Hospitality sector could face cost squeeze as RBA proposes card surcharge ban
Cafés, pubs and restaurants may soon be unable to pass card transaction fees on to customers under a new Reserve Bank of Australia (RBA) proposal that would outlaw surcharges on credit and debit card payments from July next year.
The move could reshape pricing strategies across the hospitality industry, which has long relied on small surcharges to offset payment processing costs. The RBA says the changes – currently out for consultation – could save consumers up to A$1.2 billion annually. But small business groups warn the reform could force operators to raise menu prices, trim costs, or reduce staff hours.
"The proposed regulatory options fail small businesses and the local communities they serve. Rather, they benefit big business, big banks and big offshore companies,” said Independent Payments Forum Australia co-founder Bradford Kelly. “This cost is ultimately borne by consumers.”
The RBA argues that the surcharge system has become increasingly ineffective, noting that fewer Australians use cash and most merchants apply flat fees across debit and credit transactions. “Avoiding surcharges has become harder as cash usage has declined,” it said.
The plan would apply to eftpos, Visa and Mastercard transactions, while American Express would require separate reforms to the payments system.
Alongside the surcharge ban, the RBA proposes capping interchange fees and requiring networks like Visa and Mastercard to disclose the charges they levy on payment providers. These measures are designed to boost competition and help smaller businesses negotiate better rates.
According to the RBA, most businesses would benefit from the changes. “The final amount paid by the consumer in practice would be similar,” it noted.
Still, some costs could shift. “Merchants will need to absorb these costs, making efficient payment routing and competitive and transparent pricing more important than ever,” said Adrian Lovney, chief payments and schemes officer at Australian Payments Plus.
Business groups question consumer savings
Hospitality owners are not the only ones pushing back. The Council of Small Business Organisations of Australia called the predicted A$1.2 billion in consumer savings “a mirage”.
“Removing surcharges doesn’t remove all the cost, it simply hides it,” said council chair Matthew Addison. “For small businesses already managing tight margins, this means those costs would have to be absorbed into base prices.”
Treasurer Jim Chalmers said the government would review the RBA’s recommendations alongside broader industry input. “The declining use of cash and the rise of electronic payments means that more Australians are getting slugged by surcharges, even when they use their own money,” he said.
Pending consultation outcomes, the Reserve Bank could enforce the rules using its own powers by July 2026. However, full legal enforcement would require legislation.
Jonathan Jackson, 15th July 2025
