Taxi payment operator Cabcharge's profits went into reverse after it was forced to slash the surcharge for passengers paying by cards in Victoria.
The company's full year net profit fell to $56.1 million in 2013/14, 7.4 per cent lower than the previous year.
Cabcharge blamed the fall in part on the Victorian government's new five per cent cap on card service fees.
The company estimates the government's reduction of the surcharge from 10 per cent cost Cabcharge about 4.5 per cent in revenue since the laws were introduced on February 1.
But Cabcharge may soon have to contend with similar service fee changes in other Australian states.
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Politicians in NSW and Western Australia have flagged their intentions to follow Victoria's lead.
Cabcharge chief executive Andrew Skelton said the cap was hurting business in Victoria.
"The limit on service fees in Victoria is expected to continue to impact upon us," Mr Skelton said.
"Our technical competence in payments will however allow us to continue to provide payment services in a profitable manner."
While Cabcharge's revenues were hurt by the reduction in the surcharge, turnover in Victoria rose by nearly a third.
Overall, the company's annual revenue stalled at $197 million.
Mr Skelton said Cabcharge was a part of a changing industry, and has to refocus its business to meet new challenges.
The company closed one unprofitable smash repairs business, which was costing it around $500,000 a year and sold-off luxury vehicles to save money.
It cut its fully-franked final dividend by two cents to 10 cents.
Cabcharge shares were 15 cents higher at $5.15 at 1302 AEST.
CABCHARGE PROFIT FALLS AFTER LAW CHANGES
* Net profit of $56.1m, down 7.4 pct from $60.6m in 2012/13
* Revenue of $197.3m, up 0.3 pct from $196.6m
* Fully franked final dividend of 10 cents per share, down from 12 cents
