‘It feels like extortion’: Small businesses left in the lurch ahead of card surcharge ban

Exclusive: It was pitched as a $1.6 billion win for Aussie shoppers, but the looming credit card surcharge ban hands independent small businesses a grim ultimatum.

Vendors say they’re now stuck between losing their paper-thin profits to bank fees or losing customers to higher prices.

While the October 1 ban stops extra charges at the checkout, banks and providers will still charge merchant processing fees – leaving them with no choice but to absorb the costs or pass them on elsewhere.

For Brisbane business owner Cascie Heart, the numbers are already stacking up against her.

“I was stunned,” she told nine.com.au on first hearing of the ban.

“How can this be happening to businesses when we already have so much to pay?”

Her company, Little Bread Winner, which makes Australian-made breadboards, has paid $6000 in face-to-face transaction fees this year.

Heart’s busiest trading period hasn’t even begun.

Depending on sales volume and payment methods, Heart said processing fees currently cost her between $25 and $80 every single day.

To make matters worse, her Shopify fee is also set to rise from 1.6 per cent to 1.7 per cent on October 1– the same day the surcharge ban kicks in.

“Given we're required to use a payment gateway to sell online, we have no real choice if we want to keep our store running,” Heart said.

“It feels like extortion.

“I honestly don’t know what options we have left.”

In Noosa, Jo Yates is considering taking cards off the table for part of her new business, The Exchange – a multipurpose space combining co-working desks, photography and podcast studios, and a second-hand clothing store.

Yates said keeping card payments across every offering could cost her hundreds of dollars each month.

But removing them will inevitably cause friction for customers who now have to pay manually via bank transfer.

The dilemma is even trickier in her second-hand clothing store, where sellers set the prices of items sold on consignment.

“We don’t control the prices our sellers set for their clothing, so we can’t simply increase prices to cover the processing fees,” Yates said.

“That means we have to decide whether we take the hit or our consignment sellers do.

“I actually don’t know which of these options I’m going to take, but none of them seems to be a great solution for either myself or my customers.”

Hospitality entrepreneur Steve Sidd is preparing for the same October deadline across Catering HQ’s 16 venues, which employ about 500 people.

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Massive change to credit and debit card payments just weeks away

Sidd said putting up menu prices every time another expense arrives is not a realistic fix.

“We can’t simply pass every additional cost directly on to the customer,” he said.

“Diners are already managing their own cost-of-living pressures, and there is a ceiling on what people are prepared to spend when dining out.”

Instead of blanket price hikes, Sidd’s team has spent weeks reviewing dishes, ingredients, and operational margins to absorb the upcoming processing hit.

Sidd noted that transaction costs are coming on top of higher wages, food, utilities, insurance, and rent.

“Hospitality margins are already extremely tight.

“Even what appears to be a small additional percentage can translate into significant dollars across a high-volume operation.”

Small Business Minister Anne Aly told nine.com.au the changes are a win for both small businesses and their customers.

“From 1 October, lower interchange fee caps set by the RBA will come into effect alongside the surcharge changes.

“The RBA expects small businesses to benefit most because they tend to pay fees closer to the existing caps.

“The RBA’s changes are also making the system more transparent, so small businesses can actually see what they’re being charged, compare providers and get a better deal.

“This comes on top of the broader support we’re delivering for small business, including making the $20,000 instant asset write-off permanent to improve cash flow and give businesses more certainty to invest.”

Majority of consumers unaware of major card change coming

A huge number of Australian credit and debit card holders remain in the dark about the upcoming ban on surcharges, new research shows.

Extra fees for payments will be abolished on October 1 following a decision by the Reserve Bank of Australia (RBA), in a move it estimates will save consumers about $1.6 billion every year.

But a survey of 1000 people by comparison site Finder released on Tuesday shows 43 per cent of Australians are unaware of the upcoming shake-up.

Scrutiny of RBA data shows Australians made $475 billion in credit card purchases and $696 billion in debit card transactions during the 12 months to June 2026.

The Finder analysis also tracked consumer sentiment about financial institutions recovering money by raising interest rates or card fees and cutting customer loyalty programs.

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How banks will overhaul loyalty perks from October 1

Banks will take a hit of about $600 million per year when the surcharge ban comes into force.

This will include lower interchange fees, which are paid by businesses to banks.

If their card provider responded to the ban by increasing annual fees, 30 per cent of responders in the Finder survey say they’d respond by cancelling their credit card.