The surcharge ban isn’t a threat to profitability, it’s a prompt to get smarter about pricing

I’ve never applied surcharges in my businesses. Not once. And when customers realise the price they see is the price they pay, they appreciate it.

Since October 1, Australian businesses have had to adapt to a significant change with card payment surcharges no longer permitted on transactions.

For customers, it means greater price transparency. For business owners, it raises a pressing question: how do you protect your margins without passing costs on through a separate fee?

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My view is simple: the surcharge ban shouldn’t be treated as a threat to profitability. It should be a prompt to get smarter about pricing.

Running a business costs far more than stock and wages. Rent, insurance, software, compliance, training, merchant fees and countless other expenses all contribute to the cost of delivering a product or service. These costs don’t disappear because the rules change. But neither should customers be expected to navigate a maze of additional charges to understand what something actually costs.

The challenge is many small businesses have become accustomed to treating payment processing as a separate expense to recover at the checkout. Now, those costs need to be considered as part of the overall price of doing business. That requires a more deliberate approach to pricing, rather than simply adding another percentage to the bill.

Don’t confuse higher prices with better pricing

Since the surcharge ban took effect, concerns have emerged about businesses increasing prices to compensate for lost revenue. Some price adjustments may be commercially justified, particularly as wages, rent and supplier costs continue to rise. But increasing prices without understanding the numbers is not a strategy. It’s guesswork.

Businesses can incorporate legitimate payment-processing costs into their overall prices. However, they must not mislead customers about the reasons for price increases. If a price rise reflects several rising costs, it shouldn’t be attributed solely to the surcharge ban.

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The real question isn’t whether businesses should charge more or less; it’s actually whether they’re charging appropriately for what they deliver.

If you’re constantly chasing cash flow, working longer hours just to cover costs, or struggling to get ahead of debt, your pricing structure deserves scrutiny. That’s not to suggest every struggling business has a pricing problem. Weak demand, rising expenses and delayed payments all play a role. But pricing is one of the most important commercial levers owners can review.

The payments system still has a role to play

The responsibility shouldn’t fall entirely on small businesses. Banks and payment providers must also be accountable for transparent, competitive merchant fees.

The Reserve Bank of Australia has introduced broader reforms alongside the surcharge ban, including lower interchange fee caps for domestic card transactions and measures to improve transparency around merchant costs. These changes are intended to help businesses secure better deals, but owners need to take an active role in reviewing their arrangements rather than assuming their current provider offers the best value.

There’s another warning sign we shouldn’t ignore and that presents itself when businesses opt to use credit cards to pay tax debts. When cash flow is stretched, it can feel like a way to buy time. But expensive credit can compound an already difficult financial position.

This isn’t about judging business owners under pressure. It’s about recognising when the numbers aren’t working and seeking professional advice before liabilities become harder to manage.

Six ways to price your business more intelligently

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Surcharges might have once felt like a quick fix. But market trust is hard to win and easy to lose. If we want stronger small businesses, we need better pricing discipline and we need to stop pretending the payments system is neutral when the power sits higher up the chain.

The surcharge ban makes it a good time to review six fundamentals of pricing in small business:

1. Calculate your true cost of delivery. Include wages, overheads, payment-processing fees, administration and the time required to deliver each product or service. You can’t price for profit if you don’t know what something actually costs.

1. Know your break-even point. Calculate the revenue needed to cover fixed and variable expenses. Then assess whether your sales targets are realistic and your margins sustainable.

1. Review your payment provider. Compare merchant service fees, terminal rental and transaction costs. Ask your provider to explain your statement and shop around for a more competitive arrangement.

1. Review prices regularly. Schedule quarterly pricing reviews rather than waiting for rising costs to erode your margins. Make evidence-based adjustments and communicate them transparently.

1. Protect accessible entry-level offers. Keep straightforward products and services attractive where commercially viable, while ensuring larger, more complex jobs reflect the extra time, expertise, risk and value involved.

1. Price for value, not just cost. Consider the expertise, convenience, experience and outcomes you provide. Competing solely on price can leave even busy businesses struggling to make money.

The bottom line is that pricing isn’t simply about deciding what to charge. It’s about building a business that can deliver consistently, meet its obligations and remain sustainable without constantly scrambling to recover costs.

I’ve always believed customers appreciate knowing where they stand. The surcharge ban makes transparent pricing more important than ever, but transparency alone won’t make a business profitable. That takes commercial discipline, a clear understanding of costs, and the confidence to charge appropriately for the value delivered.

The goal isn’t to absorb every cost or increase every price. It’s to build a business that understands its numbers, values its work and prices accordingly. Price your premium work like premium work. Let the bigger jobs carry the weight and keep the front door welcoming.