New laws take down exorbitant fees on card purchases

PROGRESS: As we move towards a cashless society, new laws brought in by the ACCC on September 1 mean businesses can't overcharge consumers for paying with a debit card.
PROGRESS: As we move towards a cashless society, new laws brought in by the ACCC on September 1 mean businesses can't overcharge consumers for paying with a debit card.

Businesses should no longer be hitting customers with excessive surcharges for paying with plastic.

Australian Competitor and Consumer Commission (ACCC) rule reforms that have been in place since September 1 mean businesses can only charge customers what it actually costs them to process payments for eftpos, debit mastercard, visa debit, visa credit and american express cards, including bank fees and terminal costs.

"A business is only permitted to charge a payment surcharge for the same amount that they are charged by their bank, payment facilitator or payment service provider, to process the payment," Deputy Chairperson ACCC Dr Michael Schaper said.

That means if a business' cost of acceptance is two per cent, it can only sting consumers a surcharge of two per cent.

"If a business wishes to impose one rate across all payment schemes, it must be the lowest of all schemes," Dr Schaper said.

"Businesses are not permitted to average or blend their surcharge rates across different payment schemes."

So if a business chooses to enforce a flat surcharge for all card types, that surcharge can only equal the lowest cost the business is charged to process any payment for any card type.

Businesses should know what processing a transaction costs them

Financial institutions or payment facilitators should have sent all businesses merchant payment statements in July, outlining their cost of acceptance for each payment method.

"That statement should clearly set out in percentage terms, the cost of acceptance for each different payment scheme," Dr Schaper said.

"If businesses have not yet received their statements they should contact their bank or payment facilitator directly."

What about irritating minimum purchase requirements?

Exasperating minimum purchase requirements are technically not illegal, however in many cases a merchant's agreement with card processing networks prohibits them from setting a minimum purchase amount for debit card transactions.

"In the absence of any private contractual arrangement with their bank or payment facilitator, businesses are free to set minimum purchase requirements for any payment scheme," Dr Schaper said.

"What is not permitted however, is for a business to charge a higher surcharge on smaller amounts.

"The core principle remains the same, that a business cannot surcharge above its permissable costs of acceptance, regardless of the purchase amount."

There is no 'standard' surcharge across businesses and no caps in place for any payment scheme.

"Surcharge amounts vary from business to business, as they are dependent on each business' negotiated terms with their acquirer, payment facilitator or payment service provider.

"The only 'cap' that exists is each business is not able to surcharge above their permissable costs of acceptance."

Making transactions straightforward

By introducing the new regulations, the ACCC is not trying to hinder small businesses with slender profit margins, who simply can't afford not to pass costs on.

"When businesses accept payments by card they incur costs for doing so," Dr Schaper said.

"Some businesses include these costs in the prices of their goods and services, and others choose to pass them on as a payment surcharge.

"The new laws are designed to allow businesses to fairly recover those costs, but also to ensure that there is increased transparency around surcharging, so that customers are aware of exactly what they are being charged for.

"Consumers can then make informed decisions around pricing and selecting the most appropriate payment method for them."

Dr Schaper said the decision to pass on costs by increasing prices or applying a surcharge is a commercial one that each business must consider individually.

"If a business chooses not to charge a payment surcharge to its customers, it is not precluded from building in those charges to the end-cost prices of their goods and services," he said.​

If you are being slugged an excessive fee, you should first talk to the business itself.

If you are unsatisfied with their response, you can raise the matter with the ACCC, who have extensive powers to ensure businesses are operating honestly and fairly.

Dr Schaper said the ACCC has been and continues to be proactively engaging with small businesses to ensure compliance with the new laws.

"In addition to providing clear information and guidance on our website and social media channels targeted at small businesses, the ACCC has also written to a large number of small businesses who have been the subject of complaint, and provided them with further guidance to ensure that they completely understand their obligations," Dr Shaper said.

"The ACCC has also responded to a significant number of small business enquiries, providing guidance to those who need additional assistance in achieving compliance with the new laws."

Additionally, the ACCC has prepared guidance material, and a series of frequently asked questions, to assist business and consumers to understand their obligations under the new laws banning excessive payment surcharges.

To view that information or to report an unscrupulous business you believe is overcharging go to and follow the appropriate links.