Australia’s Card Surcharge Ban Explained: Small Business Pays, Banks Still Win.

DLL: All right, so today we're talking about the surcharge effects for card payments that come into place from the first of October in Australia. And the government have come out and said There's it shouldn't cost you more when you pay with a card, essentially. So we're gonna ban it and it's gonna save approximately one point nine billion dollars to the consumer each year. But it's kind of as usual when government put these statements out, it's all hidden in s some truth, some not truth. And when I first heard that they were banning the surcharges, I thought that's a great Thing to do. But the ban should be on the banks or the software providers who supply that equipment and allow the businesses to handle the transactions. That is not what's going on here. All that they're doing is making it so that the businesses that are handling those transactions now have to absorb the cost of those transactions. And now I have heard I've seen a lot of people come out in the in various comments and say, well, businesses should be able to absorb that cost, and if they don't or they don't have the capacity to, then they have a a bad business model. Now It's I mean that's a that's a yes and no. I mean, a lot of businesses out there run on like a five to ten percent profit margin, and more businesses than not break even with the owners working full time in the business. and in the last twelve, twenty-four months or so, a lot of small businesses have been hit with Multiple rounds of wage increases, super increases, utility price increases, stock increases, whether it's due to like supply issues or just like everyone's been hit with like increases in their stock getting delivered because of the petrol prices going up. We've obviously had the mandated increases in wages, increases in super, everyone's rent. goes up all like quite often. So small businesses have been hit with a lot of different increases. And a lot of them, yes, there have been price increases, but I haven't really seen any businesses that have increased their prices and now they're making they've gone from making five or ten percent profit margin or breaking even or running at a loss to now making twenty, thirty percent because of those price increases. They're Their prices go up and their margins stay the same. So when you're when you're looking at statements like this from the government and they come out and they say, we're saving the consumers money by banning card surcharges, first we need to look at what the actual situation here. So we obviously run card payments in all of our businesses, and when you get the software and the the devices that you're taking the card payments on. In most cases, you're probably using for most businesses, they're either using Stripe or Square these days, but still the majority are probably using one of the big four banks, ANZ, Combank, and getting their software from them, transactioning all their payments through those banks. Now, if you look at those banks The big four in Australia and the profits that they've made year on year in the last couple of years. so 2023, combined big four profit after tax, thirty-two point five billion dollars, twenty twenty-four thirty billion dollars, twenty twenty-five thirty billion dollars, profit, profit, profit. They're making record. profits at the moment while the majority of small businesses and even if you're not a business owner, you're not making anywhere close to those margins of profit these banks are making. So the government have come out and banned the surcharges, but they haven't said to the banks who are making record profits, hey you can no longer on charge these. The consumers are already paying you to use your software on a monthly subscription. They're already buying the the card readers off you, paying ongoing fees, merchant fees and such to have this software in the business. The fees that you put on, the businesses have no say. You set the fee and you pass and then the business passes it on to the customer. And at the moment, you know, when you go to pay you'll see like if you pay this way, you'll get this charge added. If you pay this way, you'll get this charge. If you use Amex, you get this card. As we all know, like credit cards, you just have a higher fee. Inserting has a fee, tapping has a fee, paying with your phone on the app has a fee. And they're all slightly different. And the businesses that you're paying that app to, they're not making it's not like it's a one percent fee and then they're chucking an extra one percent on and making one percent gain from that transaction. They're just on charging the transaction that the bank charges. So they should be taking this ban to the banks who are making record profit. Saying that they're banning it and that's going to help everybody is just complete trash. Like what business is going to be sitting there and going, Okay, we're barely breaking even or we're we're just making profit. Everyone wants to pay. by card these days, less and less people are paying cash. Even if when you go around you see more and more and more businesses all the time putting up we prefer cash. For the ease of use and just the way the world runs right at the moment, everyone uses either their Apple Watch, their card, their phone. They're all just everyone's just tapping to pay because it's convenient. If a business doesn't accept that, they're going to lose a lot of sales. They can't retain the the customers and ban card payments. It just that doesn't that's not a logical business move to do. If if we went to one of our stores and just said you can't pay with card anymore, we don't accept it, the business would have to shut down. Because everyone would just go, okay, we don't accept card. I'm just gonna buy from there. They're not going to say, okay, I have to come into the store and pay with cash. I don't have any cash. I've got to go to the bank and get cash out. The it's all been set up that it's become too much of a pain in the ass. Like you're not allowed to pay people cash. I know a lot you know allowed you're not allowed to pay your employees cash. So it all gets put into your bank, tax gets taken out. If you want that cash, you need to go get it. We've all seen the reels about someone wanting to withdraw like over 10 grand or whatever, and them not being able to do it or having to write in advance, have a real reason to do it, have to have an interview about getting the money out. It's it's all fucked. So the government comes out and says, we're banning card fees. It's gonna save everybody money. The all the businesses that are running these thin profit lines or not making any money, they got the the business owners are working 100 hour weeks and and not taking a wage And just to keep their business going, and now going, okay, we're gonna have a two to five percent loss now added to our top end. So it either takes our if we're running a 10% profit, we drop to seven or five percent profit margin, or if we're running a loss, we now accrue five percent more loss on all our card transactions. Which is for most businesses these days, 80% plus of their transactions of all the bus all the money that comes into their accounts is card. Whether it's someone purchasing via a card on their website or in the store or through an app or something, most people are using card and there's a transaction fee there that will automatically get pushed onto that business. So if you are sitting there and you're saying, Well, if I take if we have ten percent profit margin and that gets cut in half or two to five percent goes away, now I don't have money to reinvest in any equipment that breaks. Because you've got to think like that profit margin is not just okay, we've we made a hundred grand this year, I've got ten grand of profit. That profit is not just, I'm gonna go spend that 10 grand and go on a whole day. You've got to factor in like what equipment needs upgrading. Like all these other fees you've got to have money set aside for, and that comes out of your profit. It can't come out of like your cash flow before profit because all that profit's gone to paying bass, paying wages, paying tax, paying rent. Paying stock, all of that paying your utilities, running the business is what takes up that. Anything else, yes, that's profit, but you've got to have a margin of that profit that's got to be set aside for maintenance, upgrades, marketing, whatever it is, after your your bottom line is paid. So if you're sitting there as a business owner and going, Well, if I if we we can't afford to take that hit, we've either got to let someone go. And and we've got to work more in the business, which a lot of people say, poor you, you have to work more in your own business. But at the same time, a lot of what's good about owning and operating a business is that you get to employ people and give them a career. And what you want when at least what we want when we employ people is to be able to pay someone a good salary which is above the award rate and have them stay and turn what it should be and and turn what is a job into a career and be able to increase their salary year on year and have them not need to be look looking for another job or another career because well we can't pay you anymore and you're gonna have to go work somewhere else if you want to pay that. Like I think most business owners want that for their staff. You build a good team And that's something that's really hard to do, to build a good team. Anyone knows that. Like if you ha if you need twenty, thirty staff in your business, to get twenty, thirty really good staff and have a really good team is hard to do. And then to keep them is even harder because you need to be able to offer them opportunities, offer them salaries that match what is going on around them, that they need to live, they want to buy a house. Like you need to be able to give them that money. And keep them in your business and grow your business so you can keep paying the salaries, and the salaries always increase. So it's just this government don't fall for the spin. They're not trying to help the consumer, they're helping the banks. They're just moving the fee from being visible and the customer being able to know. what fee they're paying. If I go in, I pay with a American Express versus a debit card, I know okay, I'm getting charged an extra two percent. Y'all can see that on my receipt when I pay the bill, right? I pay $100 and I see I paid with an AMX and there's an ex a two percent charge there or whatever the charge is gets added and then my total is $102 or whatever it is. Now that's just being disguised. So that fee still exists. The businesses have to wear it, and the consumer now has no knowledge of what fee they're paying for what transaction. So the business either has to wear it, or more than likely, what is going to happen? Like every other time that the government says that they're doing something that helps the consumer, like we're mandating that there's a pay rise. Pay rises are good, but pay rises also should be. Merit-based. So you want to reward people in your businesses with a higher pay rate. And you want to be able to see them grow, see their career grow, give them more responsibility, give them more ownership, pay them more money. When you increase the bottom end for no reason other than saying we we're gonna increase everyone's bait. Base pay by 3% and super and whatever else all gets added onto that because it's all calculated off your base rate. All that happens is well now we need to increase prices in the business to pay that. Otherwise, we can't employ these people in the business. And if we can't employ the amount of people that we need to, then the business can't operate. Pretty simple. And the only way to protect those profit margins, even if you like increase your sales in any business, like especially hospitality based businesses, you can do more sales, but for every sale you still have to pay for increased cost of goods, blah blah blah blah. So yes, there are ways to be more profitable, but it's not like you go from a thousand dollars to two thousand dollars and the extra thousand dollars is all profit. You're still using stock, you're still using all this stuff. So you s your margins are still all there. And this is just cutting from that. So Good in theory, but it's a straight up con job, as usual, that they're banning these fees and saving consumers. Because all that's going to happen is any business that can't absorb that cost, prices are going to increase. Just like we saw when the petrol prices went through the roof, every courier, every airline, whatever, they put their prices up straight away to protect their profit margins. And for some businesses sure. If they're making billions of dollars in profit or millions of dollars profit or whatever it is, they might be able to absorb that, but that's not the case for the majority of small businesses around. So this is just gonna hurt small businesses. This is just gonna hurt consumers because either business is gonna close or not produce the same quality because they have to let staff go or change suppliers to a cheaper product, something like that to try and find this profit margin they're losing. Which means that your favorite pub or small business cafe, whatever you wherever you go, the product's not as good, service is not as good, all the prices increase. And again, do the banks and these people, these industries that are making billions of dollars in profit, take a hit? No. Politicians don't take a hit. They they're pro their all their shit's covered. They have an expense account, they have a salary that's higher than anyone else's salary. They don't touch their private salary, anything they want to do with work, they just put it on their expense account. We pay for that. We all see that popping up. This person spent having many hundreds of thousands of dollars flying around and doing whatever they're doing, going the AFL grand final. Banks making thirty billion dollars a year, they're fine. Don't make them take a two percent loss or just not charge the fee anymore. It's just it's a huge sig up, and all of the consumers need to be very aware that this is just again a spin on words on what's actually happening. And the only people that are going to be negatively affected are you as a consumer. And all the small businesses that you love. Yeah.