Ban on excessive credit card surcharges for small businesses

Summary details relating to the Ban on excessive credit card surcharges for small businesses

– from 1 September 2017 (for more details see the link below) 

This ban now applies to ALL businesses.

From 1 September 2016, this applied to “Large Businesses” (Over $25mill Turnover, over 50 Employees and over $12.5m in Assets) 

From 1 September 2017, this applies to ALL businesses.

What Payment Types are covered:

• Eftpos (debit and prepaid)
• MasterCard (credit, debit and prepaid)
• Visa (credit, debit and prepaid)
• American Express “companion cards” (American Express cards issued through an Australian financial service provider, rather than directly through American Express).

(Listen to my interview with Oliver Peterson of 6PR on this subject)

A payment surcharge is excessive if the surcharge exceeds the permitted surcharge as defined by the RBA standard.

Accepting a Visa or MasterCard debit transaction may cost a business around 0.5 per cent of the transaction value.

Credit cards usually have a higher cost for businesses, and may cost up to 1-1.5 per cent for Visa and MasterCard, and between 2-3 per cent for an American Express card payment.

You can only recover what you have been charged.  

The amount that you surcharge will be limited to your costs for accepting that payment method.

This includes :

• merchant service fees
• fees paid for the rental and maintenance of payment card terminals
• any other fees incurred in processing card transactions, including cross-border transaction fees, switching fees, and fraud related chargeback fees (but not the cost of any actual chargebacks).
• You cannot recover any other costs like labour/rent/bookkeeping costs related to cr card receipts.

You can find out what you are being charged by reviewing your monthly statements received from your payment facilitator. 

(Listen to my interview with Oliver Peterson of 6PR on this subject)

Can I charge a standard single surcharge across multiple payment types?

You must set the surcharge at the level of the average cost of acceptance of the lowest cost system; that is, no higher than the lowest permitted surcharge.

Example
If your average cost of acceptance for Visa Debit is 1 per cent, for Visa Credit is 1.5 per cent, and for American Express is 2.5 per cent, you would be permitted to charge the same level of surcharge for each payment system, but it would need to be 1 per cent as that is the lowest of all payment systems.

You would not be allowed to use the average of those three figures (that is, 1 + 1.5 + 2.5 = 5 divided by 3 = 1.6 per cent).

What penalties apply?

If the ACCC believes that a business has charged a payment surcharge which is excessive, they can issue an infringement notice to the business:

• 600 penalty units ($108,000) for a listed corporation
• 60 penalty units ($10,800) for a body corporate
• 12 penalty units ($2,160) for a person other than a body corporate.

We can also take court action against a business, in which we can seek pecuniary penalties:

• 6,471 penalty units ($1,164,780) for a body corporate
• 1,295 penalty units ($233,100) for a person other than a body corporate.

For more detail : please visit the ACCC website here