Will ditching credit card surcharges help North Shore businesses thrive?

It’s just a couple cents, you might tell yourself, but card surcharges are costing Australian consumers almost $100 million a year. And it’s not just costing the public. The abundant small, local, and family businesses operating on the North Shore are among those being hit hardest by these fees imposed by multinational credit card companies. 

Some businesses have worked against the fees by encouraging customers to pay in cash, while others have passed the price incurred by eftpos machines on to the customer. But all that could be set to change, with the Reserve Bank of Australia (RBA) proposing major reforms to card payment systems.

Changes proposed earlier this month by the RBA include the removal of surcharges on eftpos, Mastercard, and Visa transactions and the introduction of caps on interchange fees charged to businesses.

The RBA argues the changes are in the public interest and could save consumers up to $1.2 billion annually. By scrapping card surcharges, the central bank aims to cut hidden costs and improve price transparency for consumers.

So what will this mean for local businesses?

The North Shore Lorikeet spoke to Pep, a worker at North Sydney’s Cafe La Luce, who said the move would be beneficial to customers, but “not as good” for businesses. 

“Having to pay surcharges every day, you don’t know how much it costs. It’s really unfair to people and that’s why you have to keep the cash alive”, Pep said. 

“I try to pay by cash whenever I buy stuff. You never know, some places charge 30 cents, 50 cents, there’s no minimum, some other places it’s at least $1”, the worker added. 

Anna Cafe, another café located in North Sydney, expressed mixed views on the issue. The owner told The Lorikeet, “People usually don’t complain about surcharges because they know it’s a fee from the bank, and most people use cards instead of cash these days. Still, if businesses were to remove the surcharge, it would benefit both the business owner and the customer.”

What Does This Mean for Consumers?

For Australian consumers, the proposed ban on card surcharges is a win. Currently, many businesses charge extra fees to offset the merchant service fees they incur when customers use credit or debit cards. These fees vary based on the card type and transaction amount.

These surcharges can range anywhere from a few dollars to as much as 2–3% of the transaction value.

According to the Australian Competition and Consumer Commission (ACCC), businesses are not required to charge their customers a “payment surcharge”. Instead it is the decision of the business owner to absorb or pass on the fees to their customers. 

RBA Can Regulate Surcharging Without New Legislation

The RBA does not need new legislation to implement the proposed surcharging ban. It already has the authority to regulate the payments system and set rules on merchant pricing, including surcharges, under its existing framework. 

Last year, analysis based on data from the RBA revealed that Australians lose $960.26 million a year in surcharges when they pay with their cards instead of using cash.

If the ban is implemented, customers will no longer face these extra costs when paying with their cards. 

Next Steps in RBA’s Payments Reform Process

Submissions on the RBA’s Consultation Paper are open until 26 August 2025, giving stakeholders time to provide feedback on the proposed reforms.

The RBA is expected to release its final decisions, including any regulatory changes, by the end of 2025.

If adopted, the proposed fee caps and merchant-level disclosure rules would come into effect on 1 July 2026. 

One thing is clear: with these changes, the days of hidden card fees could soon be over.

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