Provisions in the Competition and Consumer Act 2010 (Cth) which prohibited large businesses from charging excessive surcharges for processing credit card, debit card or EFTPOS transactions have been extended to apply to any business that is either located in Australia or uses an Australian bank. This change came into effect on 1 September 2017.
The purpose of the ban is to ensure that businesses do not charge customers a surcharge which is greater than the actual cost of accepting payment in a particular form.
What is a payment surcharge?
A “payment surcharge” is the amount charged for processing goods or services or for using one payment method instead of another. The Reserve Bank has indicated that the costs to businesses accepting payments by debit cards is around 0.5%, by credit card is 1-1.5%, and for American Express cards it is 2-3%. The ban does not include payments made by BPAY, PayPal, Diners Club cards, American Express cards issued directly by American Express or cheques.
Who is reponsible for investigating complaints about surcharges?
The ACCC will be responsible for investigating complaints made against a business. Businesses suspected of charging excessive fees may be issued a surcharge information notice, which will require the business to provide evidence of their costs of processing a payment in comparison to the surcharges applied. If the ACCC has reasonable grounds to believe that a business has charged excessive surcharges it may issue infringement notices or issue proceedings seeking pecuniary penalties. For example, in late 2017 the ACCC issued four infringement notices against Red Balloon in relation to excessive surcharges to four consumers. The business was consequently required to pay penalties totaling $43,200.
What about service fees or handling fees?
However, the ban does not impact a business’ right to set prices for the goods and services that it provides. Therefore if a business charges a “service fee” or “handling fee” for all payment methods then this may be acceptable provided that this fee is included in the advertised price for the goods or services.
Need your transactional policies reviewed?
We can review transactional policies relating to a buyer’s agreement to surcharges. Contact Su-Ann Loh (Director of Dispute Resolution) or Roberta Hosikian (Lawyer).