Ban on excessive credit or debit card payment surcharges applies to all businesses from September 2017

From 1 September 2017, all businesses will be subject to a ban on excessive payment surcharges, limiting what businesses can charge customers for use of credit or debit cards. While this ban has been in place for large businesses since 1 September 2016, the ban will soon apply to all businesses that impose surcharges on credit or debit card payments.

On 25 February 2016, the Competition and Consumer Amendment (Payment Surcharges) Act 2016 (Cth) became law. It inserted a new part into the Competition and Consumer Act 2011 (Cth) banning excessive payment surcharges and providing new powers for the ACCC. The ban has a staged introduction – it currently applies to large businesses and will apply to all businesses from 1 September 2017.

When is a surcharge excessive?

A surcharge is excessive if it is more than the ‘cost of acceptance’. In practice, this means that businesses cannot charge in excess of what it costs them to process the payment.

The ‘cost of acceptance’ includes merchant service fees, fees paid for the maintenance of payment card terminals and any other fees incurred in processing card transactions. Some additional costs payable to other providers may be included in the ‘cost of acceptance’ if those costs are directly related to accepting that particular card type.

What payment types does the ban apply to?

The ban applies to surcharges on the following payment methods:

• Eftpos (debit and prepaid);
• MasterCard (credit, debit and prepaid);
• Visa (credit, debit and prepaid); and
• American Express companion cards.

The ban will not apply to the following payment types: BPAY, PayPal, Diners Club cards, American Express cards issued directly by American Express, cash and cheques.

What are the penalties?

If the ACCC believes that a business has charged a payment surcharge that is excessive, the ACCC can issue infringements notices with fines of:

• $2,160 for individuals and businesses other than companies;
• $10,800 for companies; and
• $108,000 for listed companies.

What should businesses do now?

Between now and 1 September 2017, business should review their payment surcharges to ensure they are not excessive.

Further details about how to calculate permitted surcharges are available on the ACCC’s website. If you would like further information, please do not hesitate to contact Gillian Bristow on + 61 7 3231 2925 or Emily Ng on +61 7 3231 2986.