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What credit card surcharge bans mean for everyday Aussies
From 1 September 2016, large businesses will be banned from charging excessive surcharges on credit purchases.
The implementation of the ban marks the beginning of the Australian Competition and Consumer Commission’s mission to bring surcharges back to a reasonable level for consumers. The second stage of the ban, that will affect all remaining businesses, comes into force on the 1 September 2017.
Also read: Eight tips for choosing a rewards credit card
Surcharges have long been an annoyance for card holders who encountered less than scrupulous businesses charging highly excessive fees. Airlines have been rightly targeted as a repeat offender in this space, often charging up to three times more than the necessary surcharge amount.
Why am I charged a surcharge?
A surcharge is charged on credit card payments to cover the fees the business incurs from accepting electronic payment. When a card payment is accepted in store, the payment is processed through the businesses bank and the bank of the cardholder. These banks require interchange fees be paid for their part in the transaction. Some retailers will factor these costs into the price of the goods and services they offer and others will charge a surcharge to cover these fees.
What is defined as an excessive charge?
An excessive charge is deemed to be a surcharge that is higher than the cost the business takes on in processing the payment.
What changes are being introduced?
The legislation enacted on 1 September will bring into effect three new changes:
The definition of an appropriate cost for card acceptance costs will be restricted to fees paid by the merchant’s acquirer and limited additional costs directly related to accepting card payments.
Acquirers and payment facilities will have to provide an annual statement outlining the average cost for accepting card payments which will be regulated by the Reserve Bank of Australia. Merchants who wish to surcharge will therefore have to comply with the provided average surcharges and do so in a percentage figure so as to not over charge customers making smaller sized purchases.
If a merchant is suspected of being in breach of these laws the Australian Competition and Consumer Commission will have investigative and enforcement powers to deal with the situation.
Also read: RBA seeks tighter card surcharge rules
What should I do if I think a company is in breach of this new law?
While the ACCC has said that its first focus will be on education and awareness, big businesses that would clearly be aware of changes but have chosen to ignore them will face consequences. If you feel that you have experienced a surcharge that is well above the average prices you can contact the ACCC.
How can I avoid paying a credit card surcharge?
If you’d rather pay no credit card surcharges at all then looking into new ways to pay is your best bet. Purchasing using your bank’s app directly or PayPal services incurs no surcharge and is also more secure than a standard card purchase, as your cards details are not recorded by the merchant.
Alternatively, if you have a debit card, select "savings" instead of "credit" as this will be processed through the EFTPOS system rather than the credit providers' system and will help you avoid the surcharge.
