The Reserve says small businesses can be charged a whopping three times more in transaction fees than larger merchants. The hospitality industry warns that menu prices will have to rise if businesses can no longer recover the cost of debit card payments from customers, saying a coffee that now costs $5.08 with a card surcharge might rise to $5.50. “Of course it will be inflationary,” said Wes Lambert, chief executive of the Australian Restaurant and Cafe Association. “Removing a debit surcharge will translate directly to the bottom line. And to mitigate this drop in profit, we’ll see a sharp increase in prices much greater than 8¢ that we currently pay on a cup of coffee. We’ll be rounding that [price rise] to 10¢, 20¢ or even 50¢.”

Small business hit out at the government’s plan to ban surcharges by the end of the year. Labor announced a plan to end debit surcharges before the election to help ease the cost of living.

Australian Restaurant and Cafe Association chief executive Wes Lambert said that with profit margins of 3.3 per cent, restaurants “don’t have the ability to absorb penalty rates” which he said “punish” them for opening. Albanese’s comments seemed “out of touch with small businesses, restaurants and cafes struggling to break even or in many cases losing money on weekends and public holidays, so that Australians can dine out” when they want.