The reserve bank has ‘taken away consumer choice’, says one GP business advocate.
Small businesses across the country, general practices included, are maintaining pressure on the government to reverse the Reserve Bank of Australia’s ban on surcharges for card payments.
As of 1 October, businesses were no longer allowed to discriminate against different forms of payment by levying a surcharge for cards but not for cash.
This did not stop the companies which owned payment terminals from imposing merchant fees on small businesses.
While these fees were relatively small, normally accounting for about 1% of money paid by card, Australian GP Alliance chair Dr John Deery said it would have a large impact on general practice specifically, due to the small margins that most GP clinics operated on.
“My little group makes about $20 million of revenue, so 1% of that’s $200 grand a year, right?” the Canberran practice owner told The Medical Republic.
“That’s a very large chunk. Most practices run at a 10% profit margin, right? And so, if people decide to just absorb this, that’s 10% of profit gone.”
Dr Deery was also concerned as to how the changes affected patient choice and transparency.
“Patients before could choose to pay with cash and have no transaction fee,” he said.
“Patients when they were using a credit card, one third of them were choosing a high-cost card, like a frequent flyer points card. One third of people were using a normal credit card without any frequent flyer points. And one third were clearly going for the cheapest option by using debit cards that had the lowest transaction fees. And so now we’re faced with only having one fee.”
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Dr Deery said he made the decision to split the difference between the different credit card surcharges by lifting prices across the board by 1.2%.
This was on the higher end of the estimated cost of merchant fees, but Dr Deery said he had reason to believe that the clinic would be paying more in merchant fees now that they were not visible to the consumer.
“Debit card transaction fees will be lower than that, and then the mid-tier and the high tier cards will be higher,” he said.
“… Before, patients were clearly making a choice about the type of credit card transaction fees that they wanted to have to pay. Now they can’t see it, I’m assuming that patients will just go straight to the highest type of fee cards they can get and use those because, you know, it’s irrelevant to them now.”
GPs were not alone in their distress – the Australian Chamber of Commerce and Industry and the Council of Small Business Organisations Australia both continued to raise concern about the surcharge ban.
There is still hope.
Last week, following heavy lobbying, treasurer Jim Chalmers intervened on the Australian Tax Office’s decision to stop accepting credit card payments due to the merchant fees involved because of the surcharge ban.
He provided additional funding to the ATO to subsidise the merchant fee costs. This funding will run out on 30 June 2027.
The Council of Small Business Organisations Australia said the ATO decision was an “an important acknowledgement of the significant impact removing this payment option would have on small businesses”.
“If the cost of accepting credit card payments is significant enough for the ATO to reconsider its approach, the Government must also recognise the costs being imposed on small businesses that accept those same payments from their customers,” council chair Matthew Addison said.
“COSBOA has consistently warned that banning surcharges without first ensuring lower merchant fees are passed through to small businesses simply shifts those costs onto businesses already operating on tight margins.
“Removing surcharges also reduces transparency. Consumers should be able to see the cost associated with their chosen payment method and decide whether they want to incur it.”
