The Existential Threat of a Surcharging Ban to Australian Retail Newsagencies

A proposed ban on card payment surcharging by the Reserve Bank of Australia (RBA) poses a direct and existential threat to the viability of hundreds of small business newsagencies in my opinion. While intended to simplify payments for consumers, such a policy fails to account for the unique, low-margin business model of newsagents, who lack the ability to absorb these costs.

This would disproportionately punish small businesses and could lead to widespread closures.

1. The razor-thin margins of survival in the average Aussie retail newsagency

The typical Australian newsagency operates on a knife’s edge. The financial model, based on industry averages, leaves almost no room for additional costs:

• Typical Gross Profit: $28\%$
• Rent Costs: $-11\%$ (of revenue)
• Labour Costs: $-11\%$ (of revenue)
• Operating Overheads: $-5\%$ (of revenue)
• Final Net Operating Profit: $1\%$

This $1\%$ net margin is the entire buffer a newsagent has to cover unforeseen expenses, reinvest in the business, and earn a living. It is a financial reality that cannot sustain new, unrecoverable costs.

This situation is a function of the history of the newsagency channel and years of price control applied suppliers such that the price of many products have not kept up with inflation.

2. The burden of price-controlled products

Unlike most retailers, newsagents are price-takers, not price-setters, for their core products. These goods, including lottery tickets, newspapers, magazines, and greeting cards, account for approximately $75\%$ of total revenue in many stores.

Newsagents do not set the retail price of these items; they only earn a small, fixed commission. Therefore, they cannot increase prices to offset the cost of card transactions. This leaves them uniquely vulnerable to any changes in payment regulations.

3. How payment fees destroy profit

Surcharging is not a profit centre; it is a transparent cost-recovery mechanism. When a customer chooses to pay by card, the surcharge covers the fee charged by the bank. Without it, the cost is deducted directly from the newsagent’s small share of the profit.

The impact on the gross profit from each sale is devastating:

• Lottery Tickets: Payment fees consume $14\%$ of the gross profit.
• Newspapers: Payment fees consume $11.2\%$ of the gross profit.
• Magazines: Payment fees consume $5\%$ of the gross profit.
• Greeting Cards: Payment fees consume $2.8\%$ of the gross profit.

Forcing a newsagent to absorb these costs is not a minor adjustment, it’s a direct erasure of their already minimal profit margin.

4. An uneven playing field and inevitable closures

A blanket ban on surcharging would create an unfair market, favouring large corporations over small businesses. The two major supermarkets leverage their immense volume to negotiate dramatically lower payment processing fees from banks, a privilege unavailable to any small newsagent.

Forcing newsagents onto the same regulatory field without providing them with the same cost basis is inequitable.

A ban on surcharging would shift this entire financial burden back onto the business owner. Wiping out the fragile $1\%$ net profit margin will make hundreds of newsagencies instantly unviable. The foreseeable result is at least 100 small business closures within a year, hollowing out local shopping strips and costing local jobs.

I urge the RBA to consider these severe, unintended consequences and recognise that for many small retailers, surcharging is not a choice, but a fundamental requirement for survival.

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Mark Fletcher founded newsagency software company Tower Systems and is the CEO of newsXpress, a marketing group serving innovative newsagents keen to evolve their businesses for a bright future. You can reach him on mark@newsxpress.com.au or 0418 321 338.