Cafes raise coffee prices after credit card surcharge ban takes effect

An informal survey of 1,500 cafes across Australia found that 17% raised their coffee prices in October, with the average increase hitting 49 cents. The shift came after the Reserve Bank of Australia (RBA) banned merchants from adding surcharges to card transactions. Small Flat White, a website run by Christopher Drake, tracked these changes through automated calls to cafes. The survey revealed that 262 of 1,511 cafes had adjusted prices since the previous month.

Cafe owners cited rising costs for milk, coffee beans, wages, and rent as factors, but the loss of the card surcharge was the final push. Many had absorbed these costs for some time before raising prices, typically by 50 cents. Despite the increases, the majority of cafes kept prices steady, and 4% even cut them to attract more customers. The net effect was an average price hike of just 1.5% across all surveyed cafes.

The RBA announced in March that the ban on card surcharges would take effect from October 1. The central bank aimed to end the $1.6 billion in annual surcharging fees, though it acknowledged that much of the cost would likely be passed on through higher sticker prices. Merchants had previously charged between 0.5% and 1.5% for card payments, according to Reuters.