Top Menu

Unnecessary credit card charges made illegal

Excessive credit card changes are now illegal.

From the 1st of September, every business in Australia was banned from charging excessive surcharges to customers making purchases.

According to the Australasian Competition and Consumer Commission (ACCC) the ban had previously been applied to large businesses and was extended to cover all businesses based in Australia or using an Australian bank.

The ban specifically restricts the amount of charges that a business can apply to certain bank and debits cards includuing EFTPOS (debit and prepaid), MasterCard (credit, debit and prepaid), Visa (credit, debit and prepaid) and American Express cards, the ACCC reported.

ACCC deputy chair Dr Michael Schaper said this comes as news for consumers as businesses can only surcharge what it actually costs them to process card payments.

“For example, if a business’s cost of acceptance for Visa Credit is 1.5 per cent, consumers can only be charged a surcharge of 1.5 per cent on payments made using a Visa credit card,” he said.

“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.

“Our advice for businesses wanting to set a single surcharge regardless of the type of card their customers use is it must be the lowest of all the payment methods. You can’t use an average of all payment methods or you will land yourself in trouble.”

The ACCC has been given the power to enforce the ban and fines apply to businesses who do not comply with the law.

The ACCC’s website says of the ban, that if it believes a business has charged excessive surcharges, it can issue infringement notice to the business.

The fines are as follows:

  • 600 penalty units ($126 000) for a listed corporation
  • 60 penalty units ($12 600) for a body corporate
  • 12 penalty units ($2 520) for a person other than a body corporate.

See the ACCC’s page of frequently asked questions and answers for more information.

,

,

No comments yet.

Leave a Reply