Anthony Albanese had some good news for Australians this week.
On September 30, “From tomorrow, your morning coffee could be cheaper.”
Apparently, after years of Australians being smashed by rising groceries, electricity, insurance, rent, mortgages and just about everything else required to exist, salvation has finally arrived at the café counter.
The card surcharge is gone. There’s just one small problem. The cost is still there.
From 1 October, businesses can no longer add a separate surcharge when customers pay using Visa, Mastercard, eftpos or American Express cards. The Albanese Government has promoted the change as cost-of-living relief, saying consumers previously paid around $1.6 billion each year in card surcharges.
There are also genuine reductions in some of the fees sitting behind card transactions. The Reserve Bank has lowered interchange fee caps as part of the broader reforms, and the Government estimates the package will reduce business costs by around $910 million a year.
The part that seems to have been lost somewhere between Canberra and the coffee machine, businesses still pay to accept cards.
In the Reserve Bank guidance it makes clear that businesses “will still incur costs when accepting card payments” and those costs can instead be reflected in the overall price of the goods and services they sell.
The ACCC is even more explicit. It gives the example of a hairdresser previously charging $60 plus a one per cent card surcharge. Under the new rules, the hairdresser can simply incorporate that processing cost into the price and charge $60.60 instead.
So what exactly disappeared?
The fee on the EFTPOS screen. The economic cost of processing the payment didn't.
YOUR COFFEE DIDN'T MAGICALLY BECOME CHEAPER
Treasurer Jim Chalmers was actually asked this exact question back in March: if a business can no longer surcharge, won't some simply increase their prices?
His answer acknowledged that businesses would have that choice. He argued the reform would provide greater transparency and that lower interchange fees should also reduce costs for merchants.
There is an argument for saying Australians should see the real price upfront rather than discovering an extra percentage when they tap their card, but that is very different from pretending the cost simply vanished.
A café paying merchant fees has choices, it can absorb the remaining cost and reduce its margin or it can incorporate that cost into the price of the coffee.
For a business selling thousands of low-margin transactions every week, those costs add up and if the price of the coffee increases to accommodate them, the customer still pays.
They just don't see a line on the receipt telling them why.
That might be simpler and more transparent at the menu board. But it isn't magic.
ONE RULE FOR ME, BUT NOT FOR THEE
If you want to understand just how strange this situation has become, forget the local café for a moment and look at the Australian Taxation Office.
The ATO has announced that after 30 November 2026 it will stop accepting credit card payments altogether.
Why?
The ATO says:
“As a government agency, the ATO has decided it would not be appropriate for the cost of credit card merchant fees to be transferred to the community.”
Apparently, when the Tax Office incurs credit card merchant fees, it would not be appropriate for it to absorb those costs or transfer them to the broader community.
So it is simply removing the payment option.
Yet Australian businesses?
They still incur merchant fees. They can no longer separately surcharge customers for them. Their choices are to absorb whatever costs remain or incorporate them into their overall prices.
Why is the principle different when the merchant happens to be the Australian Taxation Office?
If absorbing credit card processing costs is undesirable for the ATO, surely Canberra should understand why those exact same costs matter to a café, mechanic, retailer, construction company, manufacturer or family business.
THIS ISN'T JUST ABOUT SMALL BUSINESS
There is another part of the ATO announcement that deserves attention.
The Tax Office says only around 2.3 per cent of tax payments were made using credit cards in 2024–25.
At first glance, that sounds insignificant. But more than 60 per cent of those credit card payments were made by privately owned and wealthy groups, or public and multinational businesses.
In other words, this isn't simply a handful of tiny operators paying a $2,000 BAS bill.
Businesses of various sizes use credit cards to meet tax obligations and to practically manage their cashflow. .
A business can be profitable on paper and still have cash-flow pressure.
Customers pay late. Wages are due. Suppliers need paying. BAS arrives. PAYG withholding is due. Super is due. Insurance renews. Equipment breaks. Fuel goes up.
Sometimes a credit card gives a business several additional weeks between paying the Tax Office and the money actually leaving its bank account.
That isn't necessarily financial irresponsibility. For some businesses, it is simply working-capital management. Even the ATO acknowledges that some taxpayers rely on credit cards to manage their tax payments and says the change may require adjustment.
COSBOA has also warned that removing the option could create another cash-flow challenge for affected small businesses already dealing with high costs, tight margins and competing financial obligations.
THE DOUBLE STANDARD
This is why reducing the entire debate to whether your morning coffee might be a few cents cheaper misses the point.
Politicians shouldn't pretend an economic cost has ceased to exist merely because consumers can no longer see it itemised on an EFTPOS receipt.
The Australian Taxation Office, that ministerially sits in Jim Chalmers portfolio as Federal Treasurer, looked at the same merchant fees businesses deal with every day and effectively said: We're not wearing that.
Meanwhile, the café owner is supposed to smile, absorb whatever card costs remain and celebrate because the Prime Minister says the morning coffee might be cheaper.
That is where the disconnect lies. This isn't really a story about 20 cents on a flat white. It's about whether the people making economic policy understand what actually happens inside a business when another cost lands on the ledger, our guess is they are so out of touch they wouldn’t even know how much a flat white costs these days.
