Businesses open to discounts for cash purchases as card surcharge ban looms
Financial experts believe small businesses may look to introduce discounts for cash purchases as they look to soften the blow from the removal of surcharges.
Starting on October 1, the Reserve Bank of Australia has announced a ban on surcharges, meaning extra fees for payments on credit and debit cards will be removed, in a change that will result in Aussies saving $1.6 billion a year.
Surcharges on card payments will be banned from next month. Getty Images
While the change is marketed as a win for consumers, banks will now pass on these expenses to small businesses instead, who will not have the added cash boost the surcharges gave them.
Some owners have already sounded the alarm at the negative impact it could have on their businesses, but experts say they may look to new methods to try and recoup as much cash as possible.
This includes measures such as introducing a discount for payments made in cash.
“Small and medium-sized businesses who surcharge at the moment will lose this income stream and there are concerns that this will result in higher prices,” Professor Steve Worthington from Swinburne University said.
“However, the ACCC has introduced a rule that merchants will be able to offer their customers discounts for those who pay by cash, which could ultimately see businesses and consumers rethink how they pay.”
“This could be appealing to those businesses who already accept cash as a payment.”
He believes it could see a resurgence in cash use across the country and making it a more popular form of payment.
Cash use has been declining in Australia, but the changes to surcharges could see it have a resurgence. Getty
Data from the RBA showed cash use has declined in Australia in recent years, but cash use still remains a common payment method, especially for older Aussies or those who live in urban areas.
Jason Bryce, a pro-cash campaigner, said Australia could see a rise in cash use that mirror other nations that have banned surcharges.
"Other nations that allow the card companies to ban surcharging typically have higher levels of cash usage than Australia, including The Netherlands, France, Austria, Germany, Japan, Singapore and Switzerland," he said.
"These nations, and many others, have more cash circulating per head of population than Australia and a long history of banning card surcharges.
"I expect more small businesses to prefer cash payments and even go cash-only because of this ban on surcharging."
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