In February 2016, amendments to the Competition and Consumer Act 2010 (Cth) came into effect which banned excessive payment surcharges (the Ban) and provided new powers to the Australian Competition and Consumer Commission (ACCC) to investigate and enforce the Ban.
In May 2016, the Reserve Bank of Australia (RBA) released the final report of its review into card payments regulation. This review outlined a number of changes to merchant surcharging standards in Australia on scheme credit, debit and prepaid cards aimed at limiting surcharges to the cost of acceptance (Standards).
The Ban operates in conjunction with the new Standards, which are designed to better protect consumers from excessive surcharging and provide improved transparency around the cost of card acceptance. To achieve this objective, the ACCC has new powers to monitor and prevent excessive merchant surcharging practices. The new Standards are effective 1 September 2016 for businesses with gross revenue greater than $25 million per annum; more than 50 employees; or more than $12.5 million in gross assets, and 1 September 2017 for all other businesses.
In order to comply with the new Standards, acquirers are now required to indicate the maximum surcharge a merchant can apply based on the average cost over the previous year and the average cost of acceptance on a merchant’s activity statement. This is designed to ensure merchants can clearly identify the upper limit for surcharging. Fines can be imposed, and court action taken, by the ACCC for failure to comply with the new standards, with fines of up to $108,000 or court imposed penalties of up to $1.16 million for merchants found in breach of the surcharging guidelines. The ACCC may also seek compensation on behalf of a group of consumers who have been charged an excessive surcharge.
Visa is working with acquirers and merchants to help them comply with the new Standards issued by the RBA and Ban enforced by the ACCC. More information on the new Standards and the Ban can be found on the RBA and ACCC websites at the following links:
Visa does not support excessive merchant surcharging and believes merchants should consider the following when deciding whether to surcharge their customers for accepting card payments:
- The impact on the customer payment experience for domestic cardholders
- The impact on the customer payment experience for international cardholders who may not be familiar with merchant surcharging
- The impact on their brand
- The administrative, handling and other internal costs incurred from accepting cash and other manual payment means
- The speed and efficiency of card payments, which provide merchants guaranteed payment for properly authorised transactions, while also providing customers with a fast and secure payment method
- The ability to attract customers who prefer to pay with card or who have no cash
Merchants seeking more information on the new surcharging standards can contact their acquirer for assistance in understanding the specific cost of card acceptance or the ACCC.