Excessive card payment surcharge ban to apply to all Australian businesses

As of 1 September all Australian businesses will be banned from charging customers more than what it costs them to carry out card transactions.

The excessive surcharging ban has applied to large businesses since September last year and now extends to all businesses that are either based in Australia or use an Australian bank. The ban does not affect businesses that choose not to apply a surcharge to payments.

Many smaller retailers, for example coffee shops and food outlets, could add a charge AU$0.50 for a $4 takeout coffee. Now, they would only be able to charge what it costs them to carry out the transaction, typically around 0.5% on a debit card, meaning a surcharge of $0.02 is the maximum that could apply to a $4 purchase.

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Dr Michael Schaper, Deputy Chair of the Australian Consumer and Competition Commission (ACCC), said: “The good news for consumers is that businesses can now only surcharge what it actually costs them to process card payments, including bank fees and terminal costs. For example, if a business’s cost of acceptance for Visa Credit is 1.5%, consumers can only be charged a surcharge of 1.5% on payments made using a Visa credit card.

“Our message to business is that you are not allowed to add on any of your own internal costs when calculating what surcharge you will charge customers. The only costs businesses can include are external costs charged to you by your financial provider.”

If businesses want to set a single surcharge across multiple payment methods, the surcharge must be set at the level of the lowest cost method, not an average. For example, if a business’s cost of acceptance for Visa Debit is 1%, for Visa Credit is 1.5%, and for American Express is 2.5%, the single surcharge would be 1% as that is the lowest of all payment methods.