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Those ridiculous credit card surcharges are now illegal in Australia

September 01, 2016

Rae Johnston, Gizmodo

If you’ve been stung by a gross payment method surcharge on concert tickets or flights, today brings good news. A new ban on large businesses charging consumers excessive payment surcharges for using EFTPOS, MasterCard, Visa and American Express cards issued by Australian banks is now in place.

But you can still get stung for those ridiculous “service” and “booking” fees.

Payment types that are not covered by the ban include BPAY, PayPal, Diners Club cards, American Express cards issued directly by American Express, cash and cheques.

“The new law has caused many large businesses to review their pricing practices. We expect to see a move from flat-fee surcharges for purchasing items like flights, towards percentage-based or capped surcharges,” ACCC Chairman Rod Sims said.

The ACCC said some event ticketing companies are intending to change their pricing practices from 1 September, meaning customers will no longer be charged fees based on how you choose to pay.

The RBA has indicated, as a guide, that the costs to merchants of accepting payments by debit cards is in the order of 0.5 per cent, by credit card is 1 to 1.5 per cent, and for American Express cards it is 2 to 3 per cent — although some merchants’ costs might be higher.

For the first year the law only applies to “large businesses”. It will apply to all businesses from 1 September 2017.

What makes a large business

What makes a large business? Gross revenue of 25 million dollars or more, Gross assets worth 12.5 million or more, Number of employees 50 or more. For the ban on excessive surcharging, large business is defined as having two of the above.

The ACCC has been raising awareness of the ban in the lead up to 1 September, including engaging with many large businesses to ensure they are aware of their obligations, but if you do get stung you can contact the ACCC.

“We will be enforcing these new rules from today, and the ACCC encourages all large businesses that haven’t already to ensure their payment charging methods are in line with the new law,” Mr Sims said.

Businesses can still charge other fees, such as “booking fees” or “service fees” which apply regardless of the method of payment. But in doing so, those businesses must still comply with the Australian Consumer Law in terms of ensuring the disclosure of any such fees is upfront and clear.

Passing on the cost of processing debit and credit card payments is not mandatory for businesses. Indeed, the ban has no effect on businesses that choose not to impose a payment surcharge.

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