On 1 January 2003 the Reserve Bank abolished the ‘no surcharge’ rule. The ‘no surcharge’ rule meant that businesses were not allowed to recover the cost of credit card transactions from customers who made credit card payments for goods and services.
Instead, businesses had to recover these costs indirectly—that is, by passing on the costs of credit card transactions to all consumers of their goods and services, regardless of the payment method the individual consumer was using.
The Reserve Bank's intention is to reduce the cost to the Australian community of the credit card network.
Do I have to charge extra for credit card transactions?
Merchants can choose whether or not to pass on the cost of accepting credit card payments directly or indirectly to consumers. Not all businesses will want to charge a fee to consumers who pay by credit card. There is no obligation on them to do so.
It is important to note that not all merchants will wish to charge their customers a credit card fee. However, if a merchant does decide to impose one, they must ensure that consumers know:
the credit card fee will apply
the amount of the fee before they enter into the transaction.
Merchants must not mislead or deceive consumers.
Businesses should get advice about how to avoid misleading or deceiving consumers about this charge. If in doubt, the sensible thing to do is to err on the side of stronger disclosure.
Options for informing consumers (particularly for retailers) include:
clear and prominent messages on bills or tax invoices
clear and prominent in-store and/or point of sale signage.
When businesses supply services, this information should be provided before the contract to supply is entered into. If there is an existing contract, the purchaser should be told once any fee for credit card payment is introduced.
Where can I go for more information about what I need to disclose to consumers about credit card surcharging?
The charging of a credit card surcharge is defined as a financial service and is therefore outside the ACCC's jurisdiction under the Competition and Consumer Act.
For further information about credit card surcharge disclosure, contact the Australian Securities and Investments Commission (see our Consumer and business directory on the left-hand side of this page).
What is the ACCC’s role in relation to credit card surcharging?
Part IV of the Competition and Consumer Act prohibits anti-competitive arrangements between competitors, such as price fixing, market sharing and boycotts. This means that businesses must make their own independent decision on whether to impose a credit card surcharge.
Businesses must not engage in anti-competitive conduct.
Businesses must not enter into agreements or understandings with other businesses, such as:
whether or not to impose a credit card fee
the amount of the credit card fee that they will charge.
Such agreements or understandings are contrary to the competition provisions of the Competition and Consumer Act and significant penalties may apply.
ASIC is responsible for financial services including credit. For ASIC's contact details see our Consumer and business directory on the left-hand side of this page. For information on the Competition and Consumer Act, contact the ACCC's Small business helpline on 1300 302 021.
