A regional pub owner has expressed concerns that the Reserve Bank of Australia’s (RBA) proposed ban on card surcharges could lead to increased prices for drinks, particularly beer, as hospitality venues may pass on additional costs to customers. The RBA argues that eliminating these surcharges for Eftpos, Mastercard, and Visa transactions would save Australians $1.2 billion yearly. However, pub, cafe, and restaurant owners worry they may suffer financially if this ban is implemented, leading to necessary price hikes to manage increased costs.
David Allen, the owner of Cobargo Hotel and Motel in New South Wales, stated that implementing the surcharge ban could add up to $1,500 per month to his expenses per terminal. Currently, Allen incurs about $20,000 annually just from transaction fees, and many businesses in hospitality are already feeling the squeeze due to recent interest rate hikes and ongoing cost-of-living pressures. He predicts that everyday items, including coffee and meals, may see price increases, potentially pushing his beer price beyond the psychological barrier of $9 to $9.50. He noted, “We just wouldn’t be able to afford to cop that whole $20,000… there’s just no fat left on the animal.”
Allen further explained that small establishments are getting squeezed from all sides, leading to many hospitality businesses closing down. While the RBA claims that 90% of Australian businesses would benefit from the proposed changes, Stephen Ferguson, CEO of the Australian Hotels Association, argued that the ban doesn’t effectively save consumers money if it results in higher prices at the register. He pointed out that larger vendors might absorb the costs, but smaller operations could struggle significantly, given that their profit margins often range between 3% and 10%.
Ferguson noted that many small cafes can’t afford even a marginal hit to their profits, as they rely on tight margins to survive. The RBA has also suggested increased transparency around fees, advocating for businesses to display their wholesale charges. However, Ferguson believes this may not be sufficient, stating that it can be challenging for business owners to seek out better deals among multiple banks.
The RBA has opened a feedback period until August 26 for the proposals, and the hospitality sector is keen to voice their concerns about the potential implications. Ultimately, the proposed ban seeks to reform the payments landscape in Australia, but its impact on small business viability remains a significant concern.