ACCC encourages small business owners to review surcharges

Sally McMullen 3 July 2017

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The ban on excessive payment surcharges will apply to small business from 1 September this year.

The amount you shell out for paying on plastic is about to get lower. The Australian Competition and Consumer Commission (ACCC) has put a call out to small businesses to review their card surcharges.

This is because from 1 September 2017, the RBA will enforce its ban on exorbitant card payment surcharges. This means that the surcharges they charge customers can no longer exceed the cost of processing the payment. This applies to Eftpos (debit and prepaid), Mastercard, Visa and bank-issued American Express cards.

As the ban is fast approaching, the ACCC is urging small businesses to review their surcharges to ensure they align with the new laws to avoid being stung by penalties come September.

“Businesses can only pass on to customers what it costs them to process a payment such as bank fees and terminal costs. For example, if your cost of acceptance for Visa credit is 1% you can only surcharge 1% on Visa credit card payments onto your customers,” says ACCC deputy chair Michael Schaper.

The bill also gives the ACCC the power to penalise institutions charging excessive surcharges for card payments. If businesses are caught overcharging, they can be hit with a fine of $10,800 to $108,000.

Businesses can calculate their surcharge and cost of acceptance based on the bank fees (which can be found in the merchant statement) and any additional permissible costs such as gateway fees, terminal fees or fraud prevention insurance.

Small businesses can expect to receive information from their bank which will help calculate appropriate surcharges when accepting debit and credit card payments. The ACCC has also published a fact sheet so business owners can better understand their obligations and what they can charge.

As passing on the cost of processing debit and credit card payments is not mandatory for businesses, the ban doesn’t impact those who do not charge payment surcharges.

This same ban was applied to large businesses from 1 September last year. As a result of this, we saw large businesses such as Qantas and Virgin Australia drop their card acceptance fees.

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