Excessive card surcharge bans are coming for small businesses

Sally McMullen 29 August 2017 NEWS


Aussie small businesses only have a few days to review and change their card surcharges.

It's time to say sayonara to excessive credit card surcharges. From 1 September 2017, small businesses can no longer charge a flat fee when accepting credit card transactions. Following new regulations enforced by the Reserve Bank (RBA) and Australian Competition and Consumer Commission (ACCC), businesses can only charge customers what it costs to process the transaction.

So, if it costs 1% to process a Visa payment after bank fees and terminal costs, the merchant can only charge the customer a fee of 1% come September. If small businesses don't comply with the new rules, they can expect a whopping fine of $10,800 to $108,000 courtesy of the ACCC.

How much could I save?

How much you can save will depend on where you regularly pay with plastic and the fees they used to charge. However, in September 2016, the RBA and ACCC applied these regulations to large businesses and we saw surcharge costs drop dramatically for credit and debit card users. This was especially obvious with some of Australia’s biggest airlines.

For example, Qantas swapped its flat fees for percentage-based surcharges. Previously you’d pay a credit card flat fee of $7.00 for domestic or Australian trans-Tasman flights or $30.00 for international flights, but this dropped to a fee of 1.3%. So, while you used to pay $7.00 surcharge for a $250 domestic return flight, it will now cost $3.25 if you use a Visa or Mastercard credit card to pay for your Qantas flights.

While it's only a couple of dollars, this is a saving of almost 50%. Plus, if your local cafe is cutting back its card surcharges, this could add up to some significant savings on your everyday expenses. This is especially important considering our ever-growing dependence on card rather than cash.

Which cards are included under the ban?

The ACCC has confirmed that the following payment types are covered by the excessive card surcharge ban:

  • Eftpos (debit and prepaid)
  • Mastercard and Visa (credit, debit and prepaid)
  • American Express companion cards (Amex cards issued by an Australian financial service provider, rather than directly through Amex).

This means that payment types not covered by the ban include BPAY, PayPal, Diners Club cards and American Express-issued cards.

It isn’t mandatory for businesses to pass on the cost of processing debit and credit card payments, so this ban won’t impact small businesses that don’t impose a payment surcharge.

If you’re a small business owner and you haven’t already reviewed your card surcharges, you’ll need to do so in the next week. In early July, the ACCC encouraged small businesses to review their surcharges to ensure they were prepared. Banks were required to send businesses merchant statements that explain the business’ cost of accepting card payments so they can review their surcharges accordingly.

If you’re a business owner and haven’t received any information, get in contact with your bank as soon as possible to avoid getting fined from September onwards. You can also check out our guide on what your business needs to know about the ACCC surcharge ban for more tips and information.

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