Red Balloon Pty Ltd (Red Balloon) has paid penalties totalling $43,200 following the issue of four infringement notices by the ACCC for alleged breaches of the new excessive payment surcharges laws in the Competition and Consumer Act 2010.

Red Balloon is an online trader that sells ‘experiences’ in Australia, such as skydiving jumps, wine tours, and cooking classes.

The ACCC alleged that on 31 March and 30 June 2017, Red Balloon charged four consumers excessive payment surcharges in respect of payments they made by MasterCard credit, Visa credit, Visa debit and MasterCard debit respectively.

“Red Balloon was charging these customers more than allowed under the law prohibiting excessive payment surcharges on card transactions,” ACCC Deputy Chair Dr Michael Schaper said.

"This provides that businesses can only pass on to customers what it costs to accept the payment, including fees such as merchant service fees, and terminal rental and maintenance fees.”

Red Balloon is classified as a ‘large business’ under the excessive payment surcharges provisions. The ban on excessive surcharges has applied to large businesses in Australia for more than a year, commencing on 1 September 2016.  For all other Australian businesses, the new ban has applied since 1 September this year.

“If a business wants to impose a payment surcharge on card transactions, that business is responsible for ascertaining the cost of acceptance of the payment before imposing the surcharge onto customers,” Dr Schaper said.

“If a business is unsure what the cost of acceptance is for a particular payment method, it should contact its financial institution to obtain a copy of its annual statement.”

“The excessive payment surcharges provisions now apply to all businesses, big and small, in Australia. Any business charging excessive surcharges on card transactions, whether intentional or not, risks ACCC enforcement action,” Dr Schaper said.

Red Balloon has since lowered its payment surcharges to the correct amounts, and cooperated with the ACCC’s investigation.

In addition to its ongoing enforcement work, the ACCC has undertaken a wide range of other work to educate businesses and consumers about the new excessive payment surcharging laws. This includes publishing education materials on the ACCC website.

The ACCC has also engaged with many small businesses, sending out over 350 letters reminding them about compliance with the new laws. The ACCC continues to closely monitor surcharge complaints received each week.

Notes to editors

The excessive payment surcharges law provides that businesses can only pass on to customers what it costs them to process a payment (the cost of acceptance). For example, if the cost of acceptance for Visa credit is 1 per cent, a business can only add a surcharge of 1 per cent for customers that pay with Visa credit.

The payment of a penalty specified in an infringement notice is not an admission of a contravention of the Act. The ACCC can issue an infringement notice where it has reasonable grounds to believe that a person has contravened certain provisions of the Act.