The Reserve Bank of Australia (RBA) has recently proposed a significant policy shift: eliminating merchant card surcharges on debit and credit transactions. At face value, this initiative may appear to benefit everyday Australians, removing the irritation of additional charges at the point of sale. However, for small businesses across the country, this reform raises fundamental questions about fairness, transparency, and long term sustainability.

This proposal, if implemented, will not reduce costs, it will simply hide them. And those hidden costs will be worn by businesses already under pressure from rising input prices, labour constraints, and tight margins.

What Is the RBA Proposing?

The core components of the RBA’s plan include:

• A ban on most merchant surcharges for Visa, Mastercard, and eftpos transactions.

• Greater fee transparency from payment networks and acquirers.

• Voluntary support for least cost routing (LCR), rather than a mandated rollout.

The stated goal is to reduce national surcharge payments by over $1.2 billion per year, shifting the system toward more seamless, frictionless transactions for consumers. But the cost of those savings will land squarely on the balance sheets of merchants, especially small and independent ones.

The Unseen Cost to Business

Small businesses do not create these surcharges for profit. They are a response to a system in which banks, card schemes, and payment gateways charge merchant service fees that can range from 0.5% to 2.5% per transaction, sometimes more for certain premium cards or digital wallets.

Removing the ability to recover these fees:

• Undermines price transparency at the point of sale.

• Forces operators to increase their base pricing for all customers, regardless of payment method.

• Preserves and protects the margins of banks, card schemes, and digital wallet providers.

For a local café, grocer, or roaster, absorbing hundreds or even thousands of dollars in unrecoverable fees each month is not viable. Without reforming the fee structure itself, the RBA’s move risks shifting the pain point rather than solving the problem.

Where the RBA’s Attention Should Be

The surcharge ban is a superficial fix to a deeper issue. If the RBA is serious about creating a more equitable payment ecosystem, it should focus its attention on:

• Interchange fees, which banks collect on every card transaction.

• Scheme fees, charged by Visa, Mastercard, and others for simply using their rails.

• Digital wallets, particularly Apple Pay and Google Pay, which are increasingly dominant yet remain outside the RBA’s current regulatory framework.

Unless these structural fees are brought under control, the elimination of surcharges will simply entrench an already lopsided playing field.

Practical Advice for Consumers

Customers can take several steps to support local business and reduce the overall cost of payment processing:

1. Pay with cash where convenient. It remains the lowest cost option for most merchants.

2. Insert your card and use your PIN. This can trigger eftpos debit processing, which is often cheaper than tap and go credit rails.

3. Enable least cost routing on your bank cards. Some Australian banks now offer this feature via app settings.

4. Ask your local businesses if they offer payment discounts. Some do, especially for high-volume or cash based purchases.

5. Understand that small businesses are not the enemy. If you see a surcharge, it’s likely just cost recovery, not profit.

The Broader Reform We Need

Payments reform must be fair, comprehensive, and future oriented. Banning surcharges without confronting the ecosystem of hidden fees is a short sighted move. Reform should:

• Mandate least-cost routing across all terminal providers.

• Regulate digital wallet providers under the same conditions as banks and schemes.

• Enforce transparent pricing models across all financial institutions, acquirers, and payment processors.

Until that happens, small business will continue to subsidise a system that puts scale and convenience ahead of transparency and sustainability.

At Wolff Coffee Roasters, we believe in fair value, not just in how we source and roast our coffee, but in how we engage with our customers, suppliers, and communities. We will continue advocating for reform that works for everyone not just the banks and platforms.

If you have thoughts or questions on this issue, we welcome the dialogue. Let’s build a payment future that serves all Australians, not just the ones who already control the rails.