Small business owners have warned they will be forced to increase their prices after a ban on card surcharges came into effect, saying they cannot simply absorb the cost of processing electronic payments.
The new rules prevent businesses from passing card payment surcharges directly on to customers, but the underlying transaction fees charged to businesses remain.
WATCH THE VIDEO ABOVE: Card surcharge ban leads small businesses to raise prices
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Private chef David Lee said his business had no choice but to increase its prices to absorb the cost involved in processing large transactions.
“Our fees are in the tens of thousands, so we have to increase our pricing dramatically,” he said.
Lee said he had already noticed prices increasing at the supplier end as businesses adjusted to the new rules.
His business is overwhelmingly reliant on electronic payments, with high turnover, meaning offering customers a cash alternative is not practical.
Eyebrow studio owner Hannah Cochran has also had to increase prices overall and has taken to incentivising customers to pay with cash.
The studio has a broad mix of customers, with Cochran saying some older clients were already reluctant to keep card details on file or pay deposits electronically.
“We can’t absorb the fees with the card surcharges. So, we need to then put our prices up overall,” she told Sunrise.
The business has opted for a 2 per cent increase, despite some payment processing fees being higher. The business is also offering a 2 per cent discount to its long-standing customers who pay with cash.
‘No ban on the banks’
Media and PR expert Liz Nable said she believed the changes had been mischaracterised as a ban on banks charging transaction fees.
“There’s no ban on the banks charging these surcharges,” she said.
“They will continue to charge these surcharges. They are now capped at what they can charge. But small business owners from today are banned. It is illegal to pass those charges on.”
Nable said businesses would ultimately have to decide how to deal with the additional costs.
“Struggling businesses are going to have to absorb that cost, and we know that they can’t afford that, many of them right now,” she said.
“So, essentially, they’re going to now increase their prices as a way to pass that cost on because they just can’t survive.”
Lee said he felt small businesses had been overlooked by government policy.
“I can’t see a policy that they’ve put in place in the last two to three years that has assisted small businesses, for five years almost,” he said.
Surcharge ban ‘not beneficial’
Cochran said businesses needed to be consulted more closely before policies affecting them were introduced.
“It’s being marketed as something that is beneficial for both. And it’s just not,” she said.
“I don’t know if ChatGPT was used to do the numbers on this saving, but it’s not realistic.
“The consultation with real humans is really, really important.”
She said policies should be reconsidered if they were not achieving their intended outcome.
