Australia says goodbye to excessive card payment surcharges

Good news for plastic lovers: payments just got a whole lot cheaper.

As of 1 September 2017, every business across Australia will be banned from charging excessive surcharges on payments made by certain types of EFTPOS, Mastercard, Visa and American Express cards.

The Australian Competition & Consumer Commission (ACCC) have released a statement about the ban, advising that it extends to all businesses that are either based in Australia or that use an Australian bank.

ACCC Deputy Chair Dr Michael Schaper has addressed the ban, explaining that the “good news for consumers is that businesses can now only surcharge what it actually costs them to process card payments, including bank fees and terminal costs.”

“For example, if a business’s cost of acceptance for Visa Credit is 1.5 per cent, consumers can only be charged a surcharge of 1.5 per cent on payments made using a Visa credit card.

“Our message to business is that you are not allowed to add on any of your own internal costs when calculating what surcharge you will charge customers,” said Dr Schaper.

Business who want to set a single surcharge across multiple payment methods must set the surcharge to the level of the lowest cost method – not an average.

“If a business’s cost of acceptance for Visa Debit is 1 per cent, for Visa Credit is 1.5 per cent and American Express is 2.5 per cent, the single surcharge would be 1 per cent as that is the lowest of all payment methods.”

Source: ACCC.gov.au

Businesses not left in the dark

Treasurer Scott Morrison has released a statement on this excessive payment surcharging ban, stating that the action will “ensure Australians are not ripped off when they make purchase with their cards.”

“Smaller businesses were granted extra time in which to prepare for the ban, but from today all those businesses will need to cease any excessive surcharging.

“If they continue to impose a charge for card payments, they must restrict it to their reasonable cost of acceptance of the payment,” said Treasurer Scott Morrison.

Businesses have had over a year’s notice that this change was coming, allowing for substantial time to review their surcharging practices and understand and comply with obligations.

However, businesses won’t be left in the dark when it comes to calculating surcharges. Banks have been required to “provide statements with average costs of accepting each payment method to inform business decisions on surcharging,” said Treasurer Scott Morrison.

The Treasurer went on to warn business that if charges exceed these ranges, “the matter can be raised with the ACCC for investigation.”

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