Bill Makris didn't want to add a fee for customers paying with credit cards but the owner of Tank Fish & Chippery felt he had no choice.
"We work really long hours for small profits," he says. "Especially in the hospitality industry it's long hours, seven days a week, you look at the bottom line and think 'Gee is it worth it?' "
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Makris charges a 30¢ fee per transaction under $10 for customers paying with credit cards and his Melbourne stores don't accept American Express "because of the high fees".
"We mention [the fee] before they purchase and some people are happy with it and some people aren't," he says.
![Bill Makris, the owner of Tank Fish & Chippery, has introduced a credit card surcharge to help cover his costs.](/web/20170315222212im_/http://www.smh.com.au/content/dam/images/g/u/x/j/9/l/image.related.articleLeadwide.620x349.guxcxj.png/1489456861344.jpg)
Makris says American Express quoted him a charge of 3.5 per cent of transaction total while Visa and Mastercard charge around 2 per cent of the transaction total.
"Over the year it costs me $5000 to $10,000 per store and that is straight out of my bottom line," he says.
Cap on interchange fees
But the days of small businesses bearing the brunt of high credit card fees are set to come to an end with a cap on credit card fees coming into force on July 1 this year.
This cap is also likely to mean the end of lavish credit card perks.
![ANZ will no longer offer American Express cards in a response to the cap on interchange fees.](/web/20170315222212im_/http://www.smh.com.au/content/dam/images/g/o/g/p/u/7/image.related.articleLeadwide.620x349.guxcxj.png/1489456861344.png)
In the first sign of the industry shake-up to come ANZ is cutting its ties with American Express as a result of the regulatory change and will no longer offer American Express cards.
Known as "interchange fees" the credit card fees that provided revenue to card issuers will be capped at 0.8 per cent of a purchase price from July.
The cap will offer fee relief to many small businesses with research by the Reserve Bank finding small businesses bear much more of this cost, paying almost five times more on average a transaction than big businesses due to discounts on offer for high volumes of transactions.
ANZ moves first
Nick Higginbottom, spokesman for ANZ, said the bank stopped offering American Express "companion cards" with new rewards credit card accounts from March 1.
Our message to small businesses is to check what is in your wallet.
Martin Seward
Existing ANZ customers can keep using their existing ANZ American Express card until August 5 with no change to the number of rewards points they will earn on eligible purchases.
"We are making changes to our rewards programs in response to new card payments regulations being introduced later this year," Higginbottom says.
Other lenders are likely to follow suit in scaling back rewards, according to online comparison site Mozo.
"We've seen card providers slash points-earning rates, introduce more restrictive points caps and, in the case of ANZ, get rid of higher earning American Express companion cards," says Kirsty Lamont, a spokeswoman for Mozo. More providers are likely to do the same later this year, she says, continuing a trend of rewards programs declining in value.
Amex focuses on rewards
Martin Seward, vice-president for small and medium enterprises at American Express, says all of the credit card company's bank partners are considering what to do with American Express companion cards.
However, Seward claims small businesses that rely on credit card points to fund perks and travel will be adversely impacted by the cap on interchange fees.
"One of the things that anecdotally we know is that a lot of small business owners use personal cards for their small business purchases," he says. "We are encouraging small business owners to review their cards and consider whether they best fit their needs."
Seward says American Express cards issued directly by American Express are not impacted by the cap on interchange fees.
When asked whether American Express is looking to reduce its fees, Seward says: "It's certainly in our field of vision at the moment."
He would not disclose the fees charged by American Express to businesses and says they "differ from business to business and industry to industry".
"They are commercial in confidence," he says. "It's fair to say we are a premium product and with that comes a price differential but it's incorrect to say we are always the most expensive."
A survey by American Express of 350 small businesses found 73 per cent have limited understanding of the potential impact of the credit card fee cap.
"Our message to small businesses is to check what is in your wallet," Seward says.
Commonwealth Bank of Australia says it is always trying to ensure its reward scheme is useful and that customers also valued other features such as travel insurance. National Australia Bank says it has recently launched a proprietary rewards program to give customers "greater choice and flexibility". Westpac Banking Corp declined to comment.
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