The Surcharge Ban Takes Effect October 1. It’s Already Made Coffee More Expensive.
From 1 October, the card surcharge disappears from your coffee receipt. The Reserve Bank says banning surcharges will save Australian consumers $1.6 billion a year. For the hospitality businesses behind your daily coffee, the fee hasn’t disappeared at all. It’s simply moved, from your bill to theirs.
Phillip Di Bella, founder of The Coffee Commune and Di Bella Coffee, joined 4BC Drive’s Carla Bignasca this week to explain what’s actually happening behind the counter. Banks are still charging merchants for every card transaction, anywhere from 0.7% to 1.7%, depending on how much bargaining power a business has. What’s changed is that cafes can no longer pass that cost on to the customer paying it.
The Coffee Commune’s own hospitality community gives an early read on the impact. Of the more than 1,850 members across the group, including 1,300 Queensland cafes, more than half have already lifted prices 5 to 10% in the past six weeks alone, well before the ban even takes effect.
“It’s another classic case of good intention, executed poorly,” Di Bella said. “The average cafe is making around 3% profit, according to the latest IBIS World figures. Wipe 1.7% of that off the bottom line because the government has banned the surcharge, and there’s almost nothing left.”
It’s one line in a much longer list. Wages in hospitality have climbed from around 30% of turnover to 45-50%. Rent, insurance, energy and freight have all moved at once. “If you’re in a business with three ingredients and they all go up, that’s one increase,” Di Bella said. “If you’re in a business with twenty, it compounds. That’s hospitality.”
Di Bella argues a genuinely fair cup of coffee in Australia would cost closer to $8, in line with prices in Europe and the UAE. The reason Australians can’t stomach that figure, he says, comes down to disposable income, not the price of the bean. “How much money does the average person have left over after every obligation is paid? By that measure, Australia is now among the worst-off countries in the developed world.”
The pressure is showing. One in eight coffee shops in Australia has now closed, even as the nation’s overall coffee consumption keeps climbing. Increasingly, Australians are choosing to make their coffee at home or in the office instead of buying it from the cafe on the corner, a shift Di Bella says punishes an entire local ecosystem of growers, roasters and small operators.
The surcharge ban takes effect on 1 October. For The Coffee Commune’s members, and for the customers who love them, the real cost of that change has already landed.
Listen to the full conversation with Phillip Di Bella and Carla Bignasca on 4BC Drive, or below.