Make sure your card surcharges aren't 'excessive'

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Make sure your card surcharges aren't 'excessive'

New rules start today for all Australian businesses that apply a surcharge to card payments.

Effective 1 September 2017, the Australian Competition and Consumer Commission’s ban on excessive surcharges extends to all businesses that are based in Australia or use an Australian bank.

It means that when a customer pays with an EFTPOS, MasterCard, Visa or American Express card issued by Australian banks, the surcharge must not exceed the actual cost to the merchant.

“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,” said ACCC deputy chair Michael Schaper.

“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.”

However, according to the Reserve Bank of Australia, when calculating the cost of acceptance, it is legitimate to include all associated external costs, such as fraud prevention services, fraud-related chargebacks and terminal fees, providing they are properly apportioned across the card systems.

Schaper added: “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.”

Some combinations of services – Xero with either eWay or IntegraPay, for example – make it easy to add the transaction fee to the amount paid by the customer.

At this stage taxis are excluded as they are regulated by the states. You can find out more about the ban at the ACCC web site, and the Reserve Bank of Australia provides a FAQ about card payments regulations.

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