Paying by card is the new normal, so why does it still cost more?

Convenience comes at a cost.

Convenience comes at a cost. Photo: AAP

Australians are among the lowest users of cash in the world, and businesses are increasingly moving towards card-only payments.

But card surcharges still abound, leading consumers to wonder when enough will be enough while businesses say they can’t afford to absorb the extra cost of card payments.

Dylan Whitmore, general manager of South Yarra-based Abacus Bar & Kitchen, told The New Daily less than five per cent of the restaurant’s transactions were cash, but surcharges of between 0.5 per cent and 1.5 per cent still applied to card payments.

“We’ve never really ever had a complaint about it … everyone’s just used to it because most industries do it,” he said.

“We started about four years ago … so we weren’t absorbing the cost of the transaction fees.

“[Absorbing the cost] was quite significant and … our merchant facility was the one that told us to start [implementing surcharges]. They have a system, dynamic surcharging, which just surcharges based off [the type of] every individual card.”

Although Whitmore’s customers haven’t raised a fuss, social media users have questioned the widespread practice of surcharges.

Financial technology company FIS found cash represented just six per cent of Australia’s point-of-sale market share in 2022.

And consumers are losing big by choosing card over cash.

In March, ABC analysis of Reserve Bank of Australia data revealed card surcharges cost Australians $960.26 million per year.

University of Tasmania retail expert Louise Grimmer told The New Daily said it’s understandable that consumers feel card surcharges are unfair.

But she said there’s a cost to being a cashless society, and someone has to pay it.

“From a business perspective, and particularly from a small business perspective, this is a charge that [is] part of their price of doing business,” she said.

“It’s sort of a legacy practice, ‘We’ve always charged it, so why would we stop, because then we’re going to have to meet that charge ourselves’.”

Shifty surcharge practices

Surcharges for credit card or debit card payments are legal, and businesses are allowed to refuse cash payments.

But under Australian Competition and Consumer Commission rules, surcharges must not be more than the cost to the business, and businesses should be “clear and upfront” about the types of payments they accept as well as the total minimum price payable for their goods and services.

Grimmer said the real issue may lie with businesses that don’t accept cash payments at all, but still tack on card surcharges at the checkout.

“Say you’re a cafe and you’re selling products without any choice in payment – it has to be credit card – and you’re advertising coffee at $5, but it’s actually costing $5.15,” Grimmer said.

“You’re actually meant to be advertising [the price that] incorporates the surcharge, and I would argue that a lot of places are not doing that.

“I think if [card is] the only way that you’re allowed to pay, really the business should be picking up that charge … if you’re not giving people the option to pay with cash … then that doesn’t really seem fair to keep this practice going.”

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