No more credit card surcharges – But will we end up paying more?

Consumers may welcome the removal of credit card surcharges, but could the real cost simply be hidden in higher prices? And will businesses increase prices by more than the original surcharge to protect themselves? 

For many Australians, the idea of no longer paying extra when tapping a credit or debit card sounds like a win. But as Australia moves towards removing surcharges on designated card payments, an important question remains: will consumers genuinely save money, or will businesses simply build those costs into their prices? 

Small businesses still have to pay. 

While surcharges may disappear at the checkout, businesses will still face payment processing fees charged by banks and payment providers. 

For small businesses across Bribie Island, Caboolture, Beachmere and surrounding communities, these costs can add up to thousands of dollars annually. Many businesses currently pass this expense directly to customers through a surcharge. If that option disappears, they'll need to recover the money elsewhere or absorb it. 

And here's where things become interesting. 

What happens if a business decides to increase its prices not just to cover processing fees, but to provide an additional buffer against future increases? Could a surcharge that previously cost consumers 1.5 per cent ultimately become a 2 or 3 per cent increase in everyday prices? 

Hidden costs, higher prices? 

Consider a local café selling a $5 coffee. 

Today, a customer paying by card might face a small surcharge, while someone paying cash avoids that additional fee. Under a surcharge ban, the café would still face processing costs, even if reforms reduce those fees. Rather than absorbing the expense, the owner might increase the coffee price for everyone. Suddenly, customers who never use a credit card could find themselves paying more, even though they're not generating the card processing fees. And unlike a clearly displayed surcharge, an increase built into the advertised price is far less obvious. 

Have we really removed the cost, or simply made it invisible? 

Are the banks the real winners? Another question which deserves attention. 

Why are businesses still paying substantial transaction fees when electronic payments have become such an essential part of modern commerce? 

Digital transactions reduce the need to handle physical cash, yet payment providers continue charging businesses for accepting cards. Certainly, banks and payment networks have legitimate operating costs. However, consumers and businesses deserve greater transparency about what they're paying for. 

If governments and regulators want to reduce costs, shouldn't they ensure payment providers are delivering meaningful savings rather than simply shifting expenses between businesses and customers? 

What about cash customers? 

There's also the question of fairness. 

Older Australians, particularly those who prefer cash, could end up indirectly paying for electronic transactions they never make. As cashless payments become increasingly common, customers have fewer opportunities to avoid costs associated with electronic transactions. 

Should someone paying cash subsidise another customer's credit card payment? And should small businesses already struggling with rising wages, insurance, electricity and rent be expected to absorb another expense? 

A fairer system or just a hidden one? 

Removing card surcharges may simplify transactions and eliminate an irritating extra charge at the checkout. The Reserve Bank's proposed reforms also aim to reduce payment processing costs, which could help businesses avoid passing on the full expense. But unless those savings are substantial, the underlying costs won'tdisappear. Some businesses may absorb them. Others may increase prices, and some could build in an additional margin to protect against future expenses. 

Ultimately, the real test isn't whether the surcharge disappears from the receipt. It's whether Australians genuinely pay less for their everyday purchases. 

Because if businesses increase prices, banks continue collecting fees and even cash-paying customers end up paying more, we must ask one final question. 

Have we eliminated credit card surcharges, or have we simply created another hidden cost of living?