Australian small businesses have been left reeling after it was announced that the Australian Taxation Office (ATO) would no longer accept credit card payments from November 30, 2026.
The move comes after the national credit card surcharge ban came into effect on October 1, which now allows card networks (Visa, MasterCard and Eftpos) to prohibit surcharges for payments with credit, debit and prepaid cards, both in stores, online and through mobile wallets. The move also means that businesses will no longer be able to charge an additional fee when a customer pays by card.
According The Sydney Morning Herald The move reduces processing costs for merchants by limiting interchange fees, which are fees paid between banks each time a customer uses a card. That fee will be reduced from 0.8 per cent to 0.3 per cent on Australian consumer credit cards.
The move will also force businesses to absorb the costs themselves or be forced to pass them on to their customers through higher prices, as previously most of the surcharges added to the cost of card transactions went directly to paying bank and supplier fees associated with card acceptance.
He ATO announced shortly after that they will stop accepting credit card payments, citing that transaction fees would now have to be passed on to taxpayers.
“As a government agency, the ATO has decided that it would not be appropriate to pass on the cost of credit card merchant fees to the community,” an ATO spokesperson said.
Monarch Cakes said manager Nikki Laski. AAP The move would be the straw that broke the camel’s back in terms of keeping its many regular customers stable.
“We’re going to have to raise prices,” he told the publication.
“We had to do it anyway because everything else has gone up.
“But this will be the last straw.”
Laski said while companies like Coles and Woolworths were already absorbing the costs because they could afford it, it was not an option for smaller businesses.
“It is the small businesses that [put prices up] “That’s because they have to do it to survive,” he said.
Despite being heralded as a positive move by both Premier Anthony Albanese and Treasurer Jim Chalmers, who said the ban would save consumers $1.6 billion in card surcharges and save businesses $910 million each year, Ms Laski said there were other things to consider.
“That seven cents off your coffee could mean your favorite coffee shop goes out of business,” he said.