All businesses now banned from excessive surcharging

Elizabeth Barry 1 September 2017

small business

It's a win for consumers, but businesses need to make sure they are compliant.

The Australian Competition and Consumer Commission (ACCC)'s ban on excessive card surcharges starts today, and businesses need to ensure they comply with the new rules to avoid fines and possible court action. The ban, having previously only applied to large businesses from September 2016, now applies to every business and ensures fairer surcharges for consumers.

Businesses can no longer charge more than what it actually costs them to process card payments, including bank fees and terminal costs.

“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," said ACCC deputy chair Dr Michael Schaper.

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

The ban applies to EFTPOS debit and prepaid cards; Mastercard credit, debit and prepaid cards; Visa credit, debit and prepaid cards; and American Express cards issued by Australian banks. American Express cards issued by American Express itself are exempt from the ban.

The ACCC has been given new powers to enforce the ban, including the power to issue infringement notices, take court action and seek pecuniary penalties.

“Our advice for businesses wanting to set a single surcharge regardless of the type of card their customers use is it must be the lowest of all the payment methods. You can’t use an average of all payment methods or you will land yourself in trouble,” Dr Schaper said.

To confirm you're compliant, check the monthly statements you receive from your payment facilitator which will outline the cost of acceptance for each payment type. The cost of acceptance will be expressed as a percentage of the value of a transaction. This is how much you can charge as a surcharge.

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

The small business guide to the excessive surcharge ban

Picture: Shutterstock

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