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Payment surcharge ban comes into force

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Payment surcharge ban comes into force

Banned

As well as the start of Spring, 1 September sees new rules come into force banning businesses from charging ‘excessive’ surcharges on card payments.

Under the rule, all businesses regardless of size will be banned from charging their customers excessive fees for using certain types of EFTPOS, American Express, Mastercard and Visa cards to make payments.

According to the competition watchdog, large businesses have already been operating under the ban since September last year, but it will now apply to all businesses.

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“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,” ACCC deputy chair Dr Michael Schaper said.

“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. The only costs businesses can include are external costs charged to you by your financial provider.”

Stiff penalties will also come into force as part of the ban, which amount to $2,520 for an individual, $12,600 for a body corporate and $126,000 for listed companies.

A spokesperson for the ACCC told My Business that in addition to the penalties, court action can also be launched for non-compliance, which could include pecuniary penalties in excess of $1.3 million, and enforce repayment to consumers deemed to have been overcharged.

Businesses that plan to continue passing on the surcharge to customers may face headaches implementing the change, given the differences various card providers charge.

A flat surcharge would likely leave business owners out of pocket, since the ACCC said that to be compliant, this would need to be set at the lowest cost method, not averaged across all the card types accepted.

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

Dr Shaper added that all businesses should have received guidance on this change from their financial institution in July, outlining the associated costs.

“If businesses are unsure about their cost of acceptance, they should contact their financial institutions,” he said.

Adam Zuchetti

Adam Zuchetti

Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016. 

The two-time Publish Awards finalist has an extensive journalistic career across business, property and finance, including a four-year stint in the UK. Email Adam at This email address is being protected from spambots. You need JavaScript enabled to view it.

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