Are you aware of the changes to surcharging?
If your business charges card payment surcharges, the surcharges must not be excessive.
When did the changes take effect?
The changes took effect on 1 September 2016 for large merchants and 1 September 2017 for all other merchants.
Details of the changes:
During the Financial System Inquiry, the community expressed concern that certain surcharges being imposed were in excess of what could be fairly considered to be the costs to businesses of accepting cards.[1]
In its response, the Government introduced new laws to the Competition and Consumer Act 2010 (Cth) which provide that a business must not charge a payment surcharge that is excessive.[2]
Now, any payment surcharge imposed by a business, must be limited to the costs of accepting a payment method as defined in the Reserve Bank of Australia (‘RBA’) Standard.[3]
Costs of accepting payment methods:
The RBA Standard[4] provides guidance to businesses with respect to identifying the costs of accepting a payment method that can legitimately be carried onto a consumer. For most businesses, those costs include:-
- Bank service fees;
- Fees paid for the rental and maintenance of payment card terminals; and
- Fraud related chargeback fees.
To assist businesses in calculating the costs of accepting cards, banks are now required to provide you with annual statements setting out their average cost of acceptance in percentage terms for each card payment method.
What are the consequences of non-compliance?
If a payment surcharge exceeds the permitted ‘costs of acceptance’ it will be considered to be excessive and may be subject to investigation by the ACCC.
The ACCC has additional powers to issue infringement notices to businesses breaching the new laws. An infringement notice may impose a financial penalty. For a listed corporation the maximum penalty that can be imposed is $126,000.00 and $12,600.00 for a body corporate.
Other penalties that may be imposed by the ACCC for non-compliance are pecuniary penalties (which require a Court Order), injunctions, community service and probation orders.
[1] Competition and Consumer Amendment (Payment Surcharges) Bill 2015, Explanatory Memorandum at P6.
[2] Competition and Consumer Act 2010 (Cth) S 55B.
[3] Competition and Consumer Act 2010 (Cth) S 55B(2).
[4] Reserve Bank of Australia Standard No. 3 of 2016.
