A cash comeback? Shops navigate looming death of card surcharges

In response to upcoming changes that ban card surcharges, numerous Australian shops are shifting towards cash payments. These changes, effective from October 1, will prohibit businesses from adding additional fees to card transactions, effectively making the price of goods and services the same regardless of payment method.

The Reserve Bank of Australia (RBA) has estimated that this ban will save businesses around $910 million each year. However, businesses that have traditionally relied on surcharges to keep their advertised prices low are now facing the challenge of absorbing these costs themselves.

For instance, bakery owner Dylan McQueen reported paying $5,785 in card fees last financial year. While a significant portion of his transactions were cash-based (16%), he questioned the wisdom of such a practice, stating it was out of principle and that people often pay for convenience without realizing it.

Nursery owner Calum Haygarth, on the other hand, noted that merchant fees constituted tens of thousands of dollars in his annual operating costs. He believed raising prices would be necessary to offset these costs, which he found unjustifiable.

The shift towards cash is not new, with the use of physical currency declining over the past two decades. However, there's been a slight increase last year. Economist John Hawkins pointed out that about half of Australians use no cash in a typical week. He suggested that the loss of customers due to the ban might deter some businesses from eliminating card payments altogether.

Despite the convenience of cards, many businesses see cash payments as a necessary evil, given the additional costs associated with processing card transactions.