Card surcharge ban used as ‘cover’ for larger price increases by Australian businesses, experts say
Wes Lambert, chief executive of the Australian Restaurant & Cafe Association, said business costs were rising rapidly while coffee prices in Australia were among the lowest in the world.
Lambert said businesses changed their prices for many reasons, and that the surcharge ban could have been the impetus for company owners to build up the courage to pass on costs to customers.
“Maybe this is the catalyst that has caused cafes and restaurateurs around the country to wake up.”
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It has reignited calls from the Australian Restaurant and Cafe Association for the hospitality sector to be included in the list of sectors that prioritises visas.
“No matter what migration policy that the current or future governments land on, they need to face the reality that chefs and cooks and restaurant managers from overseas are one of the most in demand skilled workers in Australia,” association chief executive Wes Lambert said.
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But Wes Lambert, chief executive of the Australian Restaurant and Cafe Association, said the changes would actually make scheme fees charged by card networks like Eftpos and Visa more opaque.
As a result, he said merchant fees – which are the total transaction fees paid by businesses – could climb from around one per cent to US levels of 2.5-3 per cent.
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Most cafes or restaurants have raised prices in some way, either by raising menu prices or increasing weekend or public holiday surcharges, said Wes Lambert, chief executive of the Australian Restaurant and Cafe Association.
“Increasing prices can always affect demand, so that certainly is an unintended consequence that the RBA could not have predicted, because they believed that prices would only go up 0.1 per cent,” he said.
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That assertion, though, has been lambasted by peak body representatives like Wes Lambert, chief executive of the Australian Restaurant & Cafe Association.
“The government is bonkers if it thinks this won’t be inflationary,” he said. “The RBA has woefully underestimated the flow-through. It won’t disappear. It will be baked permanently into higher menu prices.
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Australian Restaurant and Cafe Association explained that the average merchant fees businesses were expected to absorb were between 0.8 to 1 per cent.
These fees used to be passed on to customers in the form of the surcharge, but will now be paid by merchants in some way, leaving them with two choices – either higher prices, or smaller profits.
Mr Lambert said this “will be a shock to an industry that has margins between 2 and 3 per cent, potentially eating away at 40 per cent to 50 per cent of their profit margin”.
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Council of Small Business Organisations Australia director Wes Lambert said many small businesses could not shoulder the cost.
“Most just will not be able to absorb the credit and debit surcharges,” Mr Lambert said.
“They will need to pass those on in the form of higher prices.”
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“We don’t have 8¢ coins, so the $5.08 coffee might become $5.10 or $5.20 or $5.50,” said Wes Lambert, chief executive of the Australian Restaurant & Café Association. “By this weekend, Australians will be paying more.”
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The Australian Restaurant and Cafe Association has said it “will be one of the largest changes in payments” in Australia’s history – and many small businesses “are unprepared for its arrival”.