Excessive Payment Surcharging Reforms

Do you often go to pay with a certain debit or credit card and get told a surcharge applies? Does this surcharge seem excessively high?

This might end when a prohibition on charging of excessive payment surcharges for certain payment methods extends to all businesses from 1 September 2017. Instead, businesses will only be able to pass to customers what it actually costs to process a payment.

When will a payment surcharge be considered “excessive”?

The Reserve Bank has set this out in a new standard which determines when a surcharge is excessive.

It’s called “the cost of acceptance” and is calculated over a particular 12 month period. It will be expressed as a percentage of the total value of card transactions, and includes the following costs:

o Merchant services

o Rental and maintenance of card terminals

o Gateway or fraud prevention services

o International service assessments

o Cross-border transactions

o Switching

o Fraud-related chargebacks

o Premiums to insure against forward delivery risk

How will the ACCC monitor these changes?

The ACCC can make merchants substantiate a surcharge including issuing notices to corporations to provide documents and information evidencing the surcharge. Non-compliance could attract penalties over $1 million per contravention.

What should your business be concerned about?

o Working out the right surcharge in accordance with the RBA standard;

o Being able to substantiate that surcharge for each payment option;

o Ensuring that calculation is adjusted as the underlying costs change;

o Retaining key documents to substantiate the calculation in case the ACCC issues a surcharge information notice; and

o Maintaining compliance with existing Australian Consumer Law requirements (such as false or misleading representations) when presenting surcharges to customers.