices to cover additional expenses, but customers are feeling the pressure of the rising cost of living too,” she said.

“I do not want to be in a position where I have to keep increasing prices simply to cover another business expense, particularly when I am already working hard to keep my products as affordable as possible.”

Small Businesses Already Facing Rising Costs

Gordon said the surcharge changes would add to a growing list of business expenses.

“Fuel, interest rates, rent, wages, insurance, electricity, freight, and wholesale product prices have all increased, while small businesses must also keep up with continually changing tax requirements, regulations and compliance obligations,” she said.

“Small business owners are being asked to do more and more just to stay afloat. We are working longer hours, absorbing rising costs where we can and constantly trying to find ways to make the numbers work—at times, it genuinely feels like small businesses are being asked to pull a rabbit out of a hat just to survive.”

Gordon said support from local customers had kept her business and many others afloat.

“I think there needs to be greater recognition that a small independent business is not the same as a large corporation,” she said.

“Government policies, fees, regulations, and tax changes need to take into account the very different resources and margins that small businesses operate with.

“Small business owners are hardworking Australians who are creating jobs, supporting their communities and taking enormous personal risks to keep their businesses going.”

Gordon said small business owners needed an environment where hard work was rewarded, rather than one where they were constantly forced to find ways to absorb the next cost.

Government Says Businesses Will Save $910 Million

Treasurer Jim Chalmers and Assistant Treasurer Daniel Mulino said consumers would save around $1.6 billion in annually in surcharge changes.

The government expects businesses to save about $910 million a year through lower payment-processing costs.

Chalmers said the changes would reduce the cost of accepting card payments for businesses by lowering the fees banks can charge for processing domestic card transactions and requiring greater transparency around payment-processing fees.

The government said the additional transparency would also make it easier for small businesses to compare providers and potentially find cheaper payment services.

“These changes are all about taking pressure off consumers and businesses and helping with the cost of living,” Chalmers said.

However, the extent to which individual businesses benefit will depend on their transaction volumes, existing payment arrangements and any reductions in processing fees.

The reforms come alongside a separate restriction on businesses using credit cards to pay tax bills, with the government arguing that the Australian Tax Office should not be left to pay the fees.

Will Customers Feel the Pain?

Australian Institute of Progress executive director Graham Young said most businesses would foot the bill for card-processing fees rather than increase prices for customers.

“Those who have been passing it on may absorb it, or if they don’t, shouldn’t put their prices up by more than the charge,” he told The Epoch Times.

Young also warned that customers who rely on cash might be disadvantaged by potential price increases to recover card-processing costs.

Is the Government Benefitting From the Change?

Economist Saul Eslake said he was sceptical of claims that the government was attempting to collect additional goods and services tax (GST) revenue through price increases resulting from the reforms.

He highlighted that the move stemmed from the RBA, which operates independently of the government.

“Any increase in revenue from the GST from whatever source … if indeed there is any increase in GST revenue … goes to the states and territories, so there is no benefit to the federal government at all,” he said.

However, finance expert Shane Shmuel said the reforms were an example of political “virtue signalling and selling Australians a convenient narrative rather than addressing the underlying issue.”

“They want Australians to believe these changes are being made in their best interests,” he said.

“In reality, however, it appears they are finding new ways to increase tax revenue to help offset some of the consequences of excessive government spending.”