Small Businesses Face Higher Costs Under Proposed Card Surcharge Ban

A recent survey by small-business lender OnDeck Australia reveals that a proposed ban on card surcharges may not deliver the savings small businesses and consumers were expecting, instead risking higher prices and increased costs.

The research polled 253 Australian small businesses across retail, hospitality, ecommerce, and service sectors. Nearly half of the businesses surveyed (44 per cent) plan to increase prices to offset ongoing card payment costs, potentially erasing the projected $1.6 billion in savings from removed surcharges. Two-thirds (66 per cent) expect the changes to raise their business costs, with 23 per cent anticipating significant increases.

Of those businesses, the same 44 per cent will raise prices, while fewer than a quarter (23 per cent) intend to absorb the additional costs. Another 17 per cent aim to encourage lower-cost payment methods, 13 per cent will review payment provider fees, and 12 per cent plan to cut costs in other areas. The additional costs are a concern for 61 per cent of businesses, including 21 per cent who are very worried.

Hospitality Sector Faces Greatest Pressure

The hospitality sector feels the pressure most acutely. Almost 70 per cent of hospitality businesses surveyed expect cost increases, with over half (51 per cent) planning to raise prices. A majority (65 per cent) are concerned about the ban’s impact on their business over the next year.

OnDeck Australia CEO Cameron Poolman noted that the survey shows the new rules merely shift costs rather than eliminate them. He explained that for many businesses, merchant fees are a necessary operating expense. If they cannot recover these costs at the point of payment, they must recover them elsewhere, such as in product prices. Poolman warned that widespread price increases at a time of rising inflation and interest rates could exacerbate cost-of-living pressures rather than relieve them.

Policy Implications and ATO Changes

The Australian Taxation Office (ATO) recently announced it will stop accepting credit card payments after 30 November 2026, adding to small-business cashflow challenges. This decision faced pushback, leading Federal Treasurer Jim Chalmers to extend the deadline to 30 June 2027. Poolman called this a sign that policy changes need better consideration of small-business impacts.