From 1 October 2026, the Prime Minister is proudly announcing that your morning flat white is about to get cheaper. Why? Because the Australian Government is banning businesses from passing on credit card surcharge fees to customers. Cute idea. Deeply flawed execution.
Let’s unpack what’s actually happening, because small businesses, especially hospitality, are bracing for impact, and it’s not the “cheaper coffee for everyone” story being sold.
What’s changing?
From today, 1/10/26:
In other words, the fee still exists and the cost still exists. The only thing changing is who pays it. And spoiler, it’s not the banks. It’s the small business owner.
Real numbers from a real café
One of the little cafés we look after will now have to absorb around $7,000 a year in credit card processing fees. Seven. Thousand. Dollars.
That’s on top of:
Small hospitality businesses run on tiny margins, often 3–5%. There is simply no room to absorb thousands in new costs without something giving and that “something” is the price of your daily coffee.
So, will coffee get cheaper?
No. Absolutely not. Not in any universe where maths exists. If anything, your favourite café will need to increase prices to survive. The Government’s claim that this change will “reduce the cost of your coffee” is optimistic at best. At worst, it’s misleading because when you force a business to absorb a cost, they don’t magically become more profitable. Instead, they adjust their prices to stay afloat.
Anecdotally, I’m already hearing that many small businesses are planning to:
This is a backwards step for both business and customers. We know from years of bookkeeping data that the more payment options you give clients, the faster you get paid.
Meanwhile, over at the ATO…
In a plot twist worthy of a soap opera, the ATO has also just announced that from 30 November 2026, taxpayers will no longer be able to pay BAS or tax bills via credit card. Why? Because they don’t want to absorb the credit card surcharge fee.
Let’s pause. The Government says small businesses should absorb the fees. But the ATO, also part of the Government, says they won’t absorb fees, even though small businesses have far less financial buffer.
For many small businesses, paying the ATO by credit card was a way to:
That option disappears on 30/11/26. The ATO acknowledges this will make cash flow for small businesses harder, and they are right. But on top of that, the same logic that says small businesses should have many payment options to get paid faster also applies to the ATO. Will this change lead to higher tax debt?
The bigger picture
These changes, like surcharge bans and ATO payment restrictions, are being sold as “consumer wins.” But in reality, costs aren’t disappearing. They’re being shifted and they’re landing squarely on the shoulders of small business owners. Hospitality, retail, trades, personal services, the sectors already doing it tough, will feel this the most. And the end result isn’t cheaper coffee. It’s more expensive coffee. Not because cafés are greedy, but because maths is maths.
Small businesses are the backbone of Australia. They’re resilient, creative, and endlessly adaptable, but they’re not magic. If the Government wants to reduce costs for consumers, they need to reduce costs at the source, not simply change who pays the bill. Because right now, the bill is landing on the people least able to absorb it. And your favourite café, the one that knows your order, your dog’s name, and your preferred level of froth, is about to make some tough decisions.
Political information disclaimer
This blog reflects my perspective as a small‑business advisory professional. For the most accurate and up‑to‑date details on legislative changes, please confirm information with trusted government sources.
