Small businesses turn to cash discounts as cost of absorbing surcharges rises

For Hannah Corcoran, the owner of Manuka beauty studio The Lab, the Reserve Bank of Australia's abolition of credit card surcharges is just another blow after years of punishing policy changes.

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Now, with card surcharges banned as of October 1 and the Australian Taxation Office to refuse card payments for tax obligations from mid-2027, Ms Corcoran feels that "enough is enough".

Hannah Corcoran has owned and directed The Lab, a beauty studio in Manuka, for five years. Picture by Karleen Minney

"I don't necessarily think [the wage increases and superannuation changes] are inherently bad when they're isolated," Ms Corcoran said. "As small business owners, we absolutely want better working conditions for our employees."

For her, the card surcharge ban is another story. When combined with the other regulatory changes, the ban amounts to a "pile-up" on small businesses.

"It feels like every time we've gotten our head around one change, we get whiplash from the next one rolling in."

Even with the seven-month delay on the ATO's credit card ban, many small business owners feel that they are being left to "fall behind as the world shifts into this new direction", according to Ms Corcoran.

"I don't think [these policies] actually aid small business or the everyday Australian in any way," she said.

"There's just this immense pressure on small business and we're getting little to no support from the current government."

Ms Corcoran said the cost of absorbing card surcharges would be about $20,000 a year for her business.

Consequently, The Lab's service prices are increasing across the board by 2 per cent.

Hannah Corcoran has had to increase her prices across the board to account for the cost of absorbing card surcharges. Picture by Karleen Minney

"That's a median rate, as our surcharge fees tend to be between 1 and 3.5 per cent, so we're still absorbing a portion of the surcharge," she said.

The business is offering to slash that 2 per cent increase for payments by cash.

Are cash discounts legal?

Ms Corcoran said that increasing her prices, and subsequently contributing to the rising cost of living, "is so disheartening".

Since the ban came into effect, she has been inspired to form community with other small businesses, particularly those in Canberra's "disconnected" beauty industry, via social media.

She said that this community of business owners is a valuable resource, providing "collaboration, referrals, moral support, [and] solution-based strategies".

"We're all feeling so led up the creek without a paddle by the government," Ms Corcoran said.

"It's more important than ever that we band together and uplift one another. That's what small business is all about."

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