Payment surcharges

If a business chooses to impose a surcharge on its customers for making a payment using a credit, debit or prepaid card, the level of the surcharge must not be excessive. The ACCC will investigate complaints of excessive payment surcharging and take enforcement action where necessary.

The ban

On 25 February 2016 the Competition and Consumer Amendment (Payment Surcharges) Act 2016 became law. It inserted a new part into the Competition and Consumer Act 2010 (CCA) banning excessive payment surcharges and provided new powers for the ACCC.

The ban is found in the CCA, and operates in conjunction with a Reserve Bank of Australia (RBA) standard.

The purpose of the ban is to stop businesses from charging payment surcharges that are excessive. You are not prohibited from recovering your applicable costs of accepting payments. However, excessive surcharging of customers for use of a particular payment method is prohibited.

See Q&A: Payment surcharges

Requirements for businesses

The ban applies to all businesses, regardless of their size.

You do not have to impose payment surcharges on accepted payment methods. If you do not impose any payment surcharges on your customers, the ban will have no impact on you.

However, if you choose to impose a payment surcharge on a payment type covered by the ban, the amount of the surcharge must not exceed your applicable costs of accepting that payment type.

Your acquirer (bank) or payment facilitator (if you use one) is required to provide you with statements that clearly set out your average costs of acceptance for each card scheme. This amount will be set out as a percentage.

You will be sent monthly statements and an annual statement. The statements will assist you to determine the level of surcharge you can pass on to your customers, should you decide to do so. If you have not received any statements you should contact your bank.

In most cases the permissible surcharges you can impose will be no greater than the amount you have been charged by your bank.

See Payment surcharges – only charge what it costs you

Enforcing the ban

The ACCC is responsible for enforcing the ban. We will investigate complaints relating to excessive payment surcharges.

We can issue surcharge information notices to a business. These will require a business to give us evidence of their costs of processing a payment, in comparison to the surcharges they are applying. We will use this to work out whether or not their surcharges exceed the permitted level.

If we have reasonable grounds to believe that a business has breached the ban, we can issue an infringement notice. We may also decide to take court action against the business. Penalties can apply to payment surcharges found by a court to be excessive.

See Fines and penalties: Payment surcharges

Card surcharges and price advertising

The ban does not change your existing Australian Consumer Law obligations.

You must not mislead consumers about the price for goods or services. This means that you need to make sure that prices displayed are clear and accurate, and that you convey all relevant information about the price.

You must display a prominent single figure price for goods or services. This means that the single price must include any tax, surcharge, duty, fee, levy or other additional charges (e.g. GST) that consumers cannot avoid paying. This makes sure that the customer is not surprised by the existence of an unavoidable charge when they come to pay. The price should be clear and stand out so that it is easy for a consumer to notice.

This applies to card surcharges for using debit or credit cards.

Applying a surcharge to all kinds of card payments

Can a business apply a surcharge to all available means of card payment? Yes. However, if you do this while not accepting cash, the price displayed should include the minimum surcharge payable.

A simple way to avoid misleading consumers is to display an all-inclusive price that includes the lowest surcharge the consumer cannot avoid paying.

If you also choose to display prices for your products without including the minimum surcharge payable, then these amounts must not be displayed more prominently than the prices including the minimum surcharge.

Example: how to display a price where a surcharge is applied to all card payments and cash is not accepted

A business charges $5 for a coffee, does not accept cash, and all card payment methods are surcharged.

In this scenario, a consumer cannot actually purchase the coffee for $5. For example, if the lowest possible surcharge was a 15c debit card surcharge, the price displayed for the coffee should be $5.15.

If the business does choose to display the $5 price, the business must also show the full price of $5.15. It must be at least as prominent as the $5 price. The $5.15 price must be clear and stand out so a consumer can easily notice it.

The business also cannot display its price as ‘$5 (payment surcharges apply)’, because it is unclear to consumers what the price of the payment surcharge will be.

You should also make sure that higher surcharges for other card types are clearly displayed.

Example: how to display higher surcharges for other card types

Using the example above, if there was a 25c surcharge for credit card purchases, this should also be clearly displayed. 
The business could likely do this in a number of different ways, such as:

  • displaying the full $5.25 price for a credit card purchase
  • identifying the 25c amount of the different surcharge
  • specifying the 10c increment between the two surcharges.

Learn more about displaying prices.

More information