Australia bans card surcharges on restaurant menus
From 1 October, cafes, pubs and restaurants can no longer add a card surcharge, and owners are recalculating what a coffee or a steak should cost.
Australia's card surcharge ban takes effect on 1 October, and hospitality operators are already choosing between raising menu prices, going cash-only or absorbing the cost themselves.
The Reserve Bank of Australia's new rule removes surcharges on EFTPOS, Mastercard and Visa transactions, with American Express joining voluntarily, the RBA says. A A$10 dish will cost A$10 whether the customer pays cash or card, according to the central bank.
The move follows a lengthy RBA review of retail payments that found surcharging "no longer worked as intended," governor Michelle Bullock said, with most consumers wanting it scrapped, ABC News reported.
Every till in the country now asks the same question: who pays for the card machine.
Interchange fees fall sharply
Alongside the ban, the RBA is cutting the credit card interchange fee cap from 0.80% to 0.30% per transaction, a change it estimates will save Australian businesses A$910 million a year in processing costs, according to reporting by ABC News and the University of Technology Sydney. Small operators pay around 1.4% per transaction on average, against 0.6% for large merchants, per UTS.
The Australian Restaurant & Cafe Association called it "one of the largest changes in payments" in the country's history and said many small businesses "are unprepared for its arrival," UTS reported.
Simone Douglas, who runs two pubs in South Australia, told Yahoo Finance she is weighing cash-only tills against raising every price on her menu. "The other option, realistically, is to put all of our menu items up in price," she said.
Sydney operator Steve Sidd, who runs more than 20 venues, told Yahoo Finance he will fold the extra cost into prices rather than push diners toward cash. "You can only force customers to pay a certain way without losing that clientele," he said.
Cash discounts remain legal
The competition regulator, the ACCC, has confirmed businesses may still offer a discount for paying cash, even though card surcharges are banned, according to UTS. Weekend and public holiday surcharges, booking fees and service charges are unaffected by the change.
Mount Gambier bakery owner Dylan McQueen told ABC News he paid A$5,785 in card fees last financial year without ever charging a surcharge; cash makes up just 16% of his trade. Germany moved the opposite way this year, forcing cash-only restaurants to start accepting cards by 2027.
The Australian ban lands as the country's dining scene keeps expanding, from Melbourne's laneways to new Sydney rooms such as Bar Benevento at the Adina Town Hall Hotel. From 1 October, the maths behind every one of their menus changes.
