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No More Excessive Payment Surcharges

Delia Rickard
8th November, 2016

The government has banned businesses from charging excessive payment surcharges on credit, debit and prepaid card payments. How does the ban work? and what are the key things you need to know?

When you pay a business using certain payment types, for example a credit card, the business incurs costs for processing the payment. The level of those costs can vary according to the size of the business and the payment method.

Some businesses include these costs in the price they charge for their goods or services whereas other businesses choose to pass the costs on as a payment surcharge.

Businesses are allowed to pass on a payment surcharge, but it can’t be excessive. In other words, business can’t charge you more than what it costs them to process the payment.

The RBA has indicated, as a guide, that the costs to merchants of accepting payments by debit cards is in the order of 0.5 per cent, by credit card is 1-1.5 per cent, and for American Express cards it is 2-3 per cent.

The Australian Competition and Consumer Commission will investigate consumer reports of excessive payment surcharges and take action where necessary.

Key things to know

The ban has a staged introduction: It currently applies to large businesses and will apply to all other businesses from 1 September 2017.

Discuss the matter first: If you are not happy with a payment surcharge discuss the matter with the business. Remember, businesses are allowed to charge a payment surcharge, as long as it does not exceed their costs of accepting that payment type.

Pay using a cheaper payment method: If a business charges a payment surcharge, you may be able to avoid it by paying in a different way. Different payment types have different costs of acceptance, so some payment types may attract a smaller surcharge, or no surcharge at all.

Beware other charges may apply: It is important to note businesses can still charge other fees, such as ‘booking fees’ or ‘service fees’ which apply regardless of the method of payment. In doing so, those businesses must still comply with the Australian Consumer Law by ensuring the disclosure of any such fees is upfront and clear.

For more information on payment surcharges visit http://www.accc.gov.au/consumers/prices-surcharges-receipts/credit-debit-prepaid-card-surcharges

Delia Rickard is Deputy Chair of the Australian Competition and Consumer Commission

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