{
  "id": 15648986,
  "title": "Could the ban on card surcharges lead to a rise in tax evasion?",
  "url": "https://urgent.news/2026/10/19/could-the-ban-on-card-surcharges-lead-to-a-rise-in-tax-evasion",
  "topic": "world",
  "section": "World",
  "published": "2026-10-19T19:15:08.000Z",
  "source": {
    "name": "The Conversation AU",
    "slug": "the-conversation-au",
    "url": "https://theconversation.com/could-the-ban-on-card-surcharges-lead-to-a-rise-in-tax-evasion-294139"
  },
  "original_language": "en",
  "account": "Small businesses are adjusting to the recent ban on credit card surcharges, which went into effect on October 1, while grappling with the ongoing costs associated with card processing. Despite projections that the ban will save consumers A$1.6 billion annually in surcharge fees, businesses continue to bear the burden of bank-imposed fees. In response, some businesses are offering cash discounts, a trend that could lead to a resurgence in cash usage following years of decline. This shift could present new challenges, as cash transactions lack verifiable digital records, potentially enabling businesses to underreport sales and evade taxes. The Australian Taxation Office (ATO) data indicate that net GST collected from cafes, restaurants, and takeaway food services reached $4.36 billion in the 2024-25 financial year, highlighting the sector's contribution to the economy. Even a modest increase in unreported sales could result in significant losses for the government. The Reserve Bank of Australia (RBA) suggests that the rise in cash usage is linked to the shadow economy, which accounts for approximately 3% of Australia's GDP or $80 billion in 2025. The peak accounting body, CPA Australia, estimates that undeclared income in the shadow economy results in an annual tax gap of $11 billion. Federal Treasury identifies undeclared sales and wages as primary components of the shadow economy. The ban on card surcharges may unintentionally reverse the declining trend of cash usage. While cash payments have fallen from 69% of consumer transactions in 2007 to 15% in 2025, card payment usage has surged from 26% to 73%. Cash transactions for dining out and takeaway food, as well as transport, have seen the most significant declines. The ban could reverse this trend, creating opportunities for tax evasion. European studies indicate that greater card payments discourage tax evasion by providing a digital trail, while cash transactions are associated with higher evasion rates. A separate EU study shows a correlation between increased card payment usage and higher tax revenue. While these findings do not definitively prove that Australia's surcharge ban will increase tax evasion, they highlight the potential risk. Policymakers should consider measures to curb the shadow economy and reduce tax evasion, such as reducing credit card processing fees for businesses or improving electronic sales recording to boost tax compliance. Increasing the use of card payments and implementing effective digital record-keeping can help ensure fair competition and fund essential public services.",
  "summary": "The new ban on card surcharges could have unintended consequences.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}