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A cash comeback? Shops navigate looming death of card surcharges

Bakery owner Dylan McQueen says he paid $5,785 in card fees last financial year. (ABC South East SA: Aiden McNamara)

Some shops are encouraging cash payments ahead of a nationwide ban on card surcharges.

The ban comes with new limits on the fees banks can charge businesses, but shops can no longer pass on these card costs directly.

Many businesses say they will raise prices after the RBA's changes on October 1.

Last financial year, bakery owner Dylan McQueen paid $5,785 in card fees, which he says came after years of displaying signs that read: "CASH PREFERRED."

While his laminated A4s led to an uptick in customers hunting for coins and notes to pay for their coffee and scrolls, cash was only 16 per cent of his transactions.    

Card surcharges are banned from October 1. What’s changing at the checkout?

From October 1 this year, businesses will be banned from adding a surcharge when customers pay with a debit, credit, EFTPOS or prepaid card.

The Australian Restaurant and Cafe Association has said it “will be one of the largest changes in payments” in Australia’s history – and many small businesses “are unprepared for its arrival”.

The change follows a lengthy Reserve Bank of Australia review and decision to remove surcharging from all designated card networks (EFTPOS, Mastercard and Visa). American Express is voluntarily joining the change.

When the Reserve Bank first effectively allowed card surcharges in 2003, Australians mostly paid in cash. Cash still accounted for 69% of payments in 2007, when the central bank first began tracking payment methods usage. Back then, debit and credit cards were used for only one in four payments.

Ditch the credit card? Why it’s time to switch to debit

Thanks to the government’s brilliant decision on credit card surcharges and the Reserve Bank acting on it, I’m now going to be charged an extra $75 a year on top of my existing $175 card fee. I’m with BankSA, a subsidiary of Westpac. The bank says the only way to avoid such high fees is to abandon the joint credit card I have with my husband and each get a new card costing $7 a month. That’s $84 a year each, and we would have to apply separately and meet the bank’s lending criteria.

I have never failed to pay the balance in full. We are age pensioners so we may not even qualify. We use debit cards for everyday purchases and the credit card for scheduled bills, travel and emergencies. To cap it off, the supervisor asked whether I really needed a credit card. Is this really how banks now regard older customers who have spent a lifetime paying their bills on time?

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