The nation’s peak hospitality body has lashed out at a proposed move by the Reserve Bank of Australia to ban credit and debit card surcharges, warning that it will force small cafés and restaurants to raise prices at a time when customers can least afford it.
The Australian Restaurant & Café Association (ARCA) has labelled the RBA’s plan as “tone-deaf,” accusing it of shifting costs from banks onto small businesses already under immense pressure.
“This proposal is anti-small business,” said Wes Lambert, CEO of ARCA. “Who the hell does the RBA think will bear the cost of this ridiculous decision? First, merchants—and then customers, through higher menu prices in the middle of a cost-of-living crisis.”
Currently, hospitality businesses can pass on the real cost of accepting tap-and-go and credit card payments, which sit between 1 and 1.5% per transaction. Removing the surcharge option, ARCA argues, will quietly force small venues to absorb those fees or raise prices across the board—essentially paying a penalty for offering customers the convenience of card payments.
“No matter how low merchant fees go based on the RBA’s intention to save businesses $1.2 billion dollars, with no surcharging, businesses who previously paid net zero in merchant fees will now be left holding the bill,” said Lambert.
For larger retailers, those costs might be manageable through volume discounts and better terms with banks. For smaller cafés and family-run restaurants, the change amounts to what ARCA describes as an “invisible tax,” one that will quietly eat into already thin profit margins.
“Restaurants are not banks. We do not have the luxury of absorbing thousands of dollars in hidden transaction costs,” Lambert added. “A blanket ban on surcharging will undermine small businesses, reduce price transparency, and mandate price hikes across every menu in Australia.”
Data from the past year paints a troubling picture. Hospitality insolvencies are up, and ARCA says one in ten venues has already closed its doors. With wages, rent, utilities, and insurance costs all rising, removing the surcharge option could push many more to the brink.
“The so-called ‘savings’ to consumers is a mirage,” said Lambert. “If this ban goes ahead, small businesses will have no choice but to raise prices across the board just to survive. The RBA is shifting the cost of payment infrastructure from the banks onto the smallest players in the economy.”
He said ARCA is not opposing efforts to lower merchant fees but argued that banning surcharge options strips away choice and transparency. “This is not just bad policy, it’s a policy that pretends to help consumers while quietly hollowing out small business,” he said.
For many cafés and restaurants, the fee itself isn’t the issue—it’s the ability to disclose it, account for it, and manage cashflow accordingly. With surcharges, customers can choose how they pay and understand where the cost lies. Without it, Lambert warned, prices will be padded and trust eroded.
“The RBA may be proposing lower merchant fees, but if merchants cannot pass on those costs clearly, every café and restaurant in Australia will be forced to carry a heavier burden,” Lambert said.
ARCA is now urging the RBA to scrap the proposal, saying the hospitality sector needs support, not more hidden costs.
“That is a crying shame,” Lambert said. “They are asking cafés and restaurants to reach into their pockets to pay merchant fees—pockets that are empty after years of tough times.”
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