Don’t Blame Your Barista: The Surcharge Ban Will Raise the Price of Everything You Tap For
On Thursday, the card surcharge disappears from your receipt. The government is celebrating it as a win for consumers. Behind the counter, small businesses know the fee hasn’t gone anywhere. The banks are still charging it. It’s just no longer itemised.
Phillip Di Bella, founder of The Coffee Commune and Di Bella Coffee, joined Jason Matthews on 4BC Breakfast on Tuesday morning, two days before the ban takes effect, to explain what it means for the businesses that serve your morning coffee, and for the price of almost everything else.
“It’s just smoke and mirrors,” Di Bella said. “The government’s made decisions that are going to impact the consumer further.”
Listen to the interview here:
A 1.7% surcharge becomes a 5-10% price rise
The Coffee Commune has 1,850 members, 1,300 of them cafes across Queensland. Around half have already lifted their prices by about 5%, and some by as much as 10%.
“The consumer is now not getting charged 0.7 to 1.7 for their credit card surcharge,” Di Bella said. “They’re now going to be charged probably five, and some people are putting up their prices 10%. So not only is the consumer paying more, it’s also added to inflation.”
The reason is simple arithmetic. The latest IBISWorld figures show one in eight cafes closed across Australia last year, and the average profit for those still making money is around 3%.
“That’s before you take away 1.7% of credit card surcharges,” Di Bella said. “You’ve just dropped a successful cafe making 3% profit down to 1.3% profit. They would get three times that by putting their money in the bank.”
Matthews, a small business owner himself, told listeners his own business had made a profit of just $12 the previous week, and that some businesses he knows pay $40,000 a year in card fees. Absorbing that cost, he said, simply isn’t possible.
The banks still get paid
Di Bella questioned why the policy lands on small and medium businesses while the banks’ fees stay untouched.
“Just do a search on how much profit the banks make in this country, and it’s got the billion-dollar sign next to it,” he said. “There is no logic in slugging the small and medium businesses.”
He also pointed to the bigger picture. Government is a major employer, and it pays those wages from taxes that small and medium businesses help generate. “If you wipe out small and medium businesses in this country, where does the government get its income from? It is just short-sighted thinking.”
It’s not just coffee
Coffee is the example, and Di Bella was clear it’s every industry: supermarkets, retail, services and online shopping alike. With the vast majority of Australian transactions now made by card, very few businesses will be able to absorb the cost.
“Every single terminal that you swipe your debit or credit card at, you will now be paying more, because it’ll just be pushed onto the price of your product or service,” he said.
Go easy on the person making your latte
If your coffee costs a little more from Thursday, Matthews had one piece of advice for listeners: “Don’t have a crack at the person making your latte. It’s not their fault.”
Your local cafe isn’t trying to catch you out. It’s trying to keep the doors open on a 3% margin.
Listen to the full interview with Phillip Di Bella on 4BC Breakfast with Jason Matthews here:
Read our earlier coverage: The Surcharge Ban Takes Effect October 1. It’s Already Made Coffee More Expensive.