Changes to the amount merchants can charge customers for paying with credit cards are due to come into effect from September. Here’s what you need to know.

The days of charging customers a premium for using their credit or debit card will soon be over, with the Australian Competition and Consumer Commission (ACCC) to crack down on large merchants that charge customers excessive surcharges for the use of a credit or debit card from September 1.  

A large merchant is defined as one that satisfies at least two of the following requirements:  it has a consolidated gross revenue of $25 million or more; the value of its consolidated gross assets is $12.5 million or more; or it employs 50 or more employees.

SME will have another year to comply.

According to the ACCC, surcharges will be considered excessive where they exceed the permitted cost of acceptance, as defined in the Reserve Bank of Australia’s Payments System Board Standard

“In short, the new provisions will limit the amount businesses can surcharge customers for use of payment methods such as most credit and debit cards,” says ACCC Chairman Rod Sims. “The limit will be linked to the direct costs of the payment method such as bank fees and terminal costs.”

The Standard applies to EFTPOS as well as MasterCard Debit, MasterCard Credit, Visa Debit, Visa Credit and American Express cards issued by Australian banks.

“While merchants will continue to have the right to surcharge for more expensive payment methods, the changes are intended to provide customers with clarity around surcharges and strengthen the ACCC’s powers of enforcement in instances where merchants are imposing excessive surcharges," says Australian Business Lawyers & Advisors. 

“Failing to limit surcharges to the actual cost of processing payments will see you fall foul of the Competition and Consumer Act 2010 (Act)”, warns ABLA.  

“Penalties will apply for breaches of the Act,” they say. “For example, if a corporation fails to comply with a request from the ACCC to provide surcharging information then the penalty is currently $5,400.”

“If a corporation charges an excessive surcharge the penalties are:
  • for a listed corporation - currently $108,000
  • for an unlisted body corporate - currently $10,800
  • for a person (not being a body corporate) - currently $2,160”
“If the penalties are not paid then the ACCC is entitled to start legal proceedings for their recovery.”

For more information on credit surcharges, visit the ACCC website or call NSW Business Chamber’s Legal Advice Line on 13 29 59.