Excessive card surcharges applied by businesses to their customers’ payments will soon be a thing of the past following recent law changes. The Competition and Consumer Amendment (Payment Surcharges) Act 2016 inserts a new part into the Competition and Consumer Act 2010which bans excessive payment surcharges.
The Australian Competition and Consumer Commission (ACCC) says that the ban prohibits excessive surcharges on payments covered by a Reserve Bank of Australia (RBA) standard or a regulation made under the Competition and Consumer Act. Surcharges will be considered excessive where they are more than the permitted surcharge amount in the standard or regulations.
In short, the new provisions limit the amount businesses can surcharge customers for using payment methods such as credit and debit cards. The limit is linked to the direct costs the business pays to accept the payment method, such as bank fees and terminal costs.
The draft RBA standard (which was open for consultation until early February 2016) proposes that merchant businesses receive information from their acquirers or payment facilitators which will help them to set an appropriate payment surcharge that does not exceed the permitted surcharge amount for each payment type.
The timing for the changes to be implemented will depend on the RBA standard, as the bringing the ban into forces relies upon the relevant RBA standard taking effect. At the time of writing, the RBA’s Payments System Board is still finalising the content of the standard. The ACCC says this gives businesses some time to get prepared, and to consider whether any payment surcharges they apply could be higher than the cost of accepting that payment type.
The ACCC says it will be responsible for enforcing the new provisions from later in 2016. Under the changes, the ACCC will be able to gather information from those involved in the payments process, and will have the authority to issue infringement notices against businesses that engage in excessive surcharging. The ACCC says it expects to provide more guidance to businesses and consumers about its approach once the RBA consultation on its standard is finalised.