All businesses across Australia are now banned from charging excessive surcharges for using certain types of EFTPOS, Mastercard, Visa and American Express cards.
The announcement was made that the ban was effective from Friday 1 September by the Australian Competition & Consumer Commission.
The ACCC said that the concept of the ban is simple: You can only charge what it costs you to process any payment.
The ban on excessive surcharges was enforced on large businesses last September and has now been extended to all businesses that are either based in Australia, or make use of an Australian bank.
If your business does charge clients a surcharge, you can only charge the bank fees and terminal costs.
If, for example, your cost of acceptance for Visa Credit is 1.5%, you can only charge a surcharge of the equivalent amount on that Visa credit card transaction.
The Reserve Bank of Australia provides detailed information for businesses, including how the costs that can be passed on to a consumer as a surcharge are identified and quantified. The RBA states that surcharge rates for credit cards are between 1 and 1.5%, 0.5% for debit cards and between 2% to 3% for American Express cards.
What are the penalties for excessive surcharge?
The ACCC is responsible for enforcing the ban and will investigate complaints relating to excessive payment surcharges.
The ACCC can issue surcharge information notices, and these will require a business to provide evidence of their costs of processing a payment, in comparison to the surcharges they are applying.
If the ACCC has reasonable grounds to believe that a business has breached the ban, it can issue an infringement notice:
- 600 penalty units ($126 000) for a listed corporation
- 60 penalty units ($12 600) for a body corporate
- 12 penalty units ($2 520) for a person other than a body corporate.
The ACCC can also take court action against a business:
- 6,471 penalty units ($1 358 910) for a body corporate
- 1,295 penalty units ($271 950) for a person other than a body corporate.
The ACCC can also seek redress on behalf of a group of consumers who have been charged an excessive surcharge, as well as seek injunctions and various non-punitive orders (including community service and probations orders).
In addition to ACCC enforcement action, an individual who suffers loss or damage due to a breach of the ban can bring an action seeking damages.