SMALL BUSINESSES AND CONSUMERS PAY THE COST OF SURCHARGE DECISION

Paul Nicolaou | Executive Director, Business Sydney | Mob: 0419 400 038

Business Sydney today warned that the harmful flow-on effects of the credit card surcharge ban would punish small businesses and consumers. 

Consumers were paying more for goods and services because removal of the surcharge left them exposed to card fees and terminal charges that still had to be paid. 

Executive Director Paul Nicolaou said small businesses who use credit cards to pay tax obligations had also been blindsided by the ATO decision to no longer allow credit card payments.

“All that the surcharge removal has done is to make life more expensive for consumers in the middle of a cost-of-living crisis and punish small businesses for using credit cards to pay their tax,” Mr Nicolaou said.

”The ban on credit and debit card surcharges will be bad for business and could have significant consequences for governments, councils and consumers.

The cost of processing card payments does not disappear with removal of the surcharge. Someone still has to pay the cost of accepting a card.

As we are seeing in real time, businesses now have two choices: absorb the cost of card processing or build those costs into their overall prices. For businesses operating on tight margins, particularly small businesses, this is another cost pressure at a time when they are already dealing with rising operating expenses.”

Mr Nicolaou said the Australian Taxation Office’s decision to stop accepting credit card payments from taxpayers highlighted the broader issue for governments and councils.

“The ATO’s decision is a very clear demonstration that accepting credit card payments comes at a cost,” he said.

“If it is not considered appropriate for the ATO to absorb credit card processing costs, governments at every level need to consider the implications of forcing businesses to do exactly that.”

State and local governments accept card payments for a wide range of services, including rates, licences, registrations, permits, fees, fines and other government transactions.

“This change has ramifications well beyond the checkout counter,” Mr Nicolaou said. “State and local governments need to carefully examine the impact this change will have on their own payment systems and budgets. Councils and government agencies cannot simply assume that the cost of accepting card payments has disappeared.”

Mr Nicolaou said there was also a risk that consumers could ultimately face higher prices as businesses incorporated payment-processing costs into their overall pricing.

“The objective of greater transparency for consumers is understandable, but we need to be realistic about what happens when a business is no longer able to separately identify a cost,” he said.

“The cost doesn’t disappear. It is either absorbed by the business or incorporated into the price of goods and services.”

Business Sydney is calling on governments to consider the economic impact of the changes, particularly on small businesses, and to ensure that the reform does not create another layer of costs and complexity for Australian businesses.

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