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 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

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.

The ban currently applies to large businesses only. You are a large business if you satisfy certain revenue, asset or employee thresholds. If you do not satisfy the thresholds you are not a large business, and the ban applies to you from 1 September 2017.

From 1 June 2017, 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.

If the new law does not apply to your business until 1 September 2017, you may choose to comply with its requirements ahead of time. In any case, we recommend that you take steps to understand what your obligations will be if you choose to impose surcharges on payments from your customers.

In most cases the permissible level you can charge will be no greater than the amount you have been charged by your bank. Your bank will send you monthly statements and an annual statement which set out the charges to you for each payment method.

The statements will assist you to determine the level of surcharge you can pass on to your customers, should you decide to do so.

See: Payment surcharges – only charge what it costs you

Enforcing the ban

The ACCC has been given new powers to enforce the ban. We will investigate complaints relating to excessive payment surcharges.

We can issue surcharge information notices, and these will require a business to provide us with evidence of their costs of processing a payment, in comparison to the surcharges they are applying, in order to determine whether or not their surcharges exceed the permitted level.

If the ACCC has reasonable grounds to believe that a business has breached the ban, we can issue an infringement notice or take court action against the business, seeking pecuniary penalties.

See: What are the penalties if my business breaches the new law?

Remember, the ban does not alter your existing Australian Consumer Law obligations. You must not make false or misleading representations about the price of your goods or services, or engage in component or partial pricing, where the upfront advertised price only constitutes part of the total price of the goods or services.

See: Displaying prices

More information

Q&A: Payment surcharges

Payment surcharges – only charge what it costs you

Review of card payments regulation: conclusions

Credit, debit and prepaid card surcharges - consumer guidance