Proposed Surcharging Ban Poses Existential Threat to Australian Retail Newsagencies

Here’s what we think: A Proposed Surcharging Ban Poses Existential Threat to Australian Retail Newsagencies

September 12, 2025

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. While the policy is intended to simplify payments for consumers, it fails to account for the unique, low-margin business model of newsagents, who lack the financial capacity to absorb these costs.

Such a ban would disproportionately punish these small businesses and could lead to widespread closures across the country.

1. The Razor-Thin Margins of Survival

The typical Australian retail newsagency operates on a financial knife’s edge. An analysis of the business model, based on industry averages, reveals almost no room for additional, unrecoverable 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 represents the entire buffer a newsagent has to cover unforeseen expenses, reinvest in the business, and generate a personal income. This financial reality is a function of the newsagency channel’s history and years of price controls from suppliers, meaning the retail prices of many core products have not kept pace with inflation.

2. The Burden of Price-Controlled Products

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

Newsagents do not determine the retail price of these items; they earn only a small, fixed commission. Consequently, they cannot increase prices to offset the cost of card transaction fees, leaving them uniquely vulnerable to any changes in payment regulations.

3. How Payment Fees Erase Profit

Surcharging is not a profit centre for these businesses; it is a transparent cost-recovery mechanism. When a customer pays by card, the surcharge covers the fee charged by the financial institution. Without this mechanism, 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 business adjustment; it is 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 and inequitable market that favours large corporations over small businesses. The two major supermarket chains, for example, leverage their immense transaction volume to negotiate dramatically lower payment processing fees from banks—a privilege unavailable to any small newsagent. Forcing newsagents to operate under the same regulations without the same cost basis is fundamentally unfair.

A ban on surcharging would shift the entire financial burden of card processing 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.

For these small retailers, surcharging is not a choice, but a fundamental requirement for survival. Any regulatory changes must account for the severe, unintended consequences a ban would have on this vulnerable sector.

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