Australian retailers face cash-flow pressure from card surcharge changes

Australian retailers are facing increased financial pressure due to recent changes in card payment regulations. Following the Reserve Bank of Australia’s (RBA) reforms on October 1, card networks including eftpos, Visa, and Mastercard introduced rules preventing businesses from adding surcharges to transactions. While the RBA aims to reduce costs for consumers and increase price transparency, retailers must now absorb payment processing fees that were previously passed on to customers.

Compounding this issue is the Australian Taxation Office’s (ATO) decision to restrict credit card payments for tax liabilities. Ed Alder, managing director of pay.com.au, warned that these combined shifts threaten the cash buffers of small and independent businesses. Many retailers have used credit card payments to the ATO to bridge cash-flow gaps, particularly when meeting expenses like freight and stock before inventory is sold.

The RBA is currently monitoring whether the reforms successfully lower costs for merchants. The central bank has cut interchange fee caps—the fees payment providers pay to issuing banks—estimating this could lower wholesale card payment costs by approximately $910 million annually. However, the effectiveness of this measure depends on whether payment providers pass these reductions through to small businesses.