Issue #59: Nobody Passed A Law... The thing that happened on 1 October was not legislation...

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This weekly dispatch is specifically designed for restaurant and small business owners who are trapped in the daily grind and ready to move from "struggling artist" to strategic operator.

One note first. Last week I promised you The Golden Hour. It ships next Tuesday. This one could not wait, and you will want the seven days.

This is Part One of two. Today: what actually happened on 1 October, and the real size of your hole. Next Tuesday: the four things that close it, and the day your bank's price goes public.

It is a café I go to. Not a client, not a case study. Somewhere I buy coffee.

Eleven days after the surcharge came off, there was a sign on the counter. Printed, not handwritten. Three short sentences.

Prices were going up. The loyalty card was finishing. And the card change was named as one of the reasons.

I read it twice, and then I took a photograph of it.

Not because the owner did anything wrong. Because that notice is the clearest piece of evidence I have seen on this whole subject, and I have not seen it written up anywhere.

I have heard versions of it since. Operators saying the same thing in person, in the same flat tone. And in the past fortnight I have taken the surcharge line off fifteen restaurant websites.

So this issue is about what that notice gets right, and the two things it gets wrong.

Both of the wrong things are wrong in the same direction. They cost the venue money and goodwill at the same time.

And one of them is mine as well, which you will find halfway down.

Start here, because almost everything else follows from it.

There is no Act of Parliament banning card surcharges. The Reserve Bank did not ban them either.

What the RBA actually did was remove its own rule that stopped the card networks from banning surcharging. In its words: "The RBA will lift its prohibition of 'no-surcharge' rules for all designated card networks" [1].

Read that sentence again. The RBA lifted a prohibition. It did not impose one.

The networks then did the banning, in their own scheme rules and in the merchant agreement you signed. eftpos, Mastercard and Visa are the three the RBA designates [1].

The RBA's own wording is careful. The three designated networks "each decided to introduce 'no-surcharge' rules from 1 October 2026" [4]. So did three others: "American Express, UnionPay and PayPal have also decided to remove surcharging" [4]. Of those last three: "These firms are not currently subject to formal regulation by the RBA" [4].

Amex is the interesting one, and most coverage has it wrong in both directions. It is not a designated network, so the March decision did not reach it [1]. But it was not outside the RBA's orbit either. It "entered into a voluntary agreement with the RBA to not impose 'no-surcharge' rules" [1]. Then it "withdrew from its existing Undertaking with the RBA on 1 October 2026" [4].

UnionPay withdrew from its own Undertaking the same day. PayPal's rule took effect on 5 October [4][7].

The ACCC's consumer page names four of them. From 1 October 2026, no surcharge on "Visa, Mastercard, American Express and eftpos cards" [6]. UnionPay and PayPal are not on that page. They are in the RBA's table [4].

And the RBA said what happens if the networks had not followed through. If surcharging continued, "the Government could legislate a ban" [1].

Could. Not did.

Because it decides who can do what to you.

There is no ACCC fine for surcharging itself. Under a heading called "What the ACCC can't do", the regulator says it about as plainly as a regulator ever says anything. "We don't enforce the 'no surcharge' rules for card networks" [5]. It also says "We don't resolve individual complaints about pricing" [5].

The old excessive-surcharging regime that the ACCC did police "ended on 1 October 2026" [5]. That is the ACCC's own word for it.

So who enforces it? "The card networks or payment service providers are responsible for enforcing these rules, not the ACCC" [5].

Your exposure is your merchant agreement. Not a penalty notice. If you keep surcharging, the lever that gets pulled is your acquirer's. My reading of that, not anybody's published statement, is that the worst version is losing card acceptance.

The RBA also flagged that some providers "may disable surcharging functionality from that date" [4]. Many did. A good number of venues discovered the change not by reading anything, but because the terminal stopped offering it.

I wrote about this before it happened, in Issue #53 on 8 September, and I built a free checklist page to go with it.

Both of them describe your cost of acceptance as being "legislated downward" on 1 October. That word is wrong, and I want to be precise about how.

The interchange caps are a variation to a Reserve Bank Standard. That variation is delegated legislation — a legislative instrument registered as F2026L00434 on 14 April 2026, made under the Payment Systems (Regulation) Act 1998 [12].

So something was registered. No Act of Parliament was passed, and no statute bans surcharging. "Legislated downward" was still the wrong word for a Standard the Reserve Bank varied itself.

It appears three times across the issue and the page. It is being fixed on the page this week [12].

The page also lists PayPal as sitting outside the change. That was true when I wrote it on 8 September. It stopped being true on 5 October [7]. That is being fixed too.

I am telling you this for the same reason I tell you where every number came from. The whole proposition here is that the figures are checked. Most of what is circulating on this subject is still three months out of date. A newsletter that corrects itself in public is the only kind worth reading.

Here is the part of the counter notice that worries me.

Raising your prices is allowed, and it is not a grey area. The ACCC has written it down: "Businesses can adjust prices to recover the cost of accepting card payments" [5].

The RBA agrees, in the same plain terms. "Those costs can be reflected in a business's overall pricing, rather than charged as a separate surcharge" [4].

So the price rise on that counter notice is fine. The sentence explaining it is the problem.

The ACCC's rule is about what you say, not what you charge. Businesses "must not give false or misleading information about prices or the reasons for any price increases" [5].

And the regulator published a worked example, which is unusual and worth reading closely. It is a hair salon that puts its haircut price up for several reasons at once. The ACCC's words: the salon "must not tell consumers that the price increase is due to the changes to card payment surcharging" [5]. The full sentence, with its "In this situation" opener, is in the references. Its stated reason follows. "This will be misleading because the price increase also reflects other business costs, not just the cost of accepting card payments" [5].

Read what that actually catches.

It does not catch a venue that raises prices and says nothing. It catches a venue that raises prices for wages, rent, insurance and card costs, and then tells the room it was the card change.

There is already a published example of the shape. Philip Barbaro gave the ABC a version of it on 11 October. "There were other items on the menu we had to increase this week, to offset the bank surcharge" [10]. I am not suggesting that is misleading, and nobody has said it is. I am pointing out how naturally the sentence arrives.

Which is exactly what a notice on a counter does.

Most operators have this backwards. They think the risk is in the rise and the safety is in the explanation. It is the other way round. The explanation is the only part a regulator has published an example about.

I am not going to quote you the maximum penalty.

It exists, it is very large, and it applies to corporations in misleading-conduct cases that look nothing like a café with a printed sign. Putting that number next to your counter notice would be scaring you with arithmetic that does not apply to you.

What is realistic is smaller and more annoying. The ACCC takes reports from the public [5]. A customer who photographs your notice and reports it has cost you a letter, an afternoon, and a conversation you did not want.

The fix is free and takes four minutes. Either say nothing about the reason, or give the real one, which is almost never a single cause.

The second thing the counter notice gets wrong is the arithmetic underneath it.

A surcharge was not revenue. It was a collection.

The RBA put the national total at around $1.8 billion in 2024/25. Of that, "an estimated $1.6 billion of these surcharges were paid by consumers, with the remaining $0.2 billion paid by businesses" [1].

You collected it at the terminal and handed it to your acquirer. If your surcharge was set properly it covered your cost of acceptance and almost nothing else.

So you did not lose $15,840 of income on 1 October. You lost the ability to show a customer where $14,784 of cost was going.

The cost was always yours. It just had a sign on it.

The interchange caps on domestic-issued cards fell on 1 October too. The RBA costs the whole package at "lowering wholesale card payment costs for merchants by around $910 million per year" [2].

Read what is inside that number. The RBA's own sentence attributes it to the domestic cuts and to a new cap on foreign-issued cards [2]. That second part does not start until 1 April 2027. Only some of the $910 million is in force now.

It also says "small merchants are expected to benefit the most from the reduction in interchange fees" [2]. The stated point was "lessening the extent of cross-subsidisation of large merchants' payment costs by small merchants" [2].

Two things about that, and they pull in opposite directions.

The first is that it is real. Small merchants were genuinely subsidising big ones, and the RBA fixed part of that.

The second is that interchange is what your acquirer is charged. Whether any of it reaches your statement depends on your plan and your provider. $910 million is a wholesale number for the whole country. It is not a figure anybody has promised you.

Which brings us to the number that is actually yours.

Illustrative figures. Not a real venue. Put your own in.

Take a venue turning over $1.2m, with 88% of sales on card. That is $1,056,000 through the terminal.

On the RBA's own averages, a small merchant on a single-rate plan pays 1.4% of transaction value to accept cards [3].

$14,784 a year.

If that venue surcharged at 1.5%, it was collecting $15,840. Set against a $14,784 cost. The surcharge was covering the cost and leaving about $1,056 — twenty dollars a week.

So the hole is not $15,840. The hole is $14,784, because that is the cost that did not go anywhere.

Now put it on the menu.

$14,784 across $1.2m of turnover is 1.23%.

And here is the scale of it. On the ATO's benchmarks, a coffee shop turning over more than $600,000 runs total expenses averaging 89% of turnover [11]. Eleven cents in the dollar left, before the owner takes anything. On the same example, 1.23% of total turnover is about one dollar in nine of that. Those are averages from tax returns rather than your venue, and the ATO says to treat them as a guide [11].

That is my arithmetic on the RBA's published rates, not an RBA figure, and it is labelled that way on purpose.

Now hold it against what actually happened.

A private coffee-price tracker surveyed cafés on the price of their smallest flat white in October. 17% raised the price. 79% held it. 4% dropped it. Among those who raised, the typical rise was about 50 cents [8]. The October average of $5.16 comes from a sample of 2,245 cafés [8].

Seven cents of surcharge came off a $5 coffee. Fifty cents went on the price.

I am not accusing anybody of anything, and neither is the tracker's own author. Chris Drake built it. SmartCompany reports him cautioning that the October figure remains an early read. It also reports him saying the ban is unlikely to explain the full size of the increases [8]. Those are the journalist's words for Drake's position, not quotes.

His one direct quote in the piece is about why cafés hold off at all. "cafes are so worried about putting pricing up because they're concerned it's going to hurt their volume" [8].

That is the honest version and it is more useful than the angry one. Stephen Wu, an economist at the investment bank UBS, put the same thought in The Guardian a fortnight in. Resilient demand and high inflation "may be allowing merchants to use the change as 'cover' to pass through broader cost pressures", he said. His second point: "evidence of 'round-up' pricing in items such as coffee suggests pass-through could exceed the surcharge itself" [9].

Wes Lambert of the Australian Restaurant & Cafe Association said it from the other side, and more bluntly. "Maybe this is the catalyst that has caused cafes and restaurateurs around the country to wake up" [9].

Both of those can be true. A venue that was underpriced in September is still underpriced in October, and a card rule did not change that either way.

What a card rule changed is whether you get to put it on a sign.

Back to the counter notice, and the sentence I have thought about most.

The loyalty card is finishing.

That is the second decision on that sign, it is almost certainly the larger of the two, and it got no sentence of its own. It was folded in under a reason that only covers the smaller one.

I have spent two weeks looking for Australian evidence on what a stamp card is actually worth to a venue. There is none. Not one article links the surcharge change to venues cutting loyalty programmes, and nobody publishes traceable figures on what one returns.

That is Part Two, along with the four things that actually close the hole you just measured. Today the job is the measuring.

Same working folder as the last two issues. If you built the Beverage Desk, this lives beside it.

Feed it three things. Your last three merchant statements. Your menu, with prices. And your September figures, before any of this moved.

Next week the same desk gets your signage photographs and your booking screens. Do not throw anything out.

This is the one to run first, and it is the only one that produces a number. It separates what you collected from what it cost, which almost nobody has on one page. Then it turns what is left into cents on your own menu items.

You need: three months of merchant statements, your old surcharge rate, your annual turnover and your card share.

You get back: one table showing the real hole. That hole expressed as a percentage of turnover. And what it comes to on three things you actually sell.

It will not tell you to raise your prices. That is your call and your accountant's.

Pro Tip: Take this AI-generated content and add your personal touch. Change a word here, add a local reference there, include a quick story about a regular customer. The AI does the heavy lifting; you add the soul.

Two steps. Twenty minutes in total.

The struggling artist writes the notice. They feel the change in the bank account, they feel it is not their fault, and the sign on the counter is where that lands. Prices up, loyalty card gone, and a reason attached so nobody thinks badly of them. The reason is the part a regulator has published an example about. And the loyalty card was the bigger of the two decisions. It did not get its own sentence.

The Savvy Operator does not write a notice, because they do not need one. They pull the statement and calculate the blended rate while everybody else is printing signs. Then they decide about the loyalty card on its own evidence, in its own week, for its own reasons. The menu moves when the arithmetic says it should, by the amount the arithmetic says, and nobody has to be told why.

Here is the whole thing in a line.

A price you have to explain is a price you have not set.

Last week it was the rate schedule. The invoice is the number they show you. The schedule is the number that decides. This is the same shape. The surcharge was the number they showed your customer. The blended rate is the number that decides. One of them disappeared on 1 October. The other one has been there the whole time, and almost nobody has ever read it.

One more thing, and it is the reason this issue exists.

The counter notice was honest. That owner was not trying to get away with anything. They were trying to be straight with their regulars, which is more than most businesses manage.

Being straight is the right instinct. It just needs the right sentence, and on this subject the right sentence is shorter than the one most people reach for.

Somebody felt they had to explain something. That is the whole of it. And the fix is a price that does not need explaining.

Get your September merchant statement out. Write down your total fees and your card turnover, and divide one by the other.

Ten minutes.

Next Tuesday I will show you what that percentage is worth, and the four things that close the gap you just measured. You will want your own figure in front of you when it lands.

There is reporting on individual venues. The ABC spoke to two Sydney operators on 11 October [10]. SmartCompany spoke to a Rose Bay restaurateur on 29 September.

What there is not is a count. Nobody has asked a few hundred operators what they actually did, and the coffee tracker only measures the price of a flat white.

So let us build the number ourselves. One tap, no email, and I will publish the result next Tuesday in Part Two.

Nearly three weeks in. What have you actually done about 1 October?

Here is the honest problem with everything above. It is another job.

You already run a kitchen, a roster, a supplier list and a family. Nobody needs a fourteenth tab open.

So do not run it yourself. Set your AI up as a second brain for the business and let it hold the detail.

Not a toy. Not a chatbot you poke when you remember it exists.

A working folder that knows your menu, your prices, your hours, your reviews and your suppliers. And the twenty questions your team answers on the phone every week.

Feed it those things once and it stops handing you ideas. It starts handing you a scoreboard.

That is why I built Strategic AI Marketing. We set your AI up properly, on your real numbers, so it thinks with your business instead of guessing at it.

You do the cooking. It does the remembering.

One, and it is free. Get your AI Visibility Snapshot. Four assistants, twelve questions about your venue, written down and dated. You will know exactly where you stand by the end of the week. It is at strategicai.marketing/free-ai-marketing-snapshot.

Two, if the counter notice sounded familiar. Reply to this email with one word: NOTICE. Tell me your card turnover and what you charged before 1 October.

I will send back your real gap and your blended rate, worked from your figures rather than an average. Then next Tuesday's issue tells you what to do with it.

No pitch deck. No discovery call unless you ask for one. One reply, one useful answer.

Next Tuesday — Part Two: What Actually Replaces The Money. Four levers, ranked by how well evidenced they are rather than how often they are tried. The one that is nearly free and almost nobody pulls. The loyalty card, and why nobody in Australia can tell you what one is worth. And 30 October — the first day in Australian history that what your bank charges gets published.

Until then, remember. A price you have to explain is a price you have not set. Serve your community. Be the operator.

Talk soon, Rowan

Talk soon,

Rowan Shead

The Editor

The Savvy Operator

Owner of Strategic Ai Marketing

[[1] Reserve Bank of Australia, Review of Merchant Card Payment Costs and Surcharging — Phase 3 Conclusions Paper, Ch. 2 "Surcharging", published 31/03/2026, read at source 19/10/2026. Source of: "The RBA will lift its prohibition of 'no-surcharge' rules for all designated card networks"; "If surcharging continues after the prohibition of 'no-surcharge' rules is lifted, the Government could legislate a ban on surcharging cards of the designated card networks"; around $1.8 billion in surcharges in 2024/25, of which "an estimated $1.6 billion of these surcharges were paid by consumers, with the remaining $0.2 billion paid by businesses"; 16% of Australian merchants surcharged designated-network card payments in 2024/25; and the estimated aggregate price effect of around 0.1%, described as "a small, one-off impact on measured inflation". Amex's voluntary agreement is at endnote 12: American Express "entered into a voluntary agreement with the RBA to not impose 'no-surcharge' rules". The three designated networks are eftpos, Mastercard and Visa. The RBA lifted its own prohibition; it did not ban surcharging.

[2] Reserve Bank of Australia, Conclusions Paper, Executive Summary, 31/03/2026, read at source 19/10/2026. "Lowering wholesale card payment costs for merchants by around $910 million per year"; "small merchants are expected to benefit the most from the reduction in interchange fees"; "lessening the extent of cross-subsidisation of large merchants' payment costs by small merchants". This is a system-wide wholesale figure covering both the domestic interchange cuts and a cap on foreign-issued cards that does not commence until 1 April 2027. It is not a per-merchant saving and nobody has published one.

[3] Reserve Bank of Australia, Conclusions Paper, Ch. 6 "Competition in Card Acquiring Services", 31/03/2026, read at source 19/10/2026. "On average, it costs a small merchant on a single-rate plan 1.4 per cent of their transaction value to accept card payments." The chapter gives no separate figure for blended plans as distinct from single-rate plans. The per-venue dollar figures in The Brutal Math are my own arithmetic on this published rate and are labelled as such in the text.

[4] Reserve Bank of Australia, Conclusions Paper, FAQs, downloaded and read as source text on 19/10/2026 after a summarised read of the same page returned a sentence that is not on it. The page says: "The three designated card networks, eftpos, Mastercard and Visa, each decided to introduce 'no-surcharge' rules from 1 October 2026. American Express, UnionPay and PayPal have also decided to remove surcharging. These firms are not currently subject to formal regulation by the RBA." Footnotes to its announcement table state that "American Express withdrew from its existing Undertaking with the RBA on 1 October 2026", that "UnionPay withdrew from its existing Undertaking with the RBA on 1 October 2026", and that "PayPal's no surcharge rule will take effect from 5 October 2026". A further footnote records that the networks' rules "are business decisions taken by each network and may be subject to change". Also from this page: "To implement this, the RBA has removed its prohibition on 'no-surcharge' rules"; "Those costs can be reflected in a business's overall pricing, rather than charged as a separate surcharge"; "The RBA does not directly regulate merchants"; and "some providers have indicated they may disable surcharging functionality from that date".

[5] Australian Competition and Consumer Commission, Card surcharges (business guidance), read at source 19/10/2026. "Businesses can adjust prices to recover the cost of accepting card payments"; "must not give false or misleading information about prices or the reasons for any price increases"; the hair salon worked example, quoted in full — "In this situation, the hair salon must not tell consumers that the price increase is due to the changes to card payment surcharging" and "This will be misleading because the price increase also reflects other business costs, not just the cost of accepting card payments"; the disclaimers appear under the heading "What the ACCC can't do"; "the card networks or payment service providers are responsible for enforcing these rules, not the ACCC"; "we don't enforce the 'no surcharge' rules for card networks"; "we don't resolve individual complaints about pricing"; "we accept reports where people consider a business is doing something it shouldn't"; and on the old regime, "the ACCC was responsible for enforcing the excessive card surcharging rules" and "these rules ended on 1 October 2026". "Ended" is the ACCC's word. Whether the statutory provisions were formally repealed or rendered inoperative is not stated and is not asserted here.

[6] Australian Competition and Consumer Commission, Card surcharges (consumer guidance), read at source 19/10/2026. "From 1 October 2026, businesses can no longer add a surcharge for payments made using Visa, Mastercard, American Express and eftpos cards." UnionPay and PayPal do not appear on this page; they are in the RBA's announcement table at [4]. The page also directs consumers concerned about a surcharge to the business or the relevant card network — not to the ACCC, which is the practical meaning of the enforcement split at [5].

[7] SBS News, Cameron Carr, published 30/09/2026 and updated 01/10/2026. American Express and UnionPay also removed surcharging from 1 October; PayPal from 5 October.

[8] SmartCompany, Simon Thompson, "Coffee prices jump 50 cents on average at one in six cafes after surcharge ban", 07/10/2026, read at source 19/10/2026. 17% of cafés raised the price of their smallest flat white in October, 79% held and 4% reduced; among those raising, the typical rise was about 50 cents, with 34% raising by 41–50c and half of all increases between 20c and 50c; the October average was $5.16 across 2,245 cafés, against $5.09 in September (~6,300) and $5.00 in April (~4,700). The source is Small Flat White, a private price tracker built by Chris Drake, founder of an automation consultancy — not an official index. October data was gathered largely by phone using an automated voice. Drake's caveats are reported by SmartCompany in indirect speech, not quoted — that the October figure remains an early read, and that the ban is unlikely to explain the full size of the increases. They are paraphrased in this issue for that reason. His one direct quote in the article is about cafés' reluctance to raise prices and is reproduced verbatim.

[9] The Guardian Australia, Patrick Commins, 13/10/2026. Stephen Wu, economist at UBS: conditions "may be allowing merchants to use the change as 'cover' to pass through broader cost pressures", and "evidence of 'round-up' pricing in items such as coffee suggests pass-through could exceed the surcharge itself". Wes Lambert, chief executive, Australian Restaurant & Cafe Association: "Maybe this is the catalyst that has caused cafes and restaurateurs around the country to wake up". Disclosure: The Guardian's own page is behind a sign-up wall and I read the article through a republication. The three quotes match that text exactly. One discrepancy worth knowing: the republication describes the coffee tracker's sample as more than 1,500 cafés, where SmartCompany gives 2,245 for the October average [8]. Two accounts of the same dataset, and I cannot reconcile them.

[10] ABC News, Danuta Kozaki, "NSW small businesses contend with how to cover merchant fees after card surcharge ban", 11/10/2026, read at source 19/10/2026. Philip Barbaro, Sydney hospitality operator: "In my very competitive market in the city we have not touched the price of our coffee, but there were other items on the menu we had to increase this week, to offset the bank surcharge". The article also carries an ACCC statement that businesses "must not mislead consumers about their prices or the reasons for any price changes". Neither operator quoted mentions a loyalty programme, and the article does not raise the subject.

[11] Australian Taxation Office, Small business benchmarks — Coffee shops, 2023–24 financial year data, page last updated 16/03/2026, read at source 19/10/2026. Total expenses as a share of turnover, averages: 79% at $65,000–$250,000 turnover, 86% at $250,001–$600,000, 89% above $600,000. The ATO publishes ranges but no averages for labour and rent. Benchmarks are drawn from tax return data and are a guide, not a target.

[12] Correction, 20/10/2026. Issue #53 (08/09/2026) and the page at strategicai.marketing/card-surcharge-ban-australia described the cost of card acceptance as being "legislated downward" on 1 October. The interchange caps are a variation to a Reserve Bank Standard — the Payment Systems (Regulation) Standards (Merchant Card Payment Costs and Surcharging) Variation 2026, registered on the Federal Register of Legislation as F2026L00434 on 14/04/2026 and made under the Payment Systems (Regulation) Act 1998. That is delegated legislation made by the Reserve Bank, not an Act of Parliament, and no statute bans surcharging. The word appears three times across the issue and the page; the page is being corrected this week. The same page lists PayPal as outside the change, which was accurate on 08/09/2026 and ceased to be on 05/10/2026 [7]. Neither error changes any figure. Both are being fixed rather than left.

Strategic AI Marketing's own citation record — 0/12 on 26/05/2026 and every reading since — is published at strategicai.marketing/we-did-this/.