In a world where the convenience of tap-and-go payments and online transactions are becoming the norm, it’s surprising to find that some Australian businesses are introducing a ‘cheeky’ surcharge not just for card payments but for cash as well. This trend has raised eyebrows and prompted warnings, as it could set a precedent that impacts consumers’ wallets more than they might expect.
Recently, a restaurant along Victoria’s scenic Great Ocean Road was caught charging a 3 per cent surcharge for all types of payment, including cash. This surcharge applied during the week, with even higher rates on weekends and public holidays—10 per cent and 20 per cent, respectively. This practice has left many customers wondering, ‘Where does it stop?’
Professor Steve Worthington from Swinburne University spoke to Yahoo Finance, expressing his concern over this growing trend. He described the surcharge for paying by cash as ‘more than cheeky’ and called it ‘pretty poor performance’. He argued that such costs should be absorbed into the base price of goods and services, much like other operational expenses businesses face.
The question of legality arises when businesses impose surcharges. According to the Australian Competition and Consumer Commission (ACCC), businesses are only permitted to pass on the cost they incur for accepting certain payments. For card payments, this typically ranges from 0.5 per cent to 2 per cent. Anything above this could be considered excessive and potentially illegal. The ACCC also states that if there is no way for a consumer to pay without a surcharge, the business must include the surcharge in the displayed price.
The Australian Banking Association (ABA) has clarified that cash is not exempt from these additional charges, but businesses must be able to justify the costs used to calculate the surcharge. This is to ensure transparency and prevent excessive surcharging, which can lead to significant fines and reputational damage.
The ‘hidden’ costs of handling cash are often cited as the reason for these surcharges. A report by the Boston Consulting Group highlighted three main costs associated with cash: direct costs (like cash-in-transit services), indirect costs (such as cash handling errors and fraud), and back-office costs (like payment reconciliation). The report estimated that businesses incur a 3.9% cost per transaction when handling cash at the point of sale (POS), considering all three types of associated costs. In comparison, card payments cost businesses 1.8%, while buy now, pay later services incur a 5.3% cost.
With the decline in cash usage, there’s speculation that cash surcharging could become more common in the future. Michele Bullock, governor of the Reserve Bank of Australia, has suggested that cash might only be around for another decade, and a new system for its distribution needs to be considered. However, she also acknowledged that a cash surcharge would not be well received by consumers.
Scott Pape, author of The Barefoot Investor, has also weighed in on the issue. He sees a future where there could be a surcharge on paying with cash, given the costs associated with handling it. He points out the risks and inconveniences for businesses that deal with large amounts of cash.
The introduction of cash surcharges is becoming a notable trend, leaving many wondering about its future impact on consumers. While businesses may justify these costs, it’s important for us to stay informed and aware of how these changes could affect our daily spending habits.
What are your thoughts on cash surcharges? Have you encountered them in your own experiences? Do you think this practice will become more widespread in the future? We’d love to hear your views and experiences in the comments below.
Also read: Sneaky card surcharges exposed: What this means for businesses and consumers
We are just back from a short holiday in Apollo Bay, with a visit to Lorne. Both places extremely expensive, however, they all charge different ” credit card usage ” fees – from 1.5% to 1.9%. How the hell does this stupid Government allow banks/businesses to rip people off – as pensioners we are finding it difficult as it is, going on any sort of holiday. Unfortunately, todays business society don’t give a dam about you – as long as they make more and more money – what hope have we as pensioners of enjoying our later years when we are given $6.80 a FORTNIGHT increase when greedy useless ineffective politicians get thousands.
There should be NO surcharges for any payment methods. All costs should be included in the price.
If someone informs me of a cash surcharge I will go elsewhere. If they do it without telling me, I will refuse to pay it!
It will be user pays, TJ
The surcharges are a way of disguising the actual increase costs that have been inflicted by this useless government. The government backs the scam because it deflects another cost of living rise. Time the government acted instead of hiding.
Useless government? Under this government inflation has fallen from over 6% to under 3%. They are doing a good job.
If the Reserve Bank says that cash is on its way out, I have no problem with that. However if the banks control ALL our money. They can charge us what they like and get away with it. Governments need to introduce legislation now so that they can’t charge for using our own money.
The banks have been charging us for using our own money since PAYE was introduced. One has to be either extremely vigilant or amazingly lucky to bank with an organisation that doesn’t charge outrageous fees (ING isn’t bad, but it amazes me each month that I manage to jump through the hoops to get the “free banking” I enjoy).
I object to the frivolous use of the word ‘cheeky’ in describing what is a GREEDY ‘have your cake and eat it too’ grab by these proprietors.
I wish the businesses had been named so I didn’t have to find out the hard way the manner in which they extort customers.
I do not give my custom to ‘card only’ small businesses, nor would I patronise those that impose surcharges for cash.
You make me laugh with comments on useless government.
They have performed very well compared to other countries.
It’s a global problem and when you travel overseas you’ll realise just how well this government is doing.
Have you not realised we are still recovering from a pandemic!!
The pensioners( which I’m one of) are one of the richest
in the world. Due to yes a labour government who introduced a very good superannuation scheme.!
Get over it guys and realise the world is changing . We live a dam good life compared to yes ( even America!)
Very much agree. Despite being a bleeding-heart liberal (small “l”), and having always voted Green, I’ve had to change tack this year in the hopes of helping to block Mr Dutton from getting his grubby mitts on our economy and our environment. Nuclear power? In Australia? SERIOUSLY???!!!
If the Labour government is tampering with the Future Fund set up the the Liberals, will my superannuation be safe or will the super company invest in failing schemes such as green hydrogen, making me a loss.
In the same vein will banks control were I can spend my money, if they and businesses lessen cash use? Remembering Nigel Farage’s bank forcibly closing his and his family’s accounts, because they disagreed with his politics.
1. The Labor government is not tinkering with the Future Fund. The Future Fund’s decisions are completely independent of government
2. The Future Fund has nothing to do with your superannuation. Your super fund makes investment decisions though you can decide which option you have your money in.
3. Banks won’t control where you spend your money whether you use a card or cash.
Sleep easily.